Question 1

For the perfectly price-discriminating monopolist, its __________ curve is the same as its __________ curve.

Accepted Answer

A) marginal cost; average fixed cost 
B) average variable cost; average total cost 
C) demand; marginal revenue 
D) demand; marginal cost 
E) marginal revenue; marginal product of labor 
A) marginal cost; average fixed cost 
B) average variable cost; average total cost 
C) demand; marginal revenue 
D) demand; marginal cost 
E) marginal revenue; marginal product of labor

Question 2

Economic rent is a payment in excess of

Accepted Answer

A) average fixed cost. 
B) average variable cost. 
C) opportunity cost. 
D) explicit cost, but not necessarily implicit cost. 
E) none of the above 
A) average fixed cost. 
B) average variable cost. 
C) opportunity cost. 
D) explicit cost, but not necessarily implicit cost. 
E) none of the above

Question 3

Exhibit 23-10
  
-Refer to Exhibit 23-10. The deadweight loss triangle is what area?

Accepted Answer

A) GFC 
B) HGD 
C) GCD 
D) DCE 
E) BFG 
A) GFC 
B) HGD 
C) GCD 
D) DCE 
E) BFG

Question 4

A public franchise is a right granted

Accepted Answer

A) to one firm by another firm; for example, McDonald's Corporation grants restaurant owners a franchise to make its hamburgers. 
B) to a firm by government that prevents other firms from producing the same product or service. 
C) to a cooperative of buyers that allows the group to purchase goods at wholesale prices. 
D) by government that enables a person to engage in arbitrage. 
A) to one firm by another firm; for example, McDonald's Corporation grants restaurant owners a franchise to make its hamburgers. 
B) to a firm by government that prevents other firms from producing the same product or service. 
C) to a cooperative of buyers that allows the group to purchase goods at wholesale prices. 
D) by government that enables a person to engage in arbitrage.

Question 5

Which of the following statements is true?

Accepted Answer

A) For a monopoly firm, its marginal revenue curve and demand curve share two points in common. 
B) A monopoly firm is a price taker; it takes the price government sets. 
C) A firm that maximizes revenue automatically maximizes profit. 
D) Maximizing revenues is the same as maximizing profits only when the firm has no variable costs. 
E) a and d 
A) For a monopoly firm, its marginal revenue curve and demand curve share two points in common. 
B) A monopoly firm is a price taker; it takes the price government sets. 
C) A firm that maximizes revenue automatically maximizes profit. 
D) Maximizing revenues is the same as maximizing profits only when the firm has no variable costs. 
E) a and d

Question 6

To engage in price discrimination, it is necessary that

Accepted Answer

A) a seller be a price searcher. 
B) there be no arbitrage. 
C) a seller incur different costs for servicing different customers. 
D) a and b 
E) all of the above 
A) a seller be a price searcher. 
B) there be no arbitrage. 
C) a seller incur different costs for servicing different customers. 
D) a and b 
E) all of the above

Question 7

One of the conditions necessary for price discrimination is that the seller be a price searcher.

Accepted Answer

A) True 
 B)False

Question 8

The monopolist's demand curve is

Accepted Answer

A) upward sloping. 
B) perfectly elastic. 
C) perfectly inelastic. 
D) downward sloping. 
A) upward sloping. 
B) perfectly elastic. 
C) perfectly inelastic. 
D) downward sloping.

Question 9

Exhibit 23-6
  
-Refer to Exhibit 23-6. 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 10

Exhibit 23-1
  
-Refer to Exhibit 23-1. 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 11

Both a price taker and a price searcher maximize profits (or minimize losses) by producing the quantity of output at which __________ equals __________.

Accepted Answer

A) total revenue; total cost 
B) average total cost; price 
C) average variable cost; marginal cost 
D) marginal revenue; marginal cost 
E) marginal cost; average fixed cost 
A) total revenue; total cost 
B) average total cost; price 
C) average variable cost; marginal cost 
D) marginal revenue; marginal cost 
E) marginal cost; average fixed cost

Question 12

The U.S. Postal Service is an example of a public franchise.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the best example of a monopoly?

Accepted Answer

A) a local public utility 
B) a fast-food restaurant 
C) a department store 
D) a wheat farmer 
A) a local public utility 
B) a fast-food restaurant 
C) a department store 
D) a wheat farmer

Question 14

Exhibit 23-8
   ​
​
-Refer to Exhibit 23-8. Average total cost at the profit-maximizing level of output equals

Accepted Answer

A) $55.00. 
B) $63.33. 
C) $59.00. 
D) $54.00. 
E) There is not enough information given to answer this question. 
A) $55.00. 
B) $63.33. 
C) $59.00. 
D) $54.00. 
E) There is not enough information given to answer this question.

Question 15

Which of the following statements is false?

Accepted Answer

A) The perfectly competitive firm and the perfectly price-discriminating monopolist both exhibit resource-allocative efficiency. 
B) The perfectly competitive firm, unlike the single-price monopolist, exhibits resource-allocative efficiency. 
C) The perfectly competitive firm charges the same price for each unit of the good it sells. 
D) The perfectly price-discriminating monopolist charges the same price for each unit of the good it sells. 
A) The perfectly competitive firm and the perfectly price-discriminating monopolist both exhibit resource-allocative efficiency. 
B) The perfectly competitive firm, unlike the single-price monopolist, exhibits resource-allocative efficiency. 
C) The perfectly competitive firm charges the same price for each unit of the good it sells. 
D) The perfectly price-discriminating monopolist charges the same price for each unit of the good it sells.

Question 16

If a single-price monopolist and a perfectly price-discriminating monopolist face the same demand and cost curves, then

Accepted Answer

A) the single-price monopolist will attain resource-allocative efficiency, but the discriminating monopolist will not. 
B) the single-price monopolist will attain resource-allocative efficiency, but the discriminating monopolist may or may not, depending upon the demand for its product. 
C) the single-price monopolist will not attain resource-allocative efficiency, but the discriminating monopolist will. 
D) both the single-price and the discriminating monopolist will attain resource-allocative efficiency. 
E) neither the single-price nor the discriminating monopolist will attain resource-allocative efficiency. 
A) the single-price monopolist will attain resource-allocative efficiency, but the discriminating monopolist will not. 
B) the single-price monopolist will attain resource-allocative efficiency, but the discriminating monopolist may or may not, depending upon the demand for its product. 
C) the single-price monopolist will not attain resource-allocative efficiency, but the discriminating monopolist will. 
D) both the single-price and the discriminating monopolist will attain resource-allocative efficiency. 
E) neither the single-price nor the discriminating monopolist will attain resource-allocative efficiency.

Question 17

A natural monopoly exists when

Accepted Answer

A) a monopolist produces a product, the main component of which is a natural resource. 
B) economies of scale are so large that only one firm can survive and achieve low unit costs. 
C) a firm is the exclusive owner of a key resource necessary to produce the firm's product. 
D) there are no close substitutes for a firm's product. 
A) a monopolist produces a product, the main component of which is a natural resource. 
B) economies of scale are so large that only one firm can survive and achieve low unit costs. 
C) a firm is the exclusive owner of a key resource necessary to produce the firm's product. 
D) there are no close substitutes for a firm's product.

Question 18

Exhibit 23-3
  
-Refer to Exhibit 23-3. The profit-maximizing single-price monopolist charges price

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) P5. 
A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) P5.

Question 19

Exhibit 23-8
   ​
​
-Refer to Exhibit 23-8. A profit-maximizing single-price monopolist will produce which quantity of output?

Accepted Answer

A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
E) There is not enough information given to answer this question. 
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
E) There is not enough information given to answer this question.

Question 20

Which of the following is the best example of a barrier to entry into a monopolistic industry?

Accepted Answer

A) diminishing returns 
B) comparative advantage 
C) high price elasticity of demand 
D) a public franchise 
A) diminishing returns 
B) comparative advantage 
C) high price elasticity of demand 
D) a public franchise

Exam 23: Monopoly

For the perfectly price-discriminating monopolist, its __________ curve is the same as its __________ curve.

Economic rent is a payment in excess of

Exhibit 23-10 -Refer to Exhibit 23-10. The deadweight loss triangle is what area?

A public franchise is a right granted

Which of the following statements is true?

To engage in price discrimination, it is necessary that

One of the conditions necessary for price discrimination is that the seller be a price searcher.

The monopolist's demand curve is

Exhibit 23-6 -Refer to Exhibit 23-6. 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 23-1 -Refer to Exhibit 23-1. According to economist Gordon Tullock, what area is subject to rent seeking activity?

Both a price taker and a price searcher maximize profits (or minimize losses) by producing the quantity of output at which __________ equals __________.

The U.S. Postal Service is an example of a public franchise.

Which of the following is the best example of a monopoly?

Exhibit 23-8 ​ ​ -Refer to Exhibit 23-8. Average total cost at the profit-maximizing level of output equals

Which of the following statements is false?

If a single-price monopolist and a perfectly price-discriminating monopolist face the same demand and cost curves, then

A natural monopoly exists when

Exhibit 23-3 -Refer to Exhibit 23-3. The profit-maximizing single-price monopolist charges price

Exhibit 23-8 ​ ​ -Refer to Exhibit 23-8. A profit-maximizing single-price monopolist will produce which quantity of output?

Which of the following is the best example of a barrier to entry into a monopolistic industry?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice 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

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

For the perfectly price-discriminating monopolist, its curve is the same as its curve.

Exhibit 23-6 -Refer to Exhibit 23-6. The price and quantity of a single-price monopolist producing good X are P₀ and q_B, respectively. The marginal revenue curve is represented by

Both a price taker and a price searcher maximize profits (or minimize losses) by producing the quantity of output at which equals .

Exhibit 23-8 -Refer to Exhibit 23-8. Average total cost at the profit-maximizing level of output equals

Exhibit 23-8 -Refer to Exhibit 23-8. A profit-maximizing single-price monopolist will produce which quantity of output?