Question 1

-A single-price monopolist has the demand and marginal cost schedules given in the above table. What is the profit-maximizing level of output and price?

Accepted Answer

The profit-maximizing output i

Question 2

While smoking is on the decline in the United States, China is still puffing away madly. That's not because the government is eager to protect its citizens from the hazards of smoking. It's because China is eager to protect its own tobacco industry which is a state monopoly. Why did China announce in 2009 that it won't allow foreign companies to build new cigarette factories or enter joint ventures?

Accepted Answer

A)  because China is concerned about the negative effects of smoking 
B)  because China wants to protect the economic profits its state monopoly makes 
C)  because China wants to protect jobs 
D)  because China regulates the tobacco industry 
A)  because China is concerned about the negative effects of smoking 
B)  because China wants to protect the economic profits its state monopoly makes 
C)  because China wants to protect jobs 
D)  because China regulates the tobacco industry

Question 3

-In the above figure, which area is the deadweight loss from a single-price monopoly?

Accepted Answer

A)  E 
B)  E + H 
C)  E + H + K 
D)  E + H + K + J 
A)  E 
B)  E + H 
C)  E + H + K 
D)  E + H + K + J

Question 4

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

Accepted Answer

A)  h. 
B)  j. 
C)  k. 
D)  none of the above. 
A)  h. 
B)  j. 
C)  k. 
D)  none of the above.

Question 5

A price cap regulation

Accepted Answer

A)  is illegal. 
B)  is a price floor. 
C)  is a price ceiling. 
D)  encourages a firm to operate inefficiently. 
A)  is illegal. 
B)  is a price floor. 
C)  is a price ceiling. 
D)  encourages a firm to operate inefficiently.

Question 6

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

Accepted Answer

A)  rectangle 0heb. 
B)  triangle abe. 
C)  triangle eig. 
D)  rectangle 0hgd. 
A)  rectangle 0heb. 
B)  triangle abe. 
C)  triangle eig. 
D)  rectangle 0hgd.

Question 7

A monopolist can set any price it wants. So why does it still produce at a point where MC=MR, just like a perfectly competitive firm?

Accepted Answer

The point where MC = MR maximizes any fi

Question 8

-For the single-price monopoly shown in the figure above, the deadweight loss is

Accepted Answer

A)  zero. 
B)  between $0 and $10. 
C)  between $10.01 and $20. 
D)  more than $20.01. 
A)  zero. 
B)  between $0 and $10. 
C)  between $10.01 and $20. 
D)  more than $20.01.

Question 9

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

Accepted Answer

A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms. 
A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms.

Question 10

-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 consumer surplus will be

Accepted Answer

A)  $192 million. 
B)  $108 million. 
C)  $216 million. 
D)  $60 million. 
A)  $192 million. 
B)  $108 million. 
C)  $216 million. 
D)  $60 million.

Question 11

"Price discrimination allows a monopolist to increase his or her economic profits by capturing part of the consumer surplus and turning it into economic profit." Is the previous statement correct or incorrect? If the statement is correct, why is it important in understanding firms' behaviors? If it is incorrect, why is it incorrect?

Accepted Answer

The statement is correct. The statement

Question 12

Patents create monopolies by restricting

Accepted Answer

A)  demand. 
B)  prices. 
C)  entry. 
D)  profit. 
A)  demand. 
B)  prices. 
C)  entry. 
D)  profit.

Question 13

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Accepted Answer

Marginal cost pricing sets the price equ

Question 14

A monopoly is best defined as a firm that

Accepted Answer

A)  produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service. 
B)  purchases its resources from only one supplier because of a barrier preventing it from buying from other suppliers. 
C)  produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service. 
D)  cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price. 
A)  produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service. 
B)  purchases its resources from only one supplier because of a barrier preventing it from buying from other suppliers. 
C)  produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service. 
D)  cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price.

Question 15

-The above figure shows the demand and cost curves for a monopolist. What is the maximum economic profit this firm can make?

Accepted Answer

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

Question 16

What condition must exist for a monopolist to effectively price discriminate?

Accepted Answer

A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible. 
A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible.

Question 17

A single-price monopoly will set its price according to which of the following rules?

Accepted Answer

A)  P = MR and MR = MC 
B)  P = MC where the MC curve crosses the demand curve 
C)  P = MR where the MR curve crosses the demand curve 
D)  None of the above answers is correct. 
A)  P = MR and MR = MC 
B)  P = MC where the MC curve crosses the demand curve 
C)  P = MR where the MR curve crosses the demand curve 
D)  None of the above answers is correct.

Question 18

-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 price is ________ per bottle.

Accepted Answer

A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar 
A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar

Question 19

Compared to a single-price monopoly, the output of a perfectly competitive market with the same costs

Accepted Answer

A)  is more than the monopoly's output. 
B)  is the same as the monopoly's output. 
C)  is less than the monopoly's output. 
D)  could be more than, less than, or equal to the monopoly's output. 
A)  is more than the monopoly's output. 
B)  is the same as the monopoly's output. 
C)  is less than the monopoly's output. 
D)  could be more than, less than, or equal to the monopoly's output.

Question 20

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

Accepted Answer

A)  Price will decrease and quantity will increase. 
B)  Price will increase and quantity will decrease. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease. 
A)  Price will decrease and quantity will increase. 
B)  Price will increase and quantity will decrease. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease.

-A single-price monopolist has the demand and marginal cost schedules given in the above table. What is the profit-maximizing level of output and price?

-In the above figure, which area is the deadweight loss from a single-price monopoly?

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

A price cap regulation

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

A monopolist can set any price it wants. So why does it still produce at a point where MC=MR, just like a perfectly competitive firm?

-For the single-price monopoly shown in the figure above, the deadweight loss is

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

-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 consumer surplus will be

Patents create monopolies by restricting

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

A monopoly is best defined as a firm that

-The above figure shows the demand and cost curves for a monopolist. What is the maximum economic profit this firm can make?

What condition must exist for a monopolist to effectively price discriminate?

A single-price monopoly will set its price according to which of the following rules?

-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 price is ________ per bottle.

Compared to a single-price monopoly, the output of a perfectly competitive market with the same costs

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

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 single-price monopolist has the demand and marginal cost schedules given in the above table. What is the profit-maximizing level of output and price?

-In the above figure, which area is the deadweight loss from a single-price monopoly?

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

A price cap regulation

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

A monopolist can set any price it wants. So why does it still produce at a point where MC=MR, just like a perfectly competitive firm?

-For the single-price monopoly shown in the figure above, the deadweight loss is

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

-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 consumer surplus will be

Patents create monopolies by restricting

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

A monopoly is best defined as a firm that

-The above figure shows the demand and cost curves for a monopolist. What is the maximum economic profit this firm can make?

What condition must exist for a monopolist to effectively price discriminate?

A single-price monopoly will set its price according to which of the following rules?

-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 price is ________ per bottle.

Compared to a single-price monopoly, the output of a perfectly competitive market with the same costs

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

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