Question 1

A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the

Accepted Answer

A)  elastic range of its demand curve. 
B)  inelastic range of its demand curve. 
C)  elastic range of its supply curve. 
D)  inelastic range of its supply curve. 
A)  elastic range of its demand curve. 
B)  inelastic range of its demand curve. 
C)  elastic range of its supply curve. 
D)  inelastic range of its supply curve.

Question 2

Which of the following is TRUE about a perfect price discriminating monopolist?

Accepted Answer

A)  There is inefficiency. 
B)  All consumers pay a price equal to marginal cost. 
C)  There is no consumer surplus. 
D)  There is zero economic profit. 
A)  There is inefficiency. 
B)  All consumers pay a price equal to marginal cost. 
C)  There is no consumer surplus. 
D)  There is zero economic profit.

Question 3

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

Accepted Answer

A)  an average cost pricing rule. 
B)  a marginal cost pricing rule. 
C)  rate of return regulation. 
D)  All of the above answers are correct. 
A)  an average cost pricing rule. 
B)  a marginal cost pricing rule. 
C)  rate of return regulation. 
D)  All of the above answers are correct.

Question 4

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be

Accepted Answer

A)  $100,000. 
B)  $60,000. 
C)  $80,000. 
D)  $20,000. 
A)  $100,000. 
B)  $60,000. 
C)  $80,000. 
D)  $20,000.

Question 5

A monopoly creates no deadweight when it maximizes its profit.

Accepted Answer

A) True 
 B)False

Question 6

Marginal revenue for a single-price monopolist is

Accepted Answer

A)  less than the market price. 
B)  equal to the market price. 
C)  greater than the market price. 
D)  equal to zero for all levels of output. 
A)  less than the market price. 
B)  equal to the market price. 
C)  greater than the market price. 
D)  equal to zero for all levels of output.

Question 7

The existence of economies of scale can create

Accepted Answer

A)  a natural monopoly. 
B)  a government monopoly. 
C)  a legal monopoly. 
D)  a market in which many firms make identical products. 
A)  a natural monopoly. 
B)  a government monopoly. 
C)  a legal monopoly. 
D)  a market in which many firms make identical products.

Question 8

In a regulated natural monopoly, a marginal cost pricing rule maximizes

Accepted Answer

A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus. 
A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus.

Question 9

The creation of a monopoly results in gains to

Accepted Answer

A)  producers at no expense to consumers. 
B)  consumers at no expense to producers. 
C)  producers at the expense of consumers. 
D)  consumers at the expense of producers. 
A)  producers at no expense to consumers. 
B)  consumers at no expense to producers. 
C)  producers at the expense of consumers. 
D)  consumers at the expense of producers.

Question 10

A single-price monopolist will always produce where the elasticity of demand

Accepted Answer

A)  is greater than 1. 
B)  is smaller than 1. 
C)  equals 1. 
D)  equals infinity. 
A)  is greater than 1. 
B)  is smaller than 1. 
C)  equals 1. 
D)  equals infinity.

Question 11

Any attempt to capture a consumer surplus, a producer surplus, or an economic profit is called

Accepted Answer

A)  profit-maximizing. 
B)  rent-seeking. 
C)  price discriminating. 
D)  efficiency gain. 
A)  profit-maximizing. 
B)  rent-seeking. 
C)  price discriminating. 
D)  efficiency gain.

Question 12

-If the firm in the figure above is unregulated, it will make an economic profit of

Accepted Answer

A)  zero. 
B)  -$240. 
C)  $100. 
D)  $400. 
A)  zero. 
B)  -$240. 
C)  $100. 
D)  $400.

Question 13

A natural monopoly is likely to experience diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 14

-If the above figure illustrated a perfectly competitive industry, the equilibrium market output would be equal to

Accepted Answer

A)  7. 
B)  11. 
C)  13. 
D)  22. 
A)  7. 
B)  11. 
C)  13. 
D)  22.

Question 15

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the ________ part of the ________ curve.

Accepted Answer

A)  elastic; supply 
B)  inelastic; supply 
C)  inelastic; demand 
D)  elastic; demand 
A)  elastic; supply 
B)  inelastic; supply 
C)  inelastic; demand 
D)  elastic; demand

Question 16

The social interest theory of regulation assumes that

Accepted Answer

A)  regulations promote the attainment of efficiency. 
B)  regulations promote the attainment of the maximum economic profit. 
C)  regulators will seek to maximize consumer surplus. 
D)  public officials seek their own gain through regulation. 
A)  regulations promote the attainment of efficiency. 
B)  regulations promote the attainment of the maximum economic profit. 
C)  regulators will seek to maximize consumer surplus. 
D)  public officials seek their own gain through regulation.

Question 17

-The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly.
a) What was the competitive price and quantity?
b) What is the monopoly price and quantity?
c) What area represents consumer surplus under perfect competition?
d) What area represents consumer surplus under monopoly?
e) What area represents the deadweight loss of monopoly?

Accepted Answer

a) The competitive price was P₂ and the c

Question 18

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

Accepted Answer

A)  $20 and 30,000 households are served. 
B)  $40 and 40,000 households are served. 
C)  $40 and 30,000 households are served. 
D)  $60 and 20,000 households are served. 
A)  $20 and 30,000 households are served. 
B)  $40 and 40,000 households are served. 
C)  $40 and 30,000 households are served. 
D)  $60 and 20,000 households are served.

Question 19

-In the figure above, a single-price unregulated monopoly sets a price equal to

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  d. 
A)  a. 
B)  b. 
C)  c. 
D)  d.

Question 20

In a small town, Marilyn's Christmas Tree Lot has a monopoly on sales of Christmas trees. In order to increase her sales from 100 trees to 101 trees, she must drop the price of all of her trees from $20 to $19. What is the marginal revenue?

Accepted Answer

A)  $2000 
B)  $20 
C)  $19 
D)  negative $81 
A)  $2000 
B)  $20 
C)  $19 
D)  negative $81

A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the

Which of the following is TRUE about a perfect price discriminating monopolist?

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be

A monopoly creates no deadweight when it maximizes its profit.

Marginal revenue for a single-price monopolist is

The existence of economies of scale can create

In a regulated natural monopoly, a marginal cost pricing rule maximizes

The creation of a monopoly results in gains to

A single-price monopolist will always produce where the elasticity of demand

Any attempt to capture a consumer surplus, a producer surplus, or an economic profit is called

-If the firm in the figure above is unregulated, it will make an economic profit of

A natural monopoly is likely to experience diseconomies of scale.

-If the above figure illustrated a perfectly competitive industry, the equilibrium market output would be equal to

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the part of the curve.

The social interest theory of regulation assumes that

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

-In the figure above, a single-price unregulated monopoly sets a price equal to

In a small town, Marilyn's Christmas Tree Lot has a monopoly on sales of Christmas trees. In order to increase her sales from 100 trees to 101 trees, she must drop the price of all of her trees from $20 to $19. What is the marginal revenue?

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 monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the

Which of the following is TRUE about a perfect price discriminating monopolist?

Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be

A monopoly creates no deadweight when it maximizes its profit.

Marginal revenue for a single-price monopolist is

The existence of economies of scale can create

In a regulated natural monopoly, a marginal cost pricing rule maximizes

The creation of a monopoly results in gains to

A single-price monopolist will always produce where the elasticity of demand

Any attempt to capture a consumer surplus, a producer surplus, or an economic profit is called

-If the firm in the figure above is unregulated, it will make an economic profit of

A natural monopoly is likely to experience diseconomies of scale.

-If the above figure illustrated a perfectly competitive industry, the equilibrium market output would be equal to

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the ________ part of the ________ curve.

The social interest theory of regulation assumes that

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

-In the figure above, a single-price unregulated monopoly sets a price equal to

In a small town, Marilyn's Christmas Tree Lot has a monopoly on sales of Christmas trees. In order to increase her sales from 100 trees to 101 trees, she must drop the price of all of her trees from $20 to $19. What is the marginal revenue?

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

Tris owns the only auto repair shop on Lonely Island. Tris is a single-price monopoly, so Tris operates on the part of the curve.