Question 1

An unregulated monopoly will

Accepted Answer

A)  flood the market with goods to deter entry. 
B)  produce only where marginal revenue is zero. 
C)  produce in the inelastic range of its demand curve. 
D)  produce in the elastic range of its demand curve. 
A)  flood the market with goods to deter entry. 
B)  produce only where marginal revenue is zero. 
C)  produce in the inelastic range of its demand curve. 
D)  produce in the elastic range of its demand curve.

Question 2

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

Accepted Answer

A)  0 per week 
B)  10 per week 
C)  20 per week 
D)  30 per week 
A)  0 per week 
B)  10 per week 
C)  20 per week 
D)  30 per week

Question 3

-Roxie's Movie Theatre has a monopoly and discovers that at $12 a movie, no one is buying movie tickets during weekdays. Roxie's conducts a survey and the table above reveals the results of the survey. Roxie decides to price discriminate between weekend and weekday moviegoers. The marginal cost of a showing a movie is $6. Roxie's charges ________ on weekdays and ________ on weekends.

Accepted Answer

A)  $9; $12 
B)  $6; $15 
C)  $6; $18 
D)  $3; $12 
A)  $9; $12 
B)  $6; $15 
C)  $6; $18 
D)  $3; $12

Question 4

-In the figure above, the total revenue of a perfectly price-discriminating monopolist at the profit-maximizing output is equal to the area of

Accepted Answer

A)  0aij. 
B)  0dgh. 
C)  aci. 
D)  obeij. 
A)  0aij. 
B)  0dgh. 
C)  aci. 
D)  obeij.

Question 5

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then total surplus will be

Accepted Answer

A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million. 
A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million.

Question 6

Compared to a competitive industry, a monopoly transfers

Accepted Answer

A)  deadweight loss away from producers to consumers. 
B)  deadweight loss away from consumers to producers. 
C)  producer surplus to consumers. 
D)  consumer surplus to producers. 
A)  deadweight loss away from producers to consumers. 
B)  deadweight loss away from consumers to producers. 
C)  producer surplus to consumers. 
D)  consumer surplus to producers.

Question 7

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using an average cost pricing rule, the

Question 8

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces ________ output and has a ________ price.

Accepted Answer

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

Question 9

Which of the following is definitely NOT an example of a natural monopoly?

Accepted Answer

A)  local water distribution companies 
B)  urban rail services 
C)  local electric power and gas distribution companies 
D)  urban retail stores 
A)  local water distribution companies 
B)  urban rail services 
C)  local electric power and gas distribution companies 
D)  urban retail stores

Question 10

If a monopolist is maximizing profits, then it is producing an amount of output so that

Accepted Answer

A)  MR = ATC. 
B)  MC = AVC. 
C)  MR = TC. 
D)  MR = MC. 
A)  MR = ATC. 
B)  MC = AVC. 
C)  MR = TC. 
D)  MR = MC.

Question 11

Patents encourage invention by

Accepted Answer

A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  allowing patent owners to make an economic profit. 
D)  preventing inventors from working on the same project. 
A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  allowing patent owners to make an economic profit. 
D)  preventing inventors from working on the same project.

Question 12

-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 an average cost pricing rule, it will serve ________ million households and set a price of ________ per household per month.

Accepted Answer

A)  1; $48 
B)  4; $12 
C)  2; $36 
D)  3; $24 
A)  1; $48 
B)  4; $12 
C)  2; $36 
D)  3; $24

Question 13

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

Accepted Answer

A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss 
A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss

Question 14

Which of the following is necessary for a monopolist to price discriminate between groups?

Accepted Answer

A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate. 
A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate.

Question 15

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is

Accepted Answer

A)  $30 and 20,000 household are served. 
B)  $10 and 40,000 household are served. 
C)  $10 and 20,000 household are served. 
D)  $20 and 30,000 households are served. 
A)  $30 and 20,000 household are served. 
B)  $10 and 40,000 household are served. 
C)  $10 and 20,000 household are served. 
D)  $20 and 30,000 households are served.

Question 16

The primary reason why a monopoly can make a long-run economic profit is the existence of

Accepted Answer

A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers. 
A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers.

Question 17

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

Accepted Answer

A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit. 
A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit.

Question 18

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce

Accepted Answer

A)  8 million units and set a price of $21 per unit. 
B)  12 million units and set a price of $18 per unit. 
C)  16 million units and set a price of $16 per unit. 
D)  nothing unless the government provides subsidies to cover its losses. 
A)  8 million units and set a price of $21 per unit. 
B)  12 million units and set a price of $18 per unit. 
C)  16 million units and set a price of $16 per unit. 
D)  nothing unless the government provides subsidies to cover its losses.

Question 19

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

Accepted Answer

Efficiency has nothing to do with who ge

Question 20

-If the firm in the figure above is unregulated, the consumer surplus will be

Accepted Answer

A)  zero. 
B)  $100. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $100. 
C)  $400. 
D)  $200.

An unregulated monopoly will

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

-In the figure above, the total revenue of a perfectly price-discriminating monopolist at the profit-maximizing output is equal to the area of

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then total surplus will be

Compared to a competitive industry, a monopoly transfers

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces output and has a price.

Which of the following is definitely NOT an example of a natural monopoly?

If a monopolist is maximizing profits, then it is producing an amount of output so that

Patents encourage invention by

Under an average cost pricing rule, a regulated natural monopoly and there is .

Which of the following is necessary for a monopolist to price discriminate between groups?

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is

The primary reason why a monopoly can make a long-run economic profit is the existence of

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

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

-If the firm in the figure above is unregulated, the consumer surplus will be

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

An unregulated monopoly will

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

-In the figure above, the total revenue of a perfectly price-discriminating monopolist at the profit-maximizing output is equal to the area of

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then total surplus will be

Compared to a competitive industry, a monopoly transfers

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces ________ output and has a ________ price.

Which of the following is definitely NOT an example of a natural monopoly?

If a monopolist is maximizing profits, then it is producing an amount of output so that

Patents encourage invention by

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

Which of the following is necessary for a monopolist to price discriminate between groups?

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is

The primary reason why a monopoly can make a long-run economic profit is the existence of

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

-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does NOT inflate its costs, then the firm will produce

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

-If the firm in the figure above is unregulated, the consumer surplus will be

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

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces output and has a price.

Under an average cost pricing rule, a regulated natural monopoly and there is .