Question 1

Which of the following is NOT a characteristic of a monopoly?

Accepted Answer

A)  a single firm 
B)  no close substitutes for the product produced 
C)  barriers to entry 
D)  easy entry and exit 
A)  a single firm 
B)  no close substitutes for the product produced 
C)  barriers to entry 
D)  easy entry and exit

Question 2

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

Accepted Answer

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

Question 3

-In the figure above, the curve labeled "W" can be a

Accepted Answer

A)  monopoly's demand curve. 
B)  monopoly's marginal revenue curve. 
C)  perfectly competitive firm's demand curve. 
D)  perfectly competitive firm's marginal revenue curve. 
A)  monopoly's demand curve. 
B)  monopoly's marginal revenue curve. 
C)  perfectly competitive firm's demand curve. 
D)  perfectly competitive firm's marginal revenue curve.

Question 4

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $16.00 per day. 
D)  $32.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $16.00 per day. 
D)  $32.00 per day.

Question 5

In order to maximize its profit, a single-price monopoly always produces output in the inelastic range of the demand for its product.

Accepted Answer

A) True 
 B)False

Question 6

Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Accepted Answer

Price discrimination helps businesses ca

Question 7

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, there is a deadweight loss in the market and the firm might need a government subsidy to survive.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT necessarily true for a profit-maximizing single-price monopolist?

Accepted Answer

A)  P > ATC 
B)  P > MC 
C)  P > MR 
D)  MR = MC 
A)  P > ATC 
B)  P > MC 
C)  P > MR 
D)  MR = MC

Question 9

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

Accepted Answer

Price cap regulation is intended to moti

Question 10

If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

Accepted Answer

A)  zero. 
B)  $450. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $450. 
C)  $400. 
D)  $200.

Question 11

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals

Accepted Answer

A)  $10,000. 
B)  $20,000. 
C)  $45,000. 
D)  $40,000. 
A)  $10,000. 
B)  $20,000. 
C)  $45,000. 
D)  $40,000.

Question 12

A single-price monopolist is inefficient because

Accepted Answer

A)  MR = MC. 
B)  P > ATC. 
C)  it creates a deadweight loss. 
D)  it increases producer surplus. 
A)  MR = MC. 
B)  P > ATC. 
C)  it creates a deadweight loss. 
D)  it increases producer surplus.

Question 13

If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Accepted Answer

A)  zero. 
B)  $100. 
C)  $200. 
D)  $50. 
A)  zero. 
B)  $100. 
C)  $200. 
D)  $50.

Question 14

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

Accepted Answer

A)  generally involves the use of price caps. 
B)  gives the firms an incentive to inflate their costs. 
C)  gives the firms an incentive to cut their costs as much as possible. 
D)  generally keeps their prices higher than if they were unregulated monopolists. 
A)  generally involves the use of price caps. 
B)  gives the firms an incentive to inflate their costs. 
C)  gives the firms an incentive to cut their costs as much as possible. 
D)  generally keeps their prices higher than if they were unregulated monopolists.

Question 15

For a single-price monopolist to sell one more unit of a good, it must

Accepted Answer

A)  lower the price on just the last unit sold. 
B)  lower the price on all units sold. 
C)  raise the price on just the last unit sold. 
D)  raise the price on all units sold. 
A)  lower the price on just the last unit sold. 
B)  lower the price on all units sold. 
C)  raise the price on just the last unit sold. 
D)  raise the price on all units sold.

Question 16

-The above figure shows the demand for cable and the cable company's cost of providing cable.
a) What price and quantity will be produced if the company is unregulated and profit maximizes?
b) What price and quantity will be produced if the company is regulated using the marginal cost pricing rule?
c) What is the advantage of the marginal cost pricing rule?
d) What price and quantity will be produced if the company is regulated using the average cost pricing rule?
e) What is the advantage of the average cost pricing rule?

Accepted Answer

a) The price will be $90 per month and t

Question 17

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

Accepted Answer

A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation. 
A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation.

Question 18

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

Accepted Answer

A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output. 
A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output.

Question 19

If the price elasticity of demand is less than 1, a monopoly's

Accepted Answer

A)  total revenue increases when the firm lowers its price. 
B)  total revenue decreases when the firm lowers its price. 
C)  marginal revenue is undefined. 
D)  marginal revenue is zero. 
A)  total revenue increases when the firm lowers its price. 
B)  total revenue decreases when the firm lowers its price. 
C)  marginal revenue is undefined. 
D)  marginal revenue is zero.

Which of the following is NOT a characteristic of a monopoly?

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

-In the figure above, the curve labeled "W" can be a

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

In order to maximize its profit, a single-price monopoly always produces output in the inelastic range of the demand for its product.

Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, there is a deadweight loss in the market and the firm might need a government subsidy to survive.

Which of the following is NOT necessarily true for a profit-maximizing single-price monopolist?

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals

A single-price monopolist is inefficient because

If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

For a single-price monopolist to sell one more unit of a good, it must

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

If the price elasticity of demand is less than 1, a monopoly's

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

Which of the following is NOT a characteristic of a monopoly?

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

-In the figure above, the curve labeled "W" can be a

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

In order to maximize its profit, a single-price monopoly always produces output in the inelastic range of the demand for its product.

Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

If the local cable TV company is a natural monopoly and required by regulators to set its price equal to marginal cost, there is a deadweight loss in the market and the firm might need a government subsidy to survive.

Which of the following is NOT necessarily true for a profit-maximizing single-price monopolist?

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the deadweight loss equals

A single-price monopolist is inefficient because

If a marginal cost pricing rule is imposed on the firm in the figure above, the deadweight loss will be

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

For a single-price monopolist to sell one more unit of a good, it must

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

If the price elasticity of demand is less than 1, a monopoly's

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