Question 1

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves,then the competitive firm will produce a

Accepted Answer

A)  greater output and charge a lower price than the monopolist. 
B)  greater output but charge the same price as the monopolist. 
C)  greater output and charge a higher price than the monopolist. 
D)  smaller output and charge a lower price than the monopolist. 
E)  smaller output and charge a higher price than the monopolist. 
A)  greater output and charge a lower price than the monopolist. 
B)  greater output but charge the same price as the monopolist. 
C)  greater output and charge a higher price than the monopolist. 
D)  smaller output and charge a lower price than the monopolist. 
E)  smaller output and charge a higher price than the monopolist.

Question 2

Exhibit 24-6
  
-Refer to Exhibit 24-6.The price and quantity of a single-price monopolist producing good X are P0 and qB,respectively.The marginal revenue curve is represented by

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 3

Exhibit 24-7
  
-Refer to Exhibit 24-7.If D represents the demand curve facing a perfectly price-discriminating monopolist,the price it charges for the last unit sold exceeds the marginal cost of the last unit by

Accepted Answer

A)  $30. 
B)  $15. 
C)  $0. 
D)  an amount that cannot be determined without the average cost curve. 
A)  $30. 
B)  $15. 
C)  $0. 
D)  an amount that cannot be determined without the average cost curve.

Question 4

By definition,monopolists sell a product for which there are absolutely no substitutes.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist can sell 7,000 units at a price of $5 per unit.Lowering price to all buyers by $1 raises the quantity demanded by 500 units.What is the change in total revenue resulting from this price change?

Accepted Answer

A)  $6,000 
B)  $5,000 
C)  -$5,000 
D)  -$18,000 
A)  $6,000 
B)  $5,000 
C)  -$5,000 
D)  -$18,000

Question 6

Suppose Johnny,seven years old,is selling lemonade and he sells each of his buyers the refreshment for the maximum price that each buyer is willing to pay.Johnny is practicing

Accepted Answer

A)  perfect competition. 
B)  perfect price discrimination. 
C)  second-degree price discrimination. 
D)  third-degree price discrimination. 
A)  perfect competition. 
B)  perfect price discrimination. 
C)  second-degree price discrimination. 
D)  third-degree price discrimination.

Question 7

X-inefficiency occurs when a monopolist produces output at a cost that is greater than the lowest possible cost.

Accepted Answer

A) True 
 B)False

Question 8

Arbitrage is

Accepted Answer

A)  a form of negotiation between two parties having a disagreement. 
B)  buying a good in one market and selling it in another for a profit. 
C)  a form of price discrimination where the producer sells its product at two different prices. 
D)  a means of deciding the most efficient way of producing a product. 
A)  a form of negotiation between two parties having a disagreement. 
B)  buying a good in one market and selling it in another for a profit. 
C)  a form of price discrimination where the producer sells its product at two different prices. 
D)  a means of deciding the most efficient way of producing a product.

Question 9

The monopolist's demand curve is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 24-7
  
-Competition is legally prohibited when barriers to entry take the form of

Accepted Answer

A)  public franchises. 
B)  economies of scale. 
C)  exclusive ownership of a resource. 
D)  all of the above 
E)  none of the above 
A)  public franchises. 
B)  economies of scale. 
C)  exclusive ownership of a resource. 
D)  all of the above 
E)  none of the above

Question 11

Your school pays one rate for the first one million kilowatts of electricity and a lower rate for any power it uses over one million kilowatts.What is occurring here?

Accepted Answer

A)  perfect price discrimination 
B)  second-degree price discrimination 
C)  third-degree price discrimination 
D)  economies of scale 
A)  perfect price discrimination 
B)  second-degree price discrimination 
C)  third-degree price discrimination 
D)  economies of scale

Question 12

Individuals who spend resources to influence public policy in a way that will redistribute income to themselves are

Accepted Answer

A)  stabilizing the economy. 
B)  rent seeking. 
C)  engaging in collusion. 
D)  minimizing explicit costs. 
A)  stabilizing the economy. 
B)  rent seeking. 
C)  engaging in collusion. 
D)  minimizing explicit costs.

Question 13

Exhibit 24-4
  
-Refer to Exhibit 24-4.The profit-maximizing single-price monopolist's maximum profit is

Accepted Answer

A)  $22. 
B)  $42. 
C)  $82. 
D)  $130. 
E)  $140. 
A)  $22. 
B)  $42. 
C)  $82. 
D)  $130. 
E)  $140.

Question 14

Exhibit 24-1
  
-Refer to Exhibit 24-1.According to economist Gordon Tullock,what area is subject to rent seeking activity?

Accepted Answer

A)  area Q1BAQ2 
B)  area BCA 
C)  area P1P2CB 
D)  area 0P1BQ1 
E)  none of the above 
A)  area Q1BAQ2 
B)  area BCA 
C)  area P1P2CB 
D)  area 0P1BQ1 
E)  none of the above

Question 15

The Townsend Acts

Accepted Answer

A)  are anti-trust laws passed in the U.S. in the 1930's to limit monopoly power. 
B)  allow district attorneys the opportunity to plea bargain with accused criminals. 
C)  were British laws enacted in the 1760's that imposed taxes on products imported to the American colonies, leading (in part) to the Boston Tea Party. 
D)  were enacted in the late 1800's to permit regulation of natural monopolies. 
A)  are anti-trust laws passed in the U.S. in the 1930's to limit monopoly power. 
B)  allow district attorneys the opportunity to plea bargain with accused criminals. 
C)  were British laws enacted in the 1760's that imposed taxes on products imported to the American colonies, leading (in part) to the Boston Tea Party. 
D)  were enacted in the late 1800's to permit regulation of natural monopolies.

Question 16

A monopolist practicing (perfect)price discrimination has

Accepted Answer

A)  a larger deadweight loss triangle than a single-price monopolist has. 
B)  the same deadweight loss triangle as a single-price monopolist. 
C)  a deadweight loss triangle one-half the size of what it would be with uniform pricing. 
D)  no deadweight loss triangle. 
A)  a larger deadweight loss triangle than a single-price monopolist has. 
B)  the same deadweight loss triangle as a single-price monopolist. 
C)  a deadweight loss triangle one-half the size of what it would be with uniform pricing. 
D)  no deadweight loss triangle.

Question 17

Exhibit 24-7
  
-Refer to Exhibit 24-7.Let D be the demand curve facing a perfectly price-discriminating monopolist.The lowest price this monopolist will charge is

Accepted Answer

A)  $60. 
B)  $45. 
C)  $30. 
D)  $0. 
A)  $60. 
B)  $45. 
C)  $30. 
D)  $0.

Question 18

Describe the circumstance under which profit maximization is the same as revenue maximization. Use a hypothetical numerical example to help explain why this is so.

Accepted Answer

In the unlikely event that a firm has no

Question 19

A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.

Accepted Answer

A) True 
 B)False

Question 20

If the monopoly firm's marginal cost curve is either horizontal or upward sloping,it follows that its marginal revenue curve will cut its marginal cost curve at a __________ level of output than where its demand curve cuts its marginal cost curve.It also follows that if the firm were to produce the quantity of output consistent with where its demand curve cut its marginal cost curve,the firm would be __________.

Accepted Answer

A)  lower; earning profits 
B)  lower; resource-allocative efficient 
C)  higher; productive efficient 
D)  lower; minimizing costs 
E)  none of the above 
A)  lower; earning profits 
B)  lower; resource-allocative efficient 
C)  higher; productive efficient 
D)  lower; minimizing costs 
E)  none of the above

Exam 24: Monopoly

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves,then the competitive firm will produce a

Exhibit 24-6 -Refer to Exhibit 24-6.The price and quantity of a single-price monopolist producing good X are P0 and qB,respectively.The marginal revenue curve is represented by

Exhibit 24-7 -Refer to Exhibit 24-7.If D represents the demand curve facing a perfectly price-discriminating monopolist,the price it charges for the last unit sold exceeds the marginal cost of the last unit by

By definition,monopolists sell a product for which there are absolutely no substitutes.

A monopolist can sell 7,000 units at a price of $5 per unit.Lowering price to all buyers by $1 raises the quantity demanded by 500 units.What is the change in total revenue resulting from this price change?

Suppose Johnny,seven years old,is selling lemonade and he sells each of his buyers the refreshment for the maximum price that each buyer is willing to pay.Johnny is practicing

X-inefficiency occurs when a monopolist produces output at a cost that is greater than the lowest possible cost.

Arbitrage is

The monopolist's demand curve is perfectly inelastic.

Exhibit 24-7 -Competition is legally prohibited when barriers to entry take the form of

Your school pays one rate for the first one million kilowatts of electricity and a lower rate for any power it uses over one million kilowatts.What is occurring here?

Individuals who spend resources to influence public policy in a way that will redistribute income to themselves are

Exhibit 24-4 -Refer to Exhibit 24-4.The profit-maximizing single-price monopolist's maximum profit is

Exhibit 24-1 -Refer to Exhibit 24-1.According to economist Gordon Tullock,what area is subject to rent seeking activity?

The Townsend Acts

A monopolist practicing (perfect)price discrimination has

Exhibit 24-7 -Refer to Exhibit 24-7.Let D be the demand curve facing a perfectly price-discriminating monopolist.The lowest price this monopolist will charge is

Describe the circumstance under which profit maximization is the same as revenue maximization. Use a hypothetical numerical example to help explain why this is so.

A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 24-6 -Refer to Exhibit 24-6.The price and quantity of a single-price monopolist producing good X are P₀ and qB,respectively.The marginal revenue curve is represented by