Question 1

A price discriminating monopolist charges lower prices to customers with

Accepted Answer

A)  lower supply elasticities. 
B)  higher supply elasticities. 
C)  lower willingness to pay. 
D)  higher willingness to pay. 
A)  lower supply elasticities. 
B)  higher supply elasticities. 
C)  lower willingness to pay. 
D)  higher willingness to pay.

Question 2

-The figure above shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly that charges one price to all customers, then consumer surplus is ________ and it creates a deadweight loss of ________.

Accepted Answer

A)  $800; $400 
B)  $200; $100 
C)  $400; $200 
D)  $0; $200 
A)  $800; $400 
B)  $200; $100 
C)  $400; $200 
D)  $0; $200

Question 3

If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

Accepted Answer

A)  incur an economic loss. 
B)  make zero economic profit, that is, its owners make a normal profit. 
C)  make an economic profit of $4 million. 
D)  make an economic profit of $9 million. 
A)  incur an economic loss. 
B)  make zero economic profit, that is, its owners make a normal profit. 
C)  make an economic profit of $4 million. 
D)  make an economic profit of $9 million.

Question 4

For a single-price monopolist, marginal revenue is less than price because

Accepted Answer

A)  the revenue gain from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price. 
B)  the revenue gain from the last unit sold is offset by further gains in price on units not sold at all. 
C)  total revenue always decreases as output increases. 
D)  the price does not have to be lowered on all previous units sold. 
A)  the revenue gain from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price. 
B)  the revenue gain from the last unit sold is offset by further gains in price on units not sold at all. 
C)  total revenue always decreases as output increases. 
D)  the price does not have to be lowered on all previous units sold.

Question 5

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

Accepted Answer

A)  $0. 
B)  $1 million. 
C)  $9 million. 
D)  $16 million. 
A)  $0. 
B)  $1 million. 
C)  $9 million. 
D)  $16 million.

Question 6

-West Coast Gas, Inc., is a natural gas supplier. The firm faces the demand schedule shown in the table above and cannot price discriminate. The company's fixed cost is $1,000 per month and its marginal cost is constant at $10 per thousand of cubic feet.
a) Draw the demand curve faced by West Coast Gas and the marginal revenue curve. Draw the company's marginal cost and average cost curves.
b) Is West Coast Gas a natural monopoly? Why or why not?
c) What are the firm's profit-maximizing output and price? What is the firm's economic profit per month?
d) If West Coast Gas maximizes its profit, does it also maximize total surplus? Why or why not? What is the deadweight loss (if any)?

Accepted Answer

@#IMG-DLM& a) The figure above shows the demand cu

Question 7

For a single-price monopolist, price is ________ marginal revenue.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  less than or equal to but never more than 
A)  less than 
B)  greater than 
C)  equal to 
D)  less than or equal to but never more than

Question 8

monopoly has two key features, which are

Accepted Answer

A)  barriers to entry and no close substitutes. 
B)  franchises and barriers to entry. 
C)  barriers to entry and close substitutes. 
D)  close substitutes and no barriers to entry. 
A)  barriers to entry and no close substitutes. 
B)  franchises and barriers to entry. 
C)  barriers to entry and close substitutes. 
D)  close substitutes and no barriers to entry.

Question 9

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 10

Which of the following statements is TRUE?

Accepted Answer

A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit. 
A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit.

Question 11

The social interest theory of regulation predicts that the political process will seek to minimize

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  total surplus. 
D)  deadweight loss. 
A)  producer surplus. 
B)  consumer surplus. 
C)  total surplus. 
D)  deadweight loss.

Question 12

Rent seeking through lobbying

Accepted Answer

A)  reduces deadweight loss. 
B)  uses up resources that result in additional costs to society. 
C)  results in perfect price discrimination. 
D)  results in perfectly competitive industries. 
A)  reduces deadweight loss. 
B)  uses up resources that result in additional costs to society. 
C)  results in perfect price discrimination. 
D)  results in perfectly competitive industries.

Question 13

Monopolists

Accepted Answer

A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers. 
A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers.

Question 14

-If the industry in the above figure was perfectly competitive, the level of output would

Accepted Answer

A)  be less than the single-price monopoly level of output. 
B)  be the same as the single-price monopoly level of output. 
C)  exceed the single-price monopoly level of output by 20 units per day. 
D)  exceed the single-price monopoly level of output by 60 units per day. 
A)  be less than the single-price monopoly level of output. 
B)  be the same as the single-price monopoly level of output. 
C)  exceed the single-price monopoly level of output by 20 units per day. 
D)  exceed the single-price monopoly level of output by 60 units per day.

Question 15

Which of the following is an example of natural monopoly?

Accepted Answer

A)  cellular phone companies in a large city 
B)  local water utility companies 
C)  major league sports franchises in the largest cities 
D)  All of the above are natural monopolies. 
A)  cellular phone companies in a large city 
B)  local water utility companies 
C)  major league sports franchises in the largest cities 
D)  All of the above are natural monopolies.

Question 16

Comment on the following: "A monopolist is a firm that can raise its price without experiencing a decrease in its total revenue."

Accepted Answer

This statement describes a fir

Question 17

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Accepted Answer

A) True 
 B)False

Question 18

Buying a monopoly from the existing owner does NOT ensure an economic profit because

Accepted Answer

A)  the market for monopolies is a monopoly. 
B)  competition among buyers drives up the cost of buying the firm. 
C)  profits equal zero in the long run anyway. 
D)  of the deadweight loss triangle. 
A)  the market for monopolies is a monopoly. 
B)  competition among buyers drives up the cost of buying the firm. 
C)  profits equal zero in the long run anyway. 
D)  of the deadweight loss triangle.

Question 19

Competition keeps prices lower for consumers. So why do we have patent laws?

Accepted Answer

Patent laws are necessary to promote inn

Question 20

Which of the following is a characteristic of a single-price monopoly?

Accepted Answer

A)  The firm is a price taker. 
B)  Demand is perfectly elastic. 
C)  There are many close substitutes for the firm's product. 
D)  The market price exceeds marginal revenue. 
A)  The firm is a price taker. 
B)  Demand is perfectly elastic. 
C)  There are many close substitutes for the firm's product. 
D)  The market price exceeds marginal revenue.

A price discriminating monopolist charges lower prices to customers with

-The figure above shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly that charges one price to all customers, then consumer surplus is and it creates a deadweight loss of .

If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

For a single-price monopolist, marginal revenue is less than price because

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

For a single-price monopolist, price is ________ marginal revenue.

monopoly has two key features, which are

Why are water companies considered a natural monopoly?

Which of the following statements is TRUE?

The social interest theory of regulation predicts that the political process will seek to minimize

Rent seeking through lobbying

Monopolists

-If the industry in the above figure was perfectly competitive, the level of output would

Which of the following is an example of natural monopoly?

Comment on the following: "A monopolist is a firm that can raise its price without experiencing a decrease in its total revenue."

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Buying a monopoly from the existing owner does NOT ensure an economic profit because

Competition keeps prices lower for consumers. So why do we have patent laws?

Which of the following is a characteristic of a single-price monopoly?

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

A price discriminating monopolist charges lower prices to customers with

-The figure above shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly that charges one price to all customers, then consumer surplus is ________ and it creates a deadweight loss of ________.

If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

For a single-price monopolist, marginal revenue is less than price because

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

For a single-price monopolist, price is ________ marginal revenue.

monopoly has two key features, which are

Why are water companies considered a natural monopoly?

Which of the following statements is TRUE?

The social interest theory of regulation predicts that the political process will seek to minimize

Rent seeking through lobbying

Monopolists

-If the industry in the above figure was perfectly competitive, the level of output would

Which of the following is an example of natural monopoly?

Comment on the following: "A monopolist is a firm that can raise its price without experiencing a decrease in its total revenue."

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Buying a monopoly from the existing owner does NOT ensure an economic profit because

Competition keeps prices lower for consumers. So why do we have patent laws?

Which of the following is a characteristic of a single-price monopoly?

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 for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly that charges one price to all customers, then consumer surplus is and it creates a deadweight loss of .