Question 1

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces ________ output and has a ________ price.

Accepted Answer

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

Question 2

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

Accepted Answer

A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce. 
A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce.

Question 3

A single-price monopoly causes a deadweight loss because it

Accepted Answer

A)  restricts its output so it is less than the efficient quantity. 
B)  increases the amount produced beyond the efficient quantity. 
C)  maximizes marginal revenue rather than minimizes marginal cost. 
D)  increases marginal cost. 
A)  restricts its output so it is less than the efficient quantity. 
B)  increases the amount produced beyond the efficient quantity. 
C)  maximizes marginal revenue rather than minimizes marginal cost. 
D)  increases marginal cost.

Question 4

-The figure above shows the demand curve (D) faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR), marginal cost (MC), and average cost (LRAC) curves. If Visual is regulated according to the social interest theory, it will serve ________ million households and set a price of ________ per household per month.

Accepted Answer

A)  2; $12 
B)  3; $24 
C)  4; $12 
D)  2; $36 
A)  2; $12 
B)  3; $24 
C)  4; $12 
D)  2; $36

Question 5

If the regulator wanted to maximize the total surplus in a natural monopoly market, the regulator has the firm set its price equal to its

Accepted Answer

A)  average fixed cost. 
B)  average total cost. 
C)  average variable cost. 
D)  marginal cost. 
A)  average fixed cost. 
B)  average total cost. 
C)  average variable cost. 
D)  marginal cost.

Question 6

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Accepted Answer

A) True 
 B)False

Question 7

Rent seeking

Accepted Answer

A)  increases consumer surplus. 
B)  occurs only when the firm practices perfect price discrimination. 
C)  increases deadweight loss. 
D)  results in a larger output than a competitive industry would produce. 
A)  increases consumer surplus. 
B)  occurs only when the firm practices perfect price discrimination. 
C)  increases deadweight loss. 
D)  results in a larger output than a competitive industry would produce.

Question 8

In comparison with a perfect competition, a single-price monopolist with the same costs creates a ________ consumer surplus and makes a ________ economic profit.

Accepted Answer

A)  smaller; larger 
B)  smaller; smaller 
C)  larger; larger 
D)  larger; smaller 
A)  smaller; larger 
B)  smaller; smaller 
C)  larger; larger 
D)  larger; smaller

Question 9

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

Accepted Answer

A)  the amount of producer surplus 
B)  the quantity produced 
C)  the total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly. 
A)  the amount of producer surplus 
B)  the quantity produced 
C)  the total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly.

Question 10

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. Under the terms of the deal, the companies agreed not to raise prices for the next three years. Why would the FTC require prices not to increase for three years?

Accepted Answer

A)  Compared to competition, monopolies are always worse for consumers. 
B)  Compared to competition, monopolies restrict output and charge higher prices. 
C)  Compared to competition, monopolies increase prices and output. 
D)  Compared to competition, monopolies restrict output and charge lower prices. 
A)  Compared to competition, monopolies are always worse for consumers. 
B)  Compared to competition, monopolies restrict output and charge higher prices. 
C)  Compared to competition, monopolies increase prices and output. 
D)  Compared to competition, monopolies restrict output and charge lower prices.

Question 11

-The above figure represents the demand and marginal revenue curves for Sue's Seafood, a seller of fresh fish.
a) Over what range of output is demand elastic?
b) Over what range of output is demand inelastic?
c) What price maximizes total revenue?
d) What is the demand elasticity at the revenue maximizing price?

Accepted Answer

a) Demand is elastic from 0 to 20 pounds

Question 12

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

Accepted Answer

A) True 
 B)False

Question 13

A monopoly's marginal revenue is equal to the market price of its product.

Accepted Answer

A) True 
 B)False

Question 14

-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal

Accepted Answer

A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $12 million. 
A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $12 million.

Question 15

Which of the following statements about a monopoly is FALSE?

Accepted Answer

A)  Monopolies have no barriers to entry or exit. 
B)  The good produced by a monopoly has no close substitutes. 
C)  A monopoly is the only producer of the good. 
D)  None of the above; that is, all of the above answers are true statements about a monopoly. 
A)  Monopolies have no barriers to entry or exit. 
B)  The good produced by a monopoly has no close substitutes. 
C)  A monopoly is the only producer of the good. 
D)  None of the above; that is, all of the above answers are true statements about a monopoly.

Question 16

-An efficient allocation of resources is reached in the figure above when output equals

Accepted Answer

A)  1 million. 
B)  2 million. 
C)  3 million. 
D)  4 million. 
A)  1 million. 
B)  2 million. 
C)  3 million. 
D)  4 million.

Question 17

The attempt to capture consumer surplus, producer surplus, or economic profit is called

Accepted Answer

A)  a natural monopoly. 
B)  price discrimination. 
C)  rent seeking. 
D)  gouging. 
A)  a natural monopoly. 
B)  price discrimination. 
C)  rent seeking. 
D)  gouging.

Question 18

If a natural monopoly is broken up into many smaller firms then

Accepted Answer

A)  the price will decrease. 
B)  the average total costs of production will increase. 
C)  efficiency will increase. 
D)  None of the above because it is illegal to break up a natural monopoly into smaller firms. 
A)  the price will decrease. 
B)  the average total costs of production will increase. 
C)  efficiency will increase. 
D)  None of the above because it is illegal to break up a natural monopoly into smaller firms.

Question 19

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows an average cost pricing rule?

Accepted Answer

A)  acg 
B)  degf 
C)  deg 
D)  There is no deadweight loss. 
A)  acg 
B)  degf 
C)  deg 
D)  There is no deadweight loss.

Question 20

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is ________ because when this quantity is produced, ________.

Accepted Answer

A)  efficient; marginal social benefit exceeds marginal social cost 
B)  efficient; marginal social benefit equals marginal social cost 
C)  not efficient; marginal social benefit exceeds marginal social cost 
D)  not efficient; marginal social benefit equals marginal social cost 
A)  efficient; marginal social benefit exceeds marginal social cost 
B)  efficient; marginal social benefit equals marginal social cost 
C)  not efficient; marginal social benefit exceeds marginal social cost 
D)  not efficient; marginal social benefit equals marginal social cost

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces output and has a price.

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

A single-price monopoly causes a deadweight loss because it

If the regulator wanted to maximize the total surplus in a natural monopoly market, the regulator has the firm set its price equal to its

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Rent seeking

In comparison with a perfect competition, a single-price monopolist with the same costs creates a consumer surplus and makes a economic profit.

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

A monopoly's marginal revenue is equal to the market price of its product.

-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal

Which of the following statements about a monopoly is FALSE?

-An efficient allocation of resources is reached in the figure above when output equals

The attempt to capture consumer surplus, producer surplus, or economic profit is called

If a natural monopoly is broken up into many smaller firms then

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows an average cost pricing rule?

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is because when this quantity is produced, .

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

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces ________ output and has a ________ price.

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

A single-price monopoly causes a deadweight loss because it

If the regulator wanted to maximize the total surplus in a natural monopoly market, the regulator has the firm set its price equal to its

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Rent seeking

In comparison with a perfect competition, a single-price monopolist with the same costs creates a ________ consumer surplus and makes a ________ economic profit.

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

A monopoly's marginal revenue is equal to the market price of its product.

-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal

Which of the following statements about a monopoly is FALSE?

-An efficient allocation of resources is reached in the figure above when output equals

The attempt to capture consumer surplus, producer surplus, or economic profit is called

If a natural monopoly is broken up into many smaller firms then

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows an average cost pricing rule?

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

Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces output and has a price.

In comparison with a perfect competition, a single-price monopolist with the same costs creates a consumer surplus and makes a economic profit.