Question 1

-If the natural monopoly shown in the figure above is unregulated, it will sell

Accepted Answer

A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units. 
A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units. A

Question 2

Monopolists can make an economic profit in the long-run because of barriers to entry.

Accepted Answer

A) True 
 B)False  True

Question 3

A patent grants

Accepted Answer

A)  a guarantee of quality to consumers. 
B)  the right to practice a profession. 
C)  an exclusive right to an inventor of a product. 
D)  control over a unique source or supply of raw materials. 
A)  a guarantee of quality to consumers. 
B)  the right to practice a profession. 
C)  an exclusive right to an inventor of a product. 
D)  control over a unique source or supply of raw materials. C

Question 4

-In the figure above, the curve labeled "X" can be a

Accepted Answer

A)  monopoly's demand curve. 
B)  monopoly's marginal revenue curve. 
C)  perfectly competitive firm's demand curve. 
D)  perfectly competitive firm's marginal revenue curve. 
A)  monopoly's demand curve. 
B)  monopoly's marginal revenue curve. 
C)  perfectly competitive firm's demand curve. 
D)  perfectly competitive firm's marginal revenue curve.

Question 5

If an average cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Accepted Answer

A)  zero. 
B)  $150. 
C)  $50. 
D)  $250. 
A)  zero. 
B)  $150. 
C)  $50. 
D)  $250.

Question 6

-Prime Pharmaceuticals has developed a new asthma medicine, for it has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if it is a single-price monopoly, Prime Pharmaceuticals will produce ________ inhalers and set a price of ________ for each inhaler.

Accepted Answer

A)  16 million; $2 
B)  10 million; $5 
C)  8 million; $6 
D)  8 million; $2 
A)  16 million; $2 
B)  10 million; $5 
C)  8 million; $6 
D)  8 million; $2

Question 7

Natural monopolies occur when there are

Accepted Answer

A)  large diseconomies of scale. 
B)  external economies. 
C)  large economies of scale. 
D)  natural resources involved. 
A)  large diseconomies of scale. 
B)  external economies. 
C)  large economies of scale. 
D)  natural resources involved.

Question 8

-Anastasia's Gold Mines, a single-price monopoly, faces the demand schedule shown in the first table above and has the cost schedule shown in the second table above.
a) Calculate Anastasia's marginal revenue schedule. In a figure, draw the demand curve and the marginal revenue curve.
b) Calculate Anastasia's marginal cost and average total cost schedules. In the same figure that you drew the demand and marginal revenue curves, draw the marginal and the average total cost curves.
c) What are Anastasia's profit-maximizing output and price? What is Anastasia's economic profit? Explain your answer.
d) Does Anastasia's Gold Mines use resources efficiently? Explain your answer.

Accepted Answer

@#IMG-DLM& a) Anastasia's marginal revenue schedul

Question 9

If an average cost pricing rule is imposed on the firm in the figure above, the price will be

Accepted Answer

A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit. 
A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit.

Question 10

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

Accepted Answer

A)  $4 
B)  $7 
C)  $9 
D)  $11 
A)  $4 
B)  $7 
C)  $9 
D)  $11

Question 11

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day.

Question 12

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Accepted Answer

A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units. 
A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units.

Question 13

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. If you are a member of WaveHouse, you can ride for half the price that a non-member pays. This is an example of

Accepted Answer

A)  price discrimination among groups of buyers. 
B)  price discrimination among units of a good. 
C)  rent seeking behavior. 
D)  monopoly regulation. 
A)  price discrimination among groups of buyers. 
B)  price discrimination among units of a good. 
C)  rent seeking behavior. 
D)  monopoly regulation.

Question 14

A profit maximizing single-price monopolist charges a price equal to

Accepted Answer

A)  average total cost. 
B)  marginal revenue. 
C)  the highest price consumers are willing to pay for the profit maximizing quantity. 
D)  the price necessary for the firm to earn a normal return on its investment. 
A)  average total cost. 
B)  marginal revenue. 
C)  the highest price consumers are willing to pay for the profit maximizing quantity. 
D)  the price necessary for the firm to earn a normal return on its investment.

Question 15

A deadweight loss occurs whenever

Accepted Answer

A)  the total benefit of a good does not equal its total cost. 
B)  the marginal social benefit of a good does not equal its marginal social cost. 
C)  there is perfect price discrimination. 
D)  there is no consumer surplus. 
A)  the total benefit of a good does not equal its total cost. 
B)  the marginal social benefit of a good does not equal its marginal social cost. 
C)  there is perfect price discrimination. 
D)  there is no consumer surplus.

Question 16

-Mountain Water is a natural monopoly. The government decides to regulate Mountain Water by imposing a marginal cost pricing rule. The figure above shows the demand for Mountain Water. Marginal cost is $0.20 per bottle. The price of a bottle of Mountain Water is ________, and ________ thousand bottles are sold per month.

Accepted Answer

A)  $0.20; 400 
B)  $0.50; 250 
C)  $0.20; 500 
D)  $1.00; 500 
A)  $0.20; 400 
B)  $0.50; 250 
C)  $0.20; 500 
D)  $1.00; 500

Question 17

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

Accepted Answer

A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct. 
A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct.

Question 18

A natural monopoly regulated with an average cost pricing rule is

Accepted Answer

A)  efficient and incurs an economic loss. 
B)  inefficient and makes zero economic profit. 
C)  inefficient and makes an economic profit. 
D)  efficient and makes zero economic profit. 
A)  efficient and incurs an economic loss. 
B)  inefficient and makes zero economic profit. 
C)  inefficient and makes an economic profit. 
D)  efficient and makes zero economic profit.

Question 19

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

Accepted Answer

A)  average cost pricing rule 
B)  rate of return regulation 
C)  price cap regulation 
D)  None of the above encourages cost cutting. 
A)  average cost pricing rule 
B)  rate of return regulation 
C)  price cap regulation 
D)  None of the above encourages cost cutting.

Question 20

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

Accepted Answer

A)  P > MC 
B)  P > MR 
C)  MR = MC 
D)  All of the above are always true. 
A)  P > MC 
B)  P > MR 
C)  MR = MC 
D)  All of the above are always true.

-If the natural monopoly shown in the figure above is unregulated, it will sell

Monopolists can make an economic profit in the long-run because of barriers to entry.

A patent grants

-In the figure above, the curve labeled "X" can be a

If an average cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Natural monopolies occur when there are

If an average cost pricing rule is imposed on the firm in the figure above, the price will be

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

A profit maximizing single-price monopolist charges a price equal to

A deadweight loss occurs whenever

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce units and set a price of per unit.

A natural monopoly regulated with an average cost pricing rule is

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 13: Monopoly

-If the natural monopoly shown in the figure above is unregulated, it will sell

Monopolists can make an economic profit in the long-run because of barriers to entry.

A patent grants

-In the figure above, the curve labeled "X" can be a

If an average cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Natural monopolies occur when there are

If an average cost pricing rule is imposed on the firm in the figure above, the price will be

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

A profit maximizing single-price monopolist charges a price equal to

A deadweight loss occurs whenever

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

A natural monopoly regulated with an average cost pricing rule is

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce units and set a price of per unit.