Question 1

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes,some monopolies are created by gover

Question 2

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements are correct?
i.When 3 haircuts are produced,the firm's ATC is $10.
ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
iii.The firm is NOT a perfect competitor.

Accepted Answer

A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii

Question 3

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 22 & 9 \
2 & 20 & 10 \
3 & 18 & 12 \
4 & 16 & 16 \
5 & 14 & 22 \
6 & 12 & 30 \
7 & 10 & 40 \
8 & 8 & 52 \
\hline
\end{array}$$
-A monopolist has the market 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 4

Which of the following is  NOT  correct about patents?

Accepted Answer

A)  Patents encourage invention of new products. 
B)  Patents stimulate innovation. 
C)  A patent is a barrier to entry. 
D)  Patents enable a firm to be a permanent monopoly. 
E)  Patents are granted to the inventor of a product or service. 
A)  Patents encourage invention of new products. 
B)  Patents stimulate innovation. 
C)  A patent is a barrier to entry. 
D)  Patents enable a firm to be a permanent monopoly. 
E)  Patents are granted to the inventor of a product or service.

Question 5

Patents
i.encourage the invention of new products and production methods.
ii.generally discourage innovation.
iii.are exclusive rights granted to the inventor of a product or service.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii

Question 6

A legal barrier is created when a firm

Accepted Answer

A)  has economies of scale, which allow it to produce at a lower cost than two or more firms. 
B)  is granted a public franchise, government license, patent, or copyright. 
C)  produces a unique product or service. 
D)  produces a standardized product or service. 
E)  has an ownership barrier to entry. 
A)  has economies of scale, which allow it to produce at a lower cost than two or more firms. 
B)  is granted a public franchise, government license, patent, or copyright. 
C)  produces a unique product or service. 
D)  produces a standardized product or service. 
E)  has an ownership barrier to entry.

Question 7

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Accepted Answer

Marginal cost pricing: The regulated pri

Question 8

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the price of a pound of steak is ________ and when it is a monopoly,the price of a pound of steak is ________.

Accepted Answer

A)  $4; $20 
B)  $8; $4 
C)  $8; $12 
D)  $4; $8 
E)  $4; $12 
A)  $4; $20 
B)  $8; $4 
C)  $8; $12 
D)  $4; $8 
E)  $4; $12

Question 9

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars per } \
\text { haircut) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (haircuts per day) }
\end{array} \
\hline 5 & 50 \
\hline 10 & 40 \
\hline 15 & 30 \
\hline 20 & 20 \
\hline 25 & 10 \
\hline 30 & 0 \
\hline
\end{array}$$
-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

Accepted Answer

A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00 
A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00

Question 10

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

Accepted Answer

A)  first unit is less than $20. 
B)  third unit is less than $20. 
C)  third unit is more than $20. 
D)  third unit is also $20. 
E)  more information is needed to determine if the marginal revenue for the third unit is more than, less than, or equal to $20. 
A)  first unit is less than $20. 
B)  third unit is less than $20. 
C)  third unit is more than $20. 
D)  third unit is also $20. 
E)  more information is needed to determine if the marginal revenue for the third unit is more than, less than, or equal to $20.

Question 11

To maximize its profit,a single-price monopoly produces the quantity at which

Accepted Answer

A)  the difference between marginal revenue and marginal cost is as large as possible. 
B)  marginal revenue equals marginal cost. 
C)  average total cost is at its minimum. 
D)  the marginal cost curve intersects the demand curve. 
E)  the marginal revenue curve intersects the horizontal axis. 
A)  the difference between marginal revenue and marginal cost is as large as possible. 
B)  marginal revenue equals marginal cost. 
C)  average total cost is at its minimum. 
D)  the marginal cost curve intersects the demand curve. 
E)  the marginal revenue curve intersects the horizontal axis.

Question 12

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Accepted Answer

Because the monopoly does control the ma

Question 13

The total revenue test using the price elasticity of demand

Accepted Answer

A)  explains why monopolies will only operate on the elastic portion of their demand curve. 
B)  explains why monopolies will only operate on the inelastic portion of their demand curves. 
C)  demonstrates why a monopoly can earn an economic profit in the long run. 
D)  determines whether a monopoly can perfectly price discriminate or not. 
E)  cannot be used for a price discriminating monopoly. 
A)  explains why monopolies will only operate on the elastic portion of their demand curve. 
B)  explains why monopolies will only operate on the inelastic portion of their demand curves. 
C)  demonstrates why a monopoly can earn an economic profit in the long run. 
D)  determines whether a monopoly can perfectly price discriminate or not. 
E)  cannot be used for a price discriminating monopoly.

Question 14

A monopoly

Accepted Answer

A)  is not protected by barriers to entry. 
B)  produces a good with no close substitutes. 
C)  faces a downward-sloping demand curve. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  is not protected by barriers to entry. 
B)  produces a good with no close substitutes. 
C)  faces a downward-sloping demand curve. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 15

For a single-price monopoly,price is

Accepted Answer

A)  greater than marginal revenue. 
B)  one half of marginal revenue. 
C)  equal to marginal revenue. 
D)  unrelated to marginal revenue. 
E)  always less than average total cost when the firm maximizes its profit. 
A)  greater than marginal revenue. 
B)  one half of marginal revenue. 
C)  equal to marginal revenue. 
D)  unrelated to marginal revenue. 
E)  always less than average total cost when the firm maximizes its profit.

Question 16

________ natural monopolies is a commonly used,potential solution to the problems presented by natural monopolies.

Accepted Answer

A)  Breaking up firms that are 
B)  Regulating 
C)  Outlawing price discrimination by 
D)  Refusing to grant patents to 
E)  Giving incentives to firms to become 
A)  Breaking up firms that are 
B)  Regulating 
C)  Outlawing price discrimination by 
D)  Refusing to grant patents to 
E)  Giving incentives to firms to become

Question 17

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Accepted Answer

A)  a natural monopoly develops. 
B)  the monopoly encounters competition. 
C)  economic profit is reduced to zero. 
D)  the monopoly converts all of the consumer surplus into economic profit. 
E)  there is always the opportunity to price discriminate. 
A)  a natural monopoly develops. 
B)  the monopoly encounters competition. 
C)  economic profit is reduced to zero. 
D)  the monopoly converts all of the consumer surplus into economic profit. 
E)  there is always the opportunity to price discriminate.

Question 18

Which of the following statements about price discrimination is false?

Accepted Answer

A)  Price discrimination is a method for a seller to capture some consumer surplus. 
B)  Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C)  Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D)  Price discrimination increases a monopoly's profit. 
E)  All forms of price discrimination are illegal. 
A)  Price discrimination is a method for a seller to capture some consumer surplus. 
B)  Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C)  Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D)  Price discrimination increases a monopoly's profit. 
E)  All forms of price discrimination are illegal.

Question 19

Today,you might be buying from a regulated natural monopoly when you purchase

Accepted Answer

A)  a car, a truck, or a bicycle. 
B)  a computer, a phone, or a camera. 
C)  natural gas or electricity. 
D)  a house, a condominium, or a plot of land. 
E)  food in a grocery store or in a restaurant. 
A)  a car, a truck, or a bicycle. 
B)  a computer, a phone, or a camera. 
C)  natural gas or electricity. 
D)  a house, a condominium, or a plot of land. 
E)  food in a grocery store or in a restaurant.

Question 20

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

Accepted Answer

A)  greater with marginal cost pricing, but average cost pricing allows for costs to be covered. 
B)  the same under both cases, but the profit is greater with average cost pricing. 
C)  greater under average cost pricing, but profits are greater with marginal cost pricing. 
D)  the same but profits are greater with marginal cost pricing. 
E)  greater with marginal cost pricing, and the firm's profit is larger with marginal cost pricing. 
A)  greater with marginal cost pricing, but average cost pricing allows for costs to be covered. 
B)  the same under both cases, but the profit is greater with average cost pricing. 
C)  greater under average cost pricing, but profits are greater with marginal cost pricing. 
D)  the same but profits are greater with marginal cost pricing. 
E)  greater with marginal cost pricing, and the firm's profit is larger with marginal cost pricing.

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Which of the following is NOT correct about patents?

Patents i.encourage the invention of new products and production methods. ii.generally discourage innovation. iii.are exclusive rights granted to the inventor of a product or service.

A legal barrier is created when a firm

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Price (dollars per haircut) Quantity demanded (haircuts per day) 5 50 10 40 15 30 20 20 25 10 30 0 -Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

To maximize its profit,a single-price monopoly produces the quantity at which

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

The total revenue test using the price elasticity of demand

A monopoly

For a single-price monopoly,price is

________ natural monopolies is a commonly used,potential solution to the problems presented by natural monopolies.

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Which of the following statements about price discrimination is false?

Today,you might be buying from a regulated natural monopoly when you purchase

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

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

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Which of the following is NOT correct about patents?

Patents i.encourage the invention of new products and production methods. ii.generally discourage innovation. iii.are exclusive rights granted to the inventor of a product or service.

A legal barrier is created when a firm

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Price (dollars per haircut) Quantity demanded (haircuts per day) 5 50 10 40 15 30 20 20 25 10 30 0 -Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

To maximize its profit,a single-price monopoly produces the quantity at which

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

The total revenue test using the price elasticity of demand

A monopoly

For a single-price monopoly,price is

________ natural monopolies is a commonly used,potential solution to the problems presented by natural monopolies.

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Which of the following statements about price discrimination is false?

Today,you might be buying from a regulated natural monopoly when you purchase

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

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