Exam 16: Monopoly

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.Compared to a marginal cost pricing rule,under an average cost pricing rule,TWC ________ output by ________ households.

A natural monopoly

A natural monopoly is one that arises from

In a monopoly,producers ________ and consumers ________.

-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?

A major characteristic of monopoly is that

The Seattle Mariners baseball team has a monopoly on major league baseball in the Northwest.If the Mariners could be purchased by anyone with enough money,we could argue that this purchase is fair according to the

Competition among rent seekers results in

The capture theory of regulation predicts that

"When electric utilities are regulated using an average cost pricing rule,they will earn zero economic profit." Is the previous statement correct or incorrect? Why?

Which of the following must exist for a firm to engage in price discrimination?

Which of the following best describes the capture theory of regulation? i.Regulation seeks an efficient use of resources. ii.Regulation is aimed at keeping prices as low as possible. iii.Regulation helps firms maximize economic profit.

-In the figure above,complete the graph of the electric utility company by adding the marginal revenue and marginal cost curves.Assume the marginal cost is constant at 4¢ per kilowatt-hour.Now discuss the marginal cost pricing rule and the average cost pricing rule regulators might use to regulate the firm.Be sure to state the price and quantity that are selected for each option.Also,what price and quantity does the firm select if it is not regulated?

Price discrimination is

Gene's Car Wash is a natural monopoly.To wash 100 cars a week,if Gene is unregulated,he would charge a price of $10.Gene's average total cost for washing 100 cars is $8,his average variable cost is $6,and his marginal cost is $4.If Gene is regulated using an average cost pricing rule,the price he is allowed to charge to wash 100 cars is

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

Which of the following can be a barrier to entry? i.ownership of a necessary input ii.requiring a government license iii.large diseconomies of scale

Fixed costs are ________ in a natural monopoly,so average total cost ________ as output increases.

-The above figure represents the demand and marginal revenue curves for Sue's Seafood,a seller of fresh fish. a.Over what range of output is demand elastic? b.Over what range of output is demand inelastic? c.What price maximizes total revenue? d.What is the price elasticity of demand at the revenue maximizing price?

Quantity (units) Price (dollars per unit) 1 8 2 7 3 6 4 5 5 4 6 3 -The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 2 to 3 units?