Question 1

What are the fundamental differences between the perfect competition and monopoly market structures?

Accepted Answer

Under perfect competition, many firms pr

Question 2

The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from:

Accepted Answer

A)  government restrictions. 
B)  location. 
C)  sunk costs. 
D)  ownership of scarce inputs. 
A)  government restrictions. 
B)  location. 
C)  sunk costs. 
D)  ownership of scarce inputs.

Question 3

Amtrak is a publicly owned company that provides rail service. This means that Amtrak's prices tend to be _____ than if it were a private company, and the quality of service tends to be _____ than if it were a private company.

Accepted Answer

A)  higher; worse 
B)  higher; better 
C)  lower; worse 
D)  lower; better 
A)  higher; worse 
B)  higher; better 
C)  lower; worse 
D)  lower; better

Question 4

Use the following to answer questions:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a monopolist, producer surplus is:

Accepted Answer

A)  $3,200. 
B)  $6,400. 
C)  $1,000. 
D)  $1,600. 
A)  $3,200. 
B)  $6,400. 
C)  $1,000. 
D)  $1,600.

Question 5

When a monopolist practices price discrimination, consumer surplus will be higher than the consumer surplus in a single-price monopoly.

Accepted Answer

A) True 
 B)False

Question 6

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 much is deadweight loss?

Accepted Answer

A)  $0 
B)  $320 
C)  $160 
D)  $500 
A)  $0 
B)  $320 
C)  $160 
D)  $500

Question 7

If the government allowed only one airline to serve the entire U.S. market, there would be a _____ loss associated with _____ efficiency in the airline industry.

Accepted Answer

A)  marginal; reduced 
B)  deadweight; reduced 
C)  total; increased 
D)  deadweight; increased 
A)  marginal; reduced 
B)  deadweight; reduced 
C)  total; increased 
D)  deadweight; increased

Question 8

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 the water works is unregulated and maximizes profit, consumer surplus will be:

Accepted Answer

A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800. 
A)  $6,400. 
B)  $3,200. 
C)  $1,600. 
D)  $800.

Question 9

Use the following to answer questions:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for competitor perfectly competitive industry, consumer surplus is:

Accepted Answer

A)  $0. 
B)  $6,400. 
C)  $1,600. 
D)  $3,200. 
A)  $0. 
B)  $6,400. 
C)  $1,600. 
D)  $3,200.

Question 10

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

Accepted Answer

A)  the firm can still make an economic profit. 
B)  the firm will earn only a zero economic profit. 
C)  efficiency in allocation will be less. 
D)  the firm will need subsidies to stay in business. 
A)  the firm can still make an economic profit. 
B)  the firm will earn only a zero economic profit. 
C)  efficiency in allocation will be less. 
D)  the firm will need subsidies to stay in business.

Question 11

A firm that faces a downward-sloping demand curve is a:

Accepted Answer

A)  price setter. 
B)  quantity minimizer. 
C)  quantity taker. 
D)  price taker. 
A)  price setter. 
B)  quantity minimizer. 
C)  quantity taker. 
D)  price taker.

Question 12

The advantage of public ownership of a monopoly is that prices can be based on efficiency rather than profit maximization.

Accepted Answer

A) True 
 B)False

Question 13

In monopoly:

Accepted Answer

A)  a basic condition for efficiency is violated because P > MC. 
B)  consumers are confronted with a price that is lower than marginal cost. 
C)  consumers will buy more of the good than is economically efficient. 
D)  consumers are confronted with a price that is lower than average total cost. 
A)  a basic condition for efficiency is violated because P > MC. 
B)  consumers are confronted with a price that is lower than marginal cost. 
C)  consumers will buy more of the good than is economically efficient. 
D)  consumers are confronted with a price that is lower than average total cost.

Question 14

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, the water works will:

Accepted Answer

A)  earn profits. 
B)  break even. 
C)  incur losses. 
D)  have a large producer surplus. 
A)  earn profits. 
B)  break even. 
C)  incur losses. 
D)  have a large producer surplus.

Question 15

In contrast with perfect competition, a monopolist:

Accepted Answer

A)  produces more at a lower price. 
B)  produces where MR > MC, and a perfectly competitively firm produces where P = MC. 
C)  may have economic profits in the long run. 
D)  earns zero economic profits in the long run. 
A)  produces more at a lower price. 
B)  produces where MR > MC, and a perfectly competitively firm produces where P = MC. 
C)  may have economic profits in the long run. 
D)  earns zero economic profits in the long run.

Question 16

Assume a monopoly is currently earning economic profits. If a change in fixed cost raises average total cost above the demand curve:

Accepted Answer

A)  price and output will remain unchanged. 
B)  more monopolies will enter. 
C)  the monopoly will go out of business. 
D)  marginal cost will be greater than marginal revenue. 
A)  price and output will remain unchanged. 
B)  more monopolies will enter. 
C)  the monopoly will go out of business. 
D)  marginal cost will be greater than marginal revenue.

Question 17

A monopolist is likely to produce _____ and charge _____ than a comparable perfectly competitive firm.

Accepted Answer

A)  more; more 
B)  less; more 
C)  more; less 
D)  less; less 
A)  more; more 
B)  less; more 
C)  more; less 
D)  less; less

Question 18

Use the following to answer question:
Figure: The Monopolist II  
-(Figure: The Monopolist II) Look at the figure The Monopolist II. The deadweight loss associated with this monopoly can be measured as the area:

Accepted Answer

A)  0.5(P1 - P2)(Q2 - Q1). 
B)  0.5 (P2 - P4)(Q4 - Q2). 
C)  0.5 (P1 - P3)Q3. 
D)  0.5 (P1 - P3)Q2. 
A)  0.5(P1 - P2)(Q2 - Q1). 
B)  0.5 (P2 - P4)(Q4 - Q2). 
C)  0.5 (P1 - P3)Q3. 
D)  0.5 (P1 - P3)Q2.

Question 19

Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _____ to increase and _____ to decrease after the breakup.

Accepted Answer

A)  producer surplus; consumer surplus and total surplus 
B)  consumer surplus; producer surplus and total surplus 
C)  consumer surplus and total surplus; producer surplus 
D)  producer surplus and total surplus; consumer surplus 
A)  producer surplus; consumer surplus and total surplus 
B)  consumer surplus; producer surplus and total surplus 
C)  consumer surplus and total surplus; producer surplus 
D)  producer surplus and total surplus; consumer surplus

Question 20

In the short run, a monopoly will stop producing if:

Accepted Answer

A)  P  MR. 
D)  P > ATC. 
A)  P  MR. 
D)  P > ATC.

What are the fundamental differences between the perfect competition and monopoly market structures?

The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from:

Amtrak is a publicly owned company that provides rail service. This means that Amtrak's prices tend to be _ than if it were a private company, and the quality of service tends to be _ than if it were a private company.

When a monopolist practices price discrimination, consumer surplus will be higher than the consumer surplus in a single-price monopoly.

If the government allowed only one airline to serve the entire U.S. market, there would be a _ loss associated with _ efficiency in the airline industry.

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 the water works is unregulated and maximizes profit, consumer surplus will be:

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

A firm that faces a downward-sloping demand curve is a:

The advantage of public ownership of a monopoly is that prices can be based on efficiency rather than profit maximization.

In monopoly:

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, the water works will:

In contrast with perfect competition, a monopolist:

Assume a monopoly is currently earning economic profits. If a change in fixed cost raises average total cost above the demand curve:

A monopolist is likely to produce _ and charge _ than a comparable perfectly competitive firm.

Use the following to answer question: Figure: The Monopolist II -(Figure: The Monopolist II) Look at the figure The Monopolist II. The deadweight loss associated with this monopoly can be measured as the area:

Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _ to increase and _ to decrease after the breakup.

In the short run, a monopoly will stop producing if:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 13: Monopoly

What are the fundamental differences between the perfect competition and monopoly market structures?

The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from:

Amtrak is a publicly owned company that provides rail service. This means that Amtrak's prices tend to be _____ than if it were a private company, and the quality of service tends to be _____ than if it were a private company.

When a monopolist practices price discrimination, consumer surplus will be higher than the consumer surplus in a single-price monopoly.

If the government allowed only one airline to serve the entire U.S. market, there would be a _____ loss associated with _____ efficiency in the airline industry.

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 the water works is unregulated and maximizes profit, consumer surplus will be:

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:

A firm that faces a downward-sloping demand curve is a:

The advantage of public ownership of a monopoly is that prices can be based on efficiency rather than profit maximization.

In monopoly:

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, the water works will:

In contrast with perfect competition, a monopolist:

Assume a monopoly is currently earning economic profits. If a change in fixed cost raises average total cost above the demand curve:

A monopolist is likely to produce _____ and charge _____ than a comparable perfectly competitive firm.

Use the following to answer question: Figure: The Monopolist II -(Figure: The Monopolist II) Look at the figure The Monopolist II. The deadweight loss associated with this monopoly can be measured as the area:

Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _____ to increase and _____ to decrease after the breakup.

In the short run, a monopoly will stop producing if:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Amtrak is a publicly owned company that provides rail service. This means that Amtrak's prices tend to be _ than if it were a private company, and the quality of service tends to be _ than if it were a private company.

If the government allowed only one airline to serve the entire U.S. market, there would be a _ loss associated with _ efficiency in the airline industry.

A monopolist is likely to produce _ and charge _ than a comparable perfectly competitive firm.

Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _ to increase and _ to decrease after the breakup.