Question 1

A monopolist is the sole supplier of a good or service for which there are no close substitutes.

Accepted Answer

A) True 
 B)False

Question 2

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. You can ride B. Max for $40 for the first hour, $33 for the second hour, and $26 for the third hour. An effect of this price discrimination is that

Accepted Answer

A)  consumer surplus increases. 
B)  deadweight loss increases. 
C)  consumer surplus is completely eliminated. 
D)  producer profit increases. 
A)  consumer surplus increases. 
B)  deadweight loss increases. 
C)  consumer surplus is completely eliminated. 
D)  producer profit increases.

Question 3

A natural monopoly that is regulated to set its price equal to its marginal cost

Accepted Answer

A)  incurs an economic loss. 
B)  makes zero economic profit. 
C)  makes an economic profit. 
D)  creates the maximum deadweight loss. 
A)  incurs an economic loss. 
B)  makes zero economic profit. 
C)  makes an economic profit. 
D)  creates the maximum deadweight loss.

Question 4

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

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.

Question 5

A natural monopoly

Accepted Answer

A)  is not protected by any barrier to entry. 
B)  exists because of legal barriers to entry. 
C)  is an industry in which economies of scale exist so that one firm can supply the market at the lowest possible cost. 
D)  is an industry where two or more smaller firms can supply the market at a lower cost than one big firm could. 
A)  is not protected by any barrier to entry. 
B)  exists because of legal barriers to entry. 
C)  is an industry in which economies of scale exist so that one firm can supply the market at the lowest possible cost. 
D)  is an industry where two or more smaller firms can supply the market at a lower cost than one big firm could.

Question 6

A public franchise is

Accepted Answer

A)  an exclusive right granted to a firm to supply a good or service. 
B)  a government issued license required to practice a profession. 
C)  an exclusive right granted to an inventor of a product. 
D)  a unique source of raw materials. 
A)  an exclusive right granted to a firm to supply a good or service. 
B)  a government issued license required to practice a profession. 
C)  an exclusive right granted to an inventor of a product. 
D)  a unique source of raw materials.

Question 7

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Accepted Answer

For a single-price monopolist,

Question 8

Rate of return regulation is most similar to

Accepted Answer

A)  a marginal cost pricing rule. 
B)  an average cost pricing rule. 
C)  an average variable cost pricing rule. 
D)  an inflation cost pricing rule. 
A)  a marginal cost pricing rule. 
B)  an average cost pricing rule. 
C)  an average variable cost pricing rule. 
D)  an inflation cost pricing rule.

Question 9

Price discrimination by a monopolist is less effective if the

Accepted Answer

A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold. 
A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold.

Question 10

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 11

Patents are ________ barriers to entry and public franchises are ________ barriers to entry.

Accepted Answer

A)  legal; legal 
B)  legal; natural 
C)  natural; legal 
D)  natural; natural 
A)  legal; legal 
B)  legal; natural 
C)  natural; legal 
D)  natural; natural

Question 12

A natural monopoly occurs when

Accepted Answer

A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus. 
A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus.

Question 13

If a decrease in price decreases a monopolist's total revenue, then

Accepted Answer

A)  demand is elastic. 
B)  demand is inelastic. 
C)  demand is unit elastic. 
D)  the law of demand is violated. 
A)  demand is elastic. 
B)  demand is inelastic. 
C)  demand is unit elastic. 
D)  the law of demand is violated.

Question 14

-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. Interlace's profit maximizing level of output is

Accepted Answer

A)  30,000 bottles. 
B)  50,000 bottles. 
C)  100,000 bottles. 
D)  0; that is, the firm shuts down. 
A)  30,000 bottles. 
B)  50,000 bottles. 
C)  100,000 bottles. 
D)  0; that is, the firm shuts down.

Question 15

A major difference between a single-price monopolist and a perfectly competitive firm is that the

Accepted Answer

A)  monopolist can maximize profit by setting the price of the output where demand is inelastic. 
B)  monopolist can always increase its profits by increasing the price of its output. 
C)  monopolist's marginal revenue is less than price. 
D)  monopolist is guaranteed to earn an economic profit. 
A)  monopolist can maximize profit by setting the price of the output where demand is inelastic. 
B)  monopolist can always increase its profits by increasing the price of its output. 
C)  monopolist's marginal revenue is less than price. 
D)  monopolist is guaranteed to earn an economic profit.

Question 16

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is positive if it produces between

Accepted Answer

A)  0 and 5 units. 
B)  0 and 15 units. 
C)  0 and 20 units. 
D)  5 and 20 units. 
A)  0 and 5 units. 
B)  0 and 15 units. 
C)  0 and 20 units. 
D)  5 and 20 units.

Question 17

-Which area in the above figure shows the producer surplus at the price and quantity that would be set by a single-price monopoly?

Accepted Answer

A)  C + D 
B)  C + D + E 
C)  C + D + F + G 
D)  C + D + F + G + I 
A)  C + D 
B)  C + D + E 
C)  C + D + F + G 
D)  C + D + F + G + I

Question 18

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

Accepted Answer

A)  area FHIL 
B)  area GHJM 
C)  area IJH 
D)  area LJK 
A)  area FHIL 
B)  area GHJM 
C)  area IJH 
D)  area LJK

Question 19

A single-price monopolist determines

Accepted Answer

A)  its output but not its price. 
B)  its price but not its output. 
C)  both its output and its price. 
D)  neither its output nor its price. 
A)  its output but not its price. 
B)  its price but not its output. 
C)  both its output and its price. 
D)  neither its output nor its price.

Question 20

-Prime Pharmaceuticals has developed a new asthma medicine, for which 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 Prime Pharmaceuticals operates as a single-price monopoly, then there will be a deadweight loss equal to

Accepted Answer

A)  $24 million. 
B)  zero. 
C)  $16 million. 
D)  $32 million. 
A)  $24 million. 
B)  zero. 
C)  $16 million. 
D)  $32 million.

A monopolist is the sole supplier of a good or service for which there are no close substitutes.

A natural monopoly that is regulated to set its price equal to its marginal cost

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

A natural monopoly

A public franchise is

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Rate of return regulation is most similar to

Price discrimination by a monopolist is less effective if the

What are the conditions that define a monopoly?

Patents are barriers to entry and public franchises are barriers to entry.

A natural monopoly occurs when

If a decrease in price decreases a monopolist's total revenue, then

-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. Interlace's profit maximizing level of output is

A major difference between a single-price monopolist and a perfectly competitive firm is that the

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is positive if it produces between

-Which area in the above figure shows the producer surplus at the price and quantity that would be set by a single-price monopoly?

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

A single-price monopolist determines

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 monopolist is the sole supplier of a good or service for which there are no close substitutes.

A natural monopoly that is regulated to set its price equal to its marginal cost

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

A natural monopoly

A public franchise is

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Rate of return regulation is most similar to

Price discrimination by a monopolist is less effective if the

What are the conditions that define a monopoly?

Patents are ________ barriers to entry and public franchises are ________ barriers to entry.

A natural monopoly occurs when

If a decrease in price decreases a monopolist's total revenue, then

-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. Interlace's profit maximizing level of output is

A major difference between a single-price monopolist and a perfectly competitive firm is that the

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is positive if it produces between

-Which area in the above figure shows the producer surplus at the price and quantity that would be set by a single-price monopoly?

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

A single-price monopolist determines

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

Patents are barriers to entry and public franchises are barriers to entry.