Question 1

Which of the following is TRUE for a single-price monopolist?

Accepted Answer

A) P > MR B) P < MR C) P = MR D) P = elasticity of demand A) P > MR B) P < MR C) P = MR D) P = elasticity of demand

Question 2

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?

Accepted Answer

A)  $8 
B)  $6 
C)  $4 
D)  $2 
A)  $8 
B)  $6 
C)  $4 
D)  $2

Question 3

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

Accepted Answer

A)  $111 
B)  $141 
C)  $151 
D)  $161 
A)  $111 
B)  $141 
C)  $151 
D)  $161

Question 4

-The figure above shows a monopoly firm's demand curve. At point t

Accepted Answer

A)  demand is elastic. 
B)  demand is unit elastic. 
C)  demand is inelastic. 
D)  total revenue is at a minimum. 
A)  demand is elastic. 
B)  demand is unit elastic. 
C)  demand is inelastic. 
D)  total revenue is at a minimum.

Question 5

A natural monopoly is a firm that owns a key natural resource.

Accepted Answer

A) True 
 B)False

Question 6

When an average cost pricing rule is imposed on a natural monopoly

Accepted Answer

A)  total surplus is maximized and the monopoly incurs an economic loss. 
B)  the monopoly makes zero economic profit. 
C)  the monopoly makes an economic profit. 
D)  total surplus is maximized and the monopoly makes an economic profit. 
A)  total surplus is maximized and the monopoly incurs an economic loss. 
B)  the monopoly makes zero economic profit. 
C)  the monopoly makes an economic profit. 
D)  total surplus is maximized and the monopoly makes an economic profit.

Question 7

-In the above figure, if this natural monopoly is NOT regulated the deadweight loss to society is

Accepted Answer

A)  ecf. 
B)  ebc. 
C)  gac. 
D)  gde. 
A)  ecf. 
B)  ebc. 
C)  gac. 
D)  gde.

Question 8

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Accepted Answer

The price would be highest if

Question 9

Rate of return regulation is equivalent to

Accepted Answer

A)  average cost pricing rule. 
B)  marginal cost pricing rule. 
C)  maximizing consumer surplus. 
D)  maximizing producer surplus. 
A)  average cost pricing rule. 
B)  marginal cost pricing rule. 
C)  maximizing consumer surplus. 
D)  maximizing producer surplus.

Question 10

-The above figure represents the cost and demand curves for a natural monopoly that is regulated using a marginal cost pricing rule.
a) What is the quantity?
b) What price is charged?
c) What area represents the consumer surplus when the firm is regulated using a marginal cost pricing rule?
d) What distance represents the firm's loss per unit when the firm is regulated using a marginal cost pricing rule?

Accepted Answer

a) The quantity is the efficient quantit

Question 11

-The above table gives a monopolist's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 12

Monopolies can make an economic profit in the long run because of

Accepted Answer

A)  rent seeking by competitors. 
B)  the elastic demand for the monopoly's product. 
C)  the cost-savings gained by the monopoly. 
D)  barriers to enter the monopoly's market. 
A)  rent seeking by competitors. 
B)  the elastic demand for the monopoly's product. 
C)  the cost-savings gained by the monopoly. 
D)  barriers to enter the monopoly's market.

Question 13

A natural monopoly is defined as

Accepted Answer

A)  a market in which competition and entry are restricted by the granting of a government license. 
B)  an industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a market in which competition and entry are restricted by the granting of a patent. 
D)  any market where one firm constitutes the entire industry. 
A)  a market in which competition and entry are restricted by the granting of a government license. 
B)  an industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a market in which competition and entry are restricted by the granting of a patent. 
D)  any market where one firm constitutes the entire industry.

Question 14

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, deadweight loss is equal to

Accepted Answer

A)  $5 million. 
B)  $0 million. 
C)  more than $10 million and less than $20 million. 
D)  $20 million or more. 
A)  $5 million. 
B)  $0 million. 
C)  more than $10 million and less than $20 million. 
D)  $20 million or more.

Question 15

-The unregulated, single-price monopoly shown in the figure above will produce where its demand

Accepted Answer

A)  equals its MC curve. 
B)  equals its ATC curve. 
C)  is inelastic. 
D)  is elastic. 
A)  equals its MC curve. 
B)  equals its ATC curve. 
C)  is inelastic. 
D)  is elastic.

Question 16

Patents encourage inventions because without a patent

Accepted Answer

A)  other firms could enter the inventor's market by producing the same product. 
B)  nobody would demand the inventor's product. 
C)  the inventor would receive no tax breaks. 
D)  all markets would be public franchises. 
A)  other firms could enter the inventor's market by producing the same product. 
B)  nobody would demand the inventor's product. 
C)  the inventor would receive no tax breaks. 
D)  all markets would be public franchises.

Question 17

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

Accepted Answer

Both types of firms maximize profits by

Question 18

-A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

Accepted Answer

As a perfectly price discrimin

Question 19

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

Accepted Answer

Rent seeking is the act of obtaining spe

Question 20

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

Accepted Answer

A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day. 
A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day.

Which of the following is TRUE for a single-price monopolist?

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

-The figure above shows a monopoly firm's demand curve. At point t

A natural monopoly is a firm that owns a key natural resource.

When an average cost pricing rule is imposed on a natural monopoly

-In the above figure, if this natural monopoly is NOT regulated the deadweight loss to society is

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Rate of return regulation is equivalent to

-The above table gives a monopolist's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.

Monopolies can make an economic profit in the long run because of

A natural monopoly is defined as

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, deadweight loss is equal to

-The unregulated, single-price monopoly shown in the figure above will produce where its demand

Patents encourage inventions because without a patent

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

-A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

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 TRUE for a single-price monopolist?

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

-The figure above shows a monopoly firm's demand curve. At point t

A natural monopoly is a firm that owns a key natural resource.

When an average cost pricing rule is imposed on a natural monopoly

-In the above figure, if this natural monopoly is NOT regulated the deadweight loss to society is

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Rate of return regulation is equivalent to

-The above table gives a monopolist's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.

Monopolies can make an economic profit in the long run because of

A natural monopoly is defined as

-Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes an average cost pricing rule, deadweight loss is equal to

-The unregulated, single-price monopoly shown in the figure above will produce where its demand

Patents encourage inventions because without a patent

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

-A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

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