Exam 13: Monopoly

The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a _____ demand for bus service than other passengers.

If a monopoly market structure is transformed to a perfectly competitive one, price will _____ and output will _____.

A natural monopoly has increasing returns to scale, so that a large producer has a relatively low average total cost.

A monopoly is most likely to be temporary if the monopoly power is derived from:

If a monopolist is producing a quantity that generates MC > MR, then profit:

Use the following to answer questions: Figure: Demand, Revenue, and Cost Curves -(Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government wanted to regulate Figglenuts-R-Us such that the entire deadweight loss would be eliminated in the short run, it would impose a price ceiling of:

When a monopolist practices price discrimination as opposed to setting a single price, efficiency decreases.

Which of the following is TRUE?

Use the following to answer questions: Figure: Monopoly Model -(Figure: Monopoly Model) Look at the figure Monopoly Model. When the firm is in equilibrium (that is, maximizing its economic profit), its total revenue is the area of rectangle:

Use the following to answer questions: -(Table: Demand and Total Cost) Look at the table Demand and Total Cost. Lenoia runs a natural monopoly producing electricity for a small mountain village. The accompanying table shows Lenoia's demand and total cost of producing electricity. The maximum profit Lenoia can make is:

The government can reduce the inefficiency associated with a monopoly through a system of patents and copyrights.

In a monopoly in the long run:

If large fixed costs result in ATC falling as output increases and this occurs over the relevant range of output, this industry is a:

Which of the following is NOT an example of price discrimination?

Use the following to answer question: Figure: The Monopolist III -(Figure: The Monopolist III) Look at the figure The Monopolist III. If this monopolist profit-maximizes, it will produce _____ units and charge a price equal to _____. Its producer surplus will be _____, its consumer surplus will be _____, and the deadweight loss is _____.

A monopoly responds to a decrease in marginal cost by _____ price and _____ output.

A monopoly can choose the price or it can choose the quantity, but it cannot choose price and quantity independent of each other.

Use the following to answer questions: Figure: PPV -(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is in a perfectly competitive industry, how many subscriptions will it sell?

Use the following to answer questions: Figure: Water Works -(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators require the water works to charge the price that eliminates deadweight loss, consumer surplus will be:

The demand curve facing a monopolist is: