Question 1

When demand is elastic,marginal revenue is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  increasing as output increases. 
E)  undefined. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  increasing as output increases. 
E)  undefined.

Question 2

With perfect price discrimination ________,and production is expanded until marginal revenue equals ________.

Accepted Answer

A)  the firm's demand curve becomes its marginal revenue curve; marginal cost 
B)  the firm's demand curve becomes its marginal revenue curve; average total cost 
C)  the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; marginal cost 
D)  the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; average total cost 
E)  economic profit is maximized when the lowest price equals marginal cost; average total cost. 
A)  the firm's demand curve becomes its marginal revenue curve; marginal cost 
B)  the firm's demand curve becomes its marginal revenue curve; average total cost 
C)  the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; marginal cost 
D)  the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; average total cost 
E)  economic profit is maximized when the lowest price equals marginal cost; average total cost.

Question 3

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The social in

Question 4

A natural monopoly arises when

Accepted Answer

A)  one firm controls the supply of a unique resource. 
B)  a firm has many small firms that it can control. 
C)  there are firms which act together as a monopoly. 
D)  the long-run average cost curve slopes downward as it crosses the demand curve. 
E)  one firm naturally convinces the government to limit competition in the market. 
A)  one firm controls the supply of a unique resource. 
B)  a firm has many small firms that it can control. 
C)  there are firms which act together as a monopoly. 
D)  the long-run average cost curve slopes downward as it crosses the demand curve. 
E)  one firm naturally convinces the government to limit competition in the market.

Question 5

Under the social interest theory of regulation,the goal of regulating natural monopolies is

Accepted Answer

A)  to provide a larger, though not maximum, profit for the firms. 
B)  to use average cost pricing. 
C)  to provide an outcome similar to the competitive outcome. 
D)  to provide a the maximum profit for the firms. 
E)  None of the above answers is correct. 
A)  to provide a larger, though not maximum, profit for the firms. 
B)  to use average cost pricing. 
C)  to provide an outcome similar to the competitive outcome. 
D)  to provide a the maximum profit for the firms. 
E)  None of the above answers is correct.

Question 6

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 7

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

Accepted Answer

A)  the same as its demand curve. 
B)  the same as its supply curve. 
C)  the same as its marginal cost curve. 
D)  a vertical line at the profit-maximizing quantity of output. 
E)  undefined because it does not exist. 
A)  the same as its demand curve. 
B)  the same as its supply curve. 
C)  the same as its marginal cost curve. 
D)  a vertical line at the profit-maximizing quantity of output. 
E)  undefined because it does not exist.

Question 8

-In the above figure,a perfectly competitive market will have a price of ________,and a single-price monopoly will have a price of ________.

Accepted Answer

A)  P₁ and quantity of Q₁; P₂ and quantity of Q₂ 
B)  P₂ and quantity of Q₂; P₁ and quantity of Q₁ 
C)  P₃ and quantity of Q₃; P₁ and quantity of Q₁ 
D)  P₂ and quantity of Q₂; P₃ and quantity of Q₁ 
E)  P₂ and quantity of Q₁; P₁ and quantity of Q₁ 
A)  P₁ and quantity of Q₁; P₂ and quantity of Q₂ 
B)  P₂ and quantity of Q₂; P₁ and quantity of Q₁ 
C)  P₃ and quantity of Q₃; P₁ and quantity of Q₁ 
D)  P₂ and quantity of Q₂; P₃ and quantity of Q₁ 
E)  P₂ and quantity of Q₁; P₁ and quantity of Q₁

Question 9

The social interest theory of regulation asserts that regulation

Accepted Answer

A)  seeks an efficient use of resources. 
B)  is aimed at keeping prices as low as possible. 
C)  helps firms maximize economic profit. 
D)  of a natural monopoly must be done using rate of return regulation. 
E)  does not work for society as well as would allowing the firms freedom from regulation. 
A)  seeks an efficient use of resources. 
B)  is aimed at keeping prices as low as possible. 
C)  helps firms maximize economic profit. 
D)  of a natural monopoly must be done using rate of return regulation. 
E)  does not work for society as well as would allowing the firms freedom from regulation.

Question 10

Which creates a larger deadweight loss,perfect competition or a single-price monopoly?

Accepted Answer

The single-price monopoly crea

Question 11

Which of the following is NOT correct about a single-price monopoly?

Accepted Answer

A)  Maximum profit is found where demand is the most inelastic. 
B)  Marginal revenue is negative when demand is inelastic. 
C)  Marginal revenue is positive when demand is elastic. 
D)  To sell more output, the firm must lower its price. 
E)  To maximize its profit, the firm produces so that marginal revenue equals marginal cost. 
A)  Maximum profit is found where demand is the most inelastic. 
B)  Marginal revenue is negative when demand is inelastic. 
C)  Marginal revenue is positive when demand is elastic. 
D)  To sell more output, the firm must lower its price. 
E)  To maximize its profit, the firm produces so that marginal revenue equals marginal cost.

Question 12

Which of the following is an example of a natural monopoly?

Accepted Answer

A)  the trademark protecting Gatorade 
B)  the talents of Tom Hanks 
C)  the local water company 
D)  the patent on an Intel processor 
E)  De Beers' ownership of a large fraction of the world's diamonds 
A)  the trademark protecting Gatorade 
B)  the talents of Tom Hanks 
C)  the local water company 
D)  the patent on an Intel processor 
E)  De Beers' ownership of a large fraction of the world's diamonds

Question 13

If a monopoly wants to sell a larger quantity,it must

Accepted Answer

A)  set a higher price. 
B)  maintain the current price. 
C)  set a lower price. 
D)  implement new technology. 
E)  increase the barrier to entry that protects it. 
A)  set a higher price. 
B)  maintain the current price. 
C)  set a lower price. 
D)  implement new technology. 
E)  increase the barrier to entry that protects it.

Question 14

We define a monopoly as a market with

Accepted Answer

A)  one supplier and no barriers to entry. 
B)  one supplier with barriers to entry. 
C)  many suppliers with no barriers to entry. 
D)  many suppliers with barriers to entry. 
E)  a few suppliers and barriers to entry. 
A)  one supplier and no barriers to entry. 
B)  one supplier with barriers to entry. 
C)  many suppliers with no barriers to entry. 
D)  many suppliers with barriers to entry. 
E)  a few suppliers and barriers to entry.

Question 15

Rent seeking is defined as

Accepted Answer

A)  charging higher prices for an apartment. 
B)  the act of obtaining special treatment by the government to create an economic profit. 
C)  charging a price below marginal cost. 
D)  selling a greater quantity than is profitable. 
E)  charging different prices for different units of the good or service. 
A)  charging higher prices for an apartment. 
B)  the act of obtaining special treatment by the government to create an economic profit. 
C)  charging a price below marginal cost. 
D)  selling a greater quantity than is profitable. 
E)  charging different prices for different units of the good or service.

Question 16

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct.Competition amo

Question 17

Competition keeps prices lower for consumers.So why do we have patent laws?

Accepted Answer

Patent laws are necessary to promote inn

Question 18

When a firm is able to engage in perfect price discrimination,its marginal revenue curve

Accepted Answer

A)  lies below its demand curve. 
B)  is the same as its demand curve. 
C)  lies above its demand curve. 
D)  is the same as its supply curve. 
E)  is undefined because it does not exist. 
A)  lies below its demand curve. 
B)  is the same as its demand curve. 
C)  lies above its demand curve. 
D)  is the same as its supply curve. 
E)  is undefined because it does not exist.

Question 19

A monopolist can make an economic profit in the long run because of

Accepted Answer

A)  the relatively elastic demand for its product. 
B)  the relatively inelastic demand for its product. 
C)  the firm's price setting behavior. 
D)  barriers to entry. 
E)  the fact that the firm produces where MR = MC. 
A)  the relatively elastic demand for its product. 
B)  the relatively inelastic demand for its product. 
C)  the firm's price setting behavior. 
D)  barriers to entry. 
E)  the fact that the firm produces where MR = MC.

Question 20

A ________ between price and quantity sold because ________.

Accepted Answer

A)  monopoly faces a tradeoff; to sell a larger quantity, it must lower its price 
B)  monopoly does not face a tradeoff; it controls market entry and can sell at any price and any quantity 
C)  natural monopoly faces a tradeoff; it can always price discriminate 
D)  natural monopoly does not face a tradeoff; it is a price maker 
E)  perfectly competitive firm faces a tradeoff; it is a price taker 
A)  monopoly faces a tradeoff; to sell a larger quantity, it must lower its price 
B)  monopoly does not face a tradeoff; it controls market entry and can sell at any price and any quantity 
C)  natural monopoly faces a tradeoff; it can always price discriminate 
D)  natural monopoly does not face a tradeoff; it is a price maker 
E)  perfectly competitive firm faces a tradeoff; it is a price taker

When demand is elastic,marginal revenue is

With perfect price discrimination ,and production is expanded until marginal revenue equals .

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

A natural monopoly arises when

Under the social interest theory of regulation,the goal of regulating natural monopolies is

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

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

-In the above figure,a perfectly competitive market will have a price of ,and a single-price monopoly will have a price of .

The social interest theory of regulation asserts that regulation

Which creates a larger deadweight loss,perfect competition or a single-price monopoly?

Which of the following is NOT correct about a single-price monopoly?

Which of the following is an example of a natural monopoly?

If a monopoly wants to sell a larger quantity,it must

We define a monopoly as a market with

Rent seeking is defined as

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Competition keeps prices lower for consumers.So why do we have patent laws?

When a firm is able to engage in perfect price discrimination,its marginal revenue curve

A monopolist can make an economic profit in the long run because of

A between price and quantity sold because .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 16: Monopoly

When demand is elastic,marginal revenue is

With perfect price discrimination ________,and production is expanded until marginal revenue equals ________.

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

A natural monopoly arises when

Under the social interest theory of regulation,the goal of regulating natural monopolies is

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

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

-In the above figure,a perfectly competitive market will have a price of ________,and a single-price monopoly will have a price of ________.

The social interest theory of regulation asserts that regulation

Which creates a larger deadweight loss,perfect competition or a single-price monopoly?

Which of the following is NOT correct about a single-price monopoly?

Which of the following is an example of a natural monopoly?

If a monopoly wants to sell a larger quantity,it must

We define a monopoly as a market with

Rent seeking is defined as

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Competition keeps prices lower for consumers.So why do we have patent laws?

When a firm is able to engage in perfect price discrimination,its marginal revenue curve

A monopolist can make an economic profit in the long run because of

A ________ between price and quantity sold because ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

With perfect price discrimination ,and production is expanded until marginal revenue equals .

-In the above figure,a perfectly competitive market will have a price of ,and a single-price monopoly will have a price of .

A between price and quantity sold because .