Question 1

What is price discrimination?

Accepted Answer

A firm price discriminates when it sells

Question 2

For a natural monopoly to cover its total cost,its price must equal its

Accepted Answer

A)  average total cost. 
B)  marginal cost. 
C)  demand. 
D)  total fixed cost. 
E)  marginal revenue. 
A)  average total cost. 
B)  marginal cost. 
C)  demand. 
D)  total fixed cost. 
E)  marginal revenue.

Question 3

Which of the following would create a natural monopoly?

Accepted Answer

A)  ownership of all the available units of a necessary input 
B)  an exclusive right granted to supply a good or service 
C)  requirement of a government license before the firm can sell the good or service 
D)  technology enabling a single firm to produce at a lower average total cost than two or more firms 
E)  a patent granted the producer of the good or service 
A)  ownership of all the available units of a necessary input 
B)  an exclusive right granted to supply a good or service 
C)  requirement of a government license before the firm can sell the good or service 
D)  technology enabling a single firm to produce at a lower average total cost than two or more firms 
E)  a patent granted the producer of the good or service

Question 4

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

Accepted Answer

A)  It is maximizing profit. 
B)  To increase profit, it should produce less. 
C)  To increase profit, it should produce more. 
D)  It should shut down. 
E)  It is making an economic profit. 
A)  It is maximizing profit. 
B)  To increase profit, it should produce less. 
C)  To increase profit, it should produce more. 
D)  It should shut down. 
E)  It is making an economic profit.

Question 5

When a perfectly competitive industry is taken over by a monopoly,some consumer surplus is transferred to the monopolist in the form of

Accepted Answer

A)  marginal cost. 
B)  economic profit. 
C)  deadweight loss. 
D)  taxes. 
E)  average variable cost. 
A)  marginal cost. 
B)  economic profit. 
C)  deadweight loss. 
D)  taxes. 
E)  average variable cost.

Question 6

A monopoly is

Accepted Answer

A)  a price taker. 
B)  able to ignore the demand for its product when setting its price. 
C)  able to set the price for its product. 
D)  able to earn only a normal profit in the long run. 
E)  a firm with no marginal revenue curve. 
A)  a price taker. 
B)  able to ignore the demand for its product when setting its price. 
C)  able to set the price for its product. 
D)  able to earn only a normal profit in the long run. 
E)  a firm with no marginal revenue curve.

Question 7

-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

Accepted Answer

A)  $4. 
B)  $8. 
C)  $12. 
D)  $20. 
E)  $2. 
A)  $4. 
B)  $8. 
C)  $12. 
D)  $20. 
E)  $2.

Question 8

When regulated using rate of return regulation,who benefits from the practice of some natural monopolies to count sumptuous offices,free baseball tickets,golf excursions,and limousines as costs of production?

Accepted Answer

A)  stockholders 
B)  managers of the monopoly 
C)  customers of the monopoly 
D)  regulators of the industry 
E)  None of the above answers is correct. 
A)  stockholders 
B)  managers of the monopoly 
C)  customers of the monopoly 
D)  regulators of the industry 
E)  None of the above answers is correct.

Question 9

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

Accepted Answer

A)  Arnie's profit increases. 
B)  consumer surplus increases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie can no longer set a price that depends upon the buyer's willingness to pay. 
A)  Arnie's profit increases. 
B)  consumer surplus increases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie can no longer set a price that depends upon the buyer's willingness to pay.

Question 10

If a monopoly engages in rent seeking,
i.its average total cost curve is lower than otherwise.
ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking.
iii.it necessarily incurs an economic loss.

Accepted Answer

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

Question 11

What is a legal barrier to entry?

Accepted Answer

A legal barrier to entry arise

Question 12

For a single-price monopoly,

Accepted Answer

A)  if marginal cost exceeds marginal revenue, profits will increase if output decreases. 
B)  if marginal revenue exceeds marginal cost, profits will increase if output decreases. 
C)  there are several different price and output combinations that maximize profit. 
D)  marginal revenue will be greater than price if demand is elastic. 
E)  marginal revenue will be greater than price if demand is inelastic. 
A)  if marginal cost exceeds marginal revenue, profits will increase if output decreases. 
B)  if marginal revenue exceeds marginal cost, profits will increase if output decreases. 
C)  there are several different price and output combinations that maximize profit. 
D)  marginal revenue will be greater than price if demand is elastic. 
E)  marginal revenue will be greater than price if demand is inelastic.

Question 13

One way a monopoly can convert additional consumer surplus into economic profit is to

Accepted Answer

A)  lower prices. 
B)  raise prices. 
C)  price discriminate. 
D)  become more competitive. 
E)  produce where price equals average total cost. 
A)  lower prices. 
B)  raise prices. 
C)  price discriminate. 
D)  become more competitive. 
E)  produce where price equals average total cost.

Question 14

Compared to a similar perfectly competitive industry,a single-price monopoly

Accepted Answer

A)  creates a deadweight loss and decreases economic profit. 
B)  produces more output. 
C)  creates a deadweight loss and decreases consumer surplus. 
D)  is more efficient because there is no wasteful competition. 
E)  sets a lower price because there is less competition. 
A)  creates a deadweight loss and decreases economic profit. 
B)  produces more output. 
C)  creates a deadweight loss and decreases consumer surplus. 
D)  is more efficient because there is no wasteful competition. 
E)  sets a lower price because there is less competition.

Question 15

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

Accepted Answer

A)  ABH 
B)  BFGH 
C)  ACG 
D)  BDEH 
E)  ACE 
A)  ABH 
B)  BFGH 
C)  ACG 
D)  BDEH 
E)  ACE

Question 16

Compared to a perfectly competitive market,a single-price monopoly sets

Accepted Answer

A)  a lower price. 
B)  the same price. 
C)  a higher price. 
D)  a price that might be higher, lower, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E)  a price that might be higher, lower, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve. 
A)  a lower price. 
B)  the same price. 
C)  a higher price. 
D)  a price that might be higher, lower, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E)  a price that might be higher, lower, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve.

Question 17

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

Accepted Answer

A)  P = MC 
B)  P = MR 
C)  MR = MC 
D)  MC = ATC 
E)  P > ATC 
A)  P = MC 
B)  P = MR 
C)  MR = MC 
D)  MC = ATC 
E)  P > ATC

Question 18

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

Accepted Answer

A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude. 
A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude.

Question 19

The demand curve for a monopoly is

Accepted Answer

A)  horizontal because the demand is perfectly elastic. 
B)  downward sloping. 
C)  vertical because the demand is perfectly inelastic. 
D)  upward sloping. 
E)  undefined because it is the only supplier in the market. 
A)  horizontal because the demand is perfectly elastic. 
B)  downward sloping. 
C)  vertical because the demand is perfectly inelastic. 
D)  upward sloping. 
E)  undefined because it is the only supplier in the market.

Question 20

$$\begin{array} { c c } 
\text { Price(dollars) } & \text { Quantity(units) } \
8 & 1 \
6 & 2 \
5 & 3 \
4 & 4 \
3 & 5 \
\hline
\end{array}$$
-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

Accepted Answer

A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive. 
A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive.

What is price discrimination?

For a natural monopoly to cover its total cost,its price must equal its

Which of the following would create a natural monopoly?

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

When a perfectly competitive industry is taken over by a monopoly,some consumer surplus is transferred to the monopolist in the form of

A monopoly is

-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

When regulated using rate of return regulation,who benefits from the practice of some natural monopolies to count sumptuous offices,free baseball tickets,golf excursions,and limousines as costs of production?

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

If a monopoly engages in rent seeking, i.its average total cost curve is lower than otherwise. ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking. iii.it necessarily incurs an economic loss.

What is a legal barrier to entry?

For a single-price monopoly,

One way a monopoly can convert additional consumer surplus into economic profit is to

Compared to a similar perfectly competitive industry,a single-price monopoly

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

Compared to a perfectly competitive market,a single-price monopoly sets

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

The demand curve for a monopoly is

Price(dollars) Quantity(units) 8 1 6 2 5 3 4 4 3 5 -The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

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

What is price discrimination?

For a natural monopoly to cover its total cost,its price must equal its

Which of the following would create a natural monopoly?

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

When a perfectly competitive industry is taken over by a monopoly,some consumer surplus is transferred to the monopolist in the form of

A monopoly is

-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

When regulated using rate of return regulation,who benefits from the practice of some natural monopolies to count sumptuous offices,free baseball tickets,golf excursions,and limousines as costs of production?

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

If a monopoly engages in rent seeking, i.its average total cost curve is lower than otherwise. ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking. iii.it necessarily incurs an economic loss.

What is a legal barrier to entry?

For a single-price monopoly,

One way a monopoly can convert additional consumer surplus into economic profit is to

Compared to a similar perfectly competitive industry,a single-price monopoly

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

Compared to a perfectly competitive market,a single-price monopoly sets

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

The demand curve for a monopoly is

Price(dollars) Quantity(units) 8 1 6 2 5 3 4 4 3 5 -The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

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