Question 1

A monopoly

Accepted Answer

A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges only if it increases the quantity that it sells. 
E) faces a perfectly inelastic demand. 
A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges only if it increases the quantity that it sells. 
E) faces a perfectly inelastic demand.

Question 2

Use the table below to answer the following questions.
Table 13.4.1
  
-Table 13.4.1 shows the demand schedule faced by a perfect price-discriminating monopoly.If 3 units are sold,total revenue is

Accepted Answer

A) $15.00. 
B) $16.00. 
C) $18.00. 
D) $19.50. 
E) $5.00. 
A) $15.00. 
B) $16.00. 
C) $18.00. 
D) $19.50. 
E) $5.00.

Question 3

A perfect price-discriminating monopoly

Accepted Answer

A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A & D are correct. 
A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A & D are correct.

Question 4

A natural monopoly exists when

Accepted Answer

A) the government protects the firm by granting an exclusive franchise. 
B) production can take place with constant returns to scale. 
C) there are no rivals in the market. 
D) one firm can supply the entire market at a lower cost than two or more firms. 
E) the average total cost curve is upward sloping. 
A) the government protects the firm by granting an exclusive franchise. 
B) production can take place with constant returns to scale. 
C) there are no rivals in the market. 
D) one firm can supply the entire market at a lower cost than two or more firms. 
E) the average total cost curve is upward sloping.

Question 5

In a natural monopoly,the long-run average cost curve

Accepted Answer

A) is downward sloping in the relevant range of output levels. 
B) is horizontal in the relevant range of output levels. 
C) is upward sloping in the relevant range of output levels. 
D) may be either upward sloping or downward sloping in the relevant range of output levels. 
E) lies below the marginal cost curve. 
A) is downward sloping in the relevant range of output levels. 
B) is horizontal in the relevant range of output levels. 
C) is upward sloping in the relevant range of output levels. 
D) may be either upward sloping or downward sloping in the relevant range of output levels. 
E) lies below the marginal cost curve.

Question 6

Use the figure below to answer the following questions.
   
Figure 13.3.1
-Refer to Figure 13.3.1.If this market is a single-price monopoly,then

Accepted Answer

A) it is efficient because the monopoly is maximizing economic profit. 
B) price is equal to marginal cost and the outcome is efficient. 
C) price is less than marginal cost, and consumer surplus is less than in a perfectly competitive market. 
D) price is greater than the marginal cost and the outcome is inefficient. 
E) the outcome is inefficient because the monopoly's costs are too high. 
A) it is efficient because the monopoly is maximizing economic profit. 
B) price is equal to marginal cost and the outcome is efficient. 
C) price is less than marginal cost, and consumer surplus is less than in a perfectly competitive market. 
D) price is greater than the marginal cost and the outcome is inefficient. 
E) the outcome is inefficient because the monopoly's costs are too high.

Question 7

Consumer surplus is

Accepted Answer

A) positive in the case of a monopolist practising perfect price discrimination. 
B) equal to price minus marginal cost. 
C) less in the case of a single-price monopoly than in the case of a perfectly competitive industry. 
D) zero for a single-price monopolist. 
E) greater in a single-price monopoly than in a perfectly competitive industry. 
A) positive in the case of a monopolist practising perfect price discrimination. 
B) equal to price minus marginal cost. 
C) less in the case of a single-price monopoly than in the case of a perfectly competitive industry. 
D) zero for a single-price monopolist. 
E) greater in a single-price monopoly than in a perfectly competitive industry.

Question 8

Use the figure below to answer the following questions.
   
Figure 13.5.2
-Consider the natural monopoly depicted in Figure 13.5.2.If a regulator uses a marginal cost pricing rule to set price,what is the quantity produced?

Accepted Answer

A) 0 
B) Q0 
C) Q1 
D) Q2 
E) Q3 
A) 0 
B) Q0 
C) Q1 
D) Q2 
E) Q3

Question 9

Use the figure below to answer the following questions.
   
Figure 13.5.2
-Consider the natural monopoly depicted in Figure 13.5.2.What area in the graph represents the deadweight loss arising from an average cost pricing rule?

Accepted Answer

A) ABD 
B) DGF 
C) DEF 
D) ACF 
E) CBDE 
A) ABD 
B) DGF 
C) DEF 
D) ACF 
E) CBDE

Question 10

For a single-price monopoly,the demand curve is

Accepted Answer

A) below the marginal revenue curve. 
B) the same as the marginal revenue curve. 
C) above the marginal revenue curve. 
D) the same as the total revenue curve. 
E) below the average total cost curve. 
A) below the marginal revenue curve. 
B) the same as the marginal revenue curve. 
C) above the marginal revenue curve. 
D) the same as the total revenue curve. 
E) below the average total cost curve.

Question 11

Use the figure below to answer the following questions.
   
Figure 13.3.3
-Refer to Figure 13.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?

Accepted Answer

A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD 
A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD

Question 12

A monopoly is a market with a single firm that

Accepted Answer

A) produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service. 
B) purchases its factors of production from only one supplier because of a barrier preventing it from buying from other suppliers. 
C) produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service. 
D) cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price. 
E) produces its good or service using labour from a single source, which is usually a union. 
A) produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service. 
B) purchases its factors of production from only one supplier because of a barrier preventing it from buying from other suppliers. 
C) produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service. 
D) cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price. 
E) produces its good or service using labour from a single source, which is usually a union.

Question 13

Use the figure below to answer the following questions.
   
Figure 13.4.5
-Consider the cost and revenue curves in Figure 13.4.5.If this is a perfect price-discriminating monopoly,what is consumer surplus?

Accepted Answer

A) EADH 
B) EABH 
C) ABD 
D) KEA 
E) None of the above. 
A) EADH 
B) EABH 
C) ABD 
D) KEA 
E) None of the above.

Question 14

Use the figure below to answer the following question.
   
Figure 13.4.1
-When perfect price discrimination occurs,which one of the following statements is false ?

Accepted Answer

A) Buyers cannot resell the product. 
B) The firm can distinguish between buyers. 
C) The firm sets prices. 
D) The firm captures consumer surplus. 
E) The outcome is less efficient than with single-price monopoly. 
A) Buyers cannot resell the product. 
B) The firm can distinguish between buyers. 
C) The firm sets prices. 
D) The firm captures consumer surplus. 
E) The outcome is less efficient than with single-price monopoly.

Question 15

A monopoly arises for two key reasons,which are ________.

Accepted Answer

A) barriers to entry and no close substitutes 
B) franchises and barriers to entry 
C) barriers to entry and close substitutes 
D) close substitutes and no barriers to entry 
E) natural and legal 
A) barriers to entry and no close substitutes 
B) franchises and barriers to entry 
C) barriers to entry and close substitutes 
D) close substitutes and no barriers to entry 
E) natural and legal

Question 16

Use the figure below to answer the following questions.
   
Figure 13.5.2
-Consider the natural monopoly depicted in Figure 13.5.2.If a regulatory agency sets a price just sufficient for the firm to make zero economic profit,what output will it produce?

Accepted Answer

A) Q4 
B) Q0 
C) Q1 
D) Q2 
E) Q3 
A) Q4 
B) Q0 
C) Q1 
D) Q2 
E) Q3

Question 17

Use the figure below to answer the following questions.
   
Figure 13.3.1
-Refer to Figure 13.3.1.If this market were perfectly competitive,the output level would exceed the single-price monopoly output level by

Accepted Answer

A) 20 units. 
B) 40 units. 
C) 60 units. 
D) zero.The perfectly competitive firm and the single-price monopoly produce the same quantity because marginal cost is constant. 
E) 30 units. 
A) 20 units. 
B) 40 units. 
C) 60 units. 
D) zero.The perfectly competitive firm and the single-price monopoly produce the same quantity because marginal cost is constant. 
E) 30 units.

Question 18

For a monopoly able to practice perfect price discrimination,the market

Accepted Answer

A) supply curve is horizontal. 
B) supply curve is the same as the marginal revenue curve. 
C) demand curve is the same as the marginal cost curve. 
D) demand curve is the same as the marginal revenue curve. 
E) demand curve is horizontal. 
A) supply curve is horizontal. 
B) supply curve is the same as the marginal revenue curve. 
C) demand curve is the same as the marginal cost curve. 
D) demand curve is the same as the marginal revenue curve. 
E) demand curve is horizontal.

Question 19

Use the figure below to answer the following questions.
   
Figure 13.3.2
-Consider Figure 13.3.2.Consider a perfectly competitive market.If the light grey area shows the consumer surplus,and the dark grey area shows the producer surplus,which graph correctly represents this market?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (b)and (d) 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (b)and (d)

Question 20

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue,it

Accepted Answer

A) should raise price and decrease output. 
B) should lower price and increase output. 
C) should lower price and decrease output. 
D) is incurring an economic loss. 
E) is maximizing profit. 
A) should raise price and decrease output. 
B) should lower price and increase output. 
C) should lower price and decrease output. 
D) is incurring an economic loss. 
E) is maximizing profit.

Exam 13: Monopoly

A monopoly

Use the table below to answer the following questions. Table 13.4.1 -Table 13.4.1 shows the demand schedule faced by a perfect price-discriminating monopoly.If 3 units are sold,total revenue is

A perfect price-discriminating monopoly

A natural monopoly exists when

In a natural monopoly,the long-run average cost curve

Use the figure below to answer the following questions. Figure 13.3.1 -Refer to Figure 13.3.1.If this market is a single-price monopoly,then

Consumer surplus is

Use the figure below to answer the following questions. Figure 13.5.2 -Consider the natural monopoly depicted in Figure 13.5.2.If a regulator uses a marginal cost pricing rule to set price,what is the quantity produced?

Use the figure below to answer the following questions. Figure 13.5.2 -Consider the natural monopoly depicted in Figure 13.5.2.What area in the graph represents the deadweight loss arising from an average cost pricing rule?

For a single-price monopoly,the demand curve is

Use the figure below to answer the following questions. Figure 13.3.3 -Refer to Figure 13.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?

A monopoly is a market with a single firm that

Use the figure below to answer the following questions. Figure 13.4.5 -Consider the cost and revenue curves in Figure 13.4.5.If this is a perfect price-discriminating monopoly,what is consumer surplus?

Use the figure below to answer the following question. Figure 13.4.1 -When perfect price discrimination occurs,which one of the following statements is false ?

A monopoly arises for two key reasons,which are ________.

Use the figure below to answer the following questions. Figure 13.5.2 -Consider the natural monopoly depicted in Figure 13.5.2.If a regulatory agency sets a price just sufficient for the firm to make zero economic profit,what output will it produce?

Use the figure below to answer the following questions. Figure 13.3.1 -Refer to Figure 13.3.1.If this market were perfectly competitive,the output level would exceed the single-price monopoly output level by

For a monopoly able to practice perfect price discrimination,the market

Use the figure below to answer the following questions. Figure 13.3.2 -Consider Figure 13.3.2.Consider a perfectly competitive market.If the light grey area shows the consumer surplus,and the dark grey area shows the producer surplus,which graph correctly represents this market?

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue,it

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