Question 1

In equilibrium,rent seeking eliminates the

Accepted Answer

A)  deadweight loss. 
B)  economic profit. 
C)  consumer surplus. 
D)  demand for the product. 
E)  opportunity to price discriminate. 
A)  deadweight loss. 
B)  economic profit. 
C)  consumer surplus. 
D)  demand for the product. 
E)  opportunity to price discriminate.

Question 2

-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 quantity

Question 3

A "buy one,get one for half price" promotion is an example of

Accepted Answer

A)  price discriminating among units of a good. 
B)  price discriminating among groups of buyers. 
C)  a legal monopoly. 
D)  a natural monopoly. 
E)  marketing by a perfectly competitive firm designed to increase the firm's sales. 
A)  price discriminating among units of a good. 
B)  price discriminating among groups of buyers. 
C)  a legal monopoly. 
D)  a natural monopoly. 
E)  marketing by a perfectly competitive firm designed to increase the firm's sales.

Question 4

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  maximized. 
E)  undefined. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  maximized. 
E)  undefined.

Question 5

How should a natural monopoly be regulated under the social interest theory of regulation?

Accepted Answer

A)  by setting price equal to the average cost of production 
B)  by allowing a price that maximizes the profit of the natural monopoly 
C)  by using a marginal cost pricing rule 
D)  by subsidizing other producers to compete with the monopoly 
E)  by using rate of return regulation 
A)  by setting price equal to the average cost of production 
B)  by allowing a price that maximizes the profit of the natural monopoly 
C)  by using a marginal cost pricing rule 
D)  by subsidizing other producers to compete with the monopoly 
E)  by using rate of return regulation

Question 6

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The deadweight loss when the market has a monopoly producer is

Accepted Answer

A)  ace. 
B)  abf. 
C)  bcd. 
D)  bcef. 
E)  acd. 
A)  ace. 
B)  abf. 
C)  bcd. 
D)  bcef. 
E)  acd.

Question 7

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

Accepted Answer

A)  least cost pricing and average cost pricing. 
B)  price discrimination and two-part tariff pricing. 
C)  zero profit pricing. 
D)  profit-maximizing pricing. 
E)  None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss. 
A)  least cost pricing and average cost pricing. 
B)  price discrimination and two-part tariff pricing. 
C)  zero profit pricing. 
D)  profit-maximizing pricing. 
E)  None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.

Question 8

A monopoly produces a product ________ and there ________ barriers to entry into the market.

Accepted Answer

A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are 
A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are

Question 9

Under a marginal cost pricing rule,a natural monopoly

Accepted Answer

A)  makes a reasonable profit. 
B)  makes an economic profit. 
C)  earns accounting profits, but breaks even in economic terms. 
D)  incurs an economic loss. 
E)  makes a normal profit, but it cannot be determined whether or not it makes an accounting profit. 
A)  makes a reasonable profit. 
B)  makes an economic profit. 
C)  earns accounting profits, but breaks even in economic terms. 
D)  incurs an economic loss. 
E)  makes a normal profit, but it cannot be determined whether or not it makes an accounting profit.

Question 10

If a monopoly can perfectly price discriminate,

Accepted Answer

A)  all the demanders pay one price. 
B)  it minimizes its profit. 
C)  it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D)  it produces less output than would be produced if the market was a perfectly competitive industry. 
E)  it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry. 
A)  all the demanders pay one price. 
B)  it minimizes its profit. 
C)  it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D)  it produces less output than would be produced if the market was a perfectly competitive industry. 
E)  it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry.

Question 11

A ________ monopoly sells different units of its good or service for ________.

Accepted Answer

A)  price-discriminating; different prices 
B)  price-discriminating; the same price 
C)  single-price; the same price 
D)  single-price; different prices 
E)  Both Answers A and C are correct. 
A)  price-discriminating; different prices 
B)  price-discriminating; the same price 
C)  single-price; the same price 
D)  single-price; different prices 
E)  Both Answers A and C are correct.

Question 12

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,the length of the double sided arrow is the

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  economic loss per unit. 
E)  economic profit. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  economic loss per unit. 
E)  economic profit.

Question 13

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 decreases. 
B)  consumer surplus decreases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie's will see all of his tickets at a single price. 
A)  Arnie's profit decreases. 
B)  consumer surplus decreases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie's will see all of his tickets at a single price.

Question 14

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

Accepted Answer

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

Question 15

A single-price monopoly

Accepted Answer

A)  sets a single, different price for each consumer. 
B)  sets a single price for all consumers. 
C)  asks each consumer what single price they would be willing to pay. 
D)  sets a single, different price for each of two different groups. 
E)  sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay. 
A)  sets a single, different price for each consumer. 
B)  sets a single price for all consumers. 
C)  asks each consumer what single price they would be willing to pay. 
D)  sets a single, different price for each of two different groups. 
E)  sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay.

Question 16

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

Accepted Answer

A)  The producer benefits, but consumers and society are harmed. 
B)  The producer and society are harmed, but consumers benefit. 
C)  The producer and society benefit, but consumers are harmed. 
D)  The producer is harmed, but consumers and society benefit. 
E)  The producer, consumers, and society all benefit. 
A)  The producer benefits, but consumers and society are harmed. 
B)  The producer and society are harmed, but consumers benefit. 
C)  The producer and society benefit, but consumers are harmed. 
D)  The producer is harmed, but consumers and society benefit. 
E)  The producer, consumers, and society all benefit.

Question 17

If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly,the amount of the gain in 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 18

Earning-sharing regulation involves

Accepted Answer

A)  setting the monopoly's price equal to its average total cost. 
B)  requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C)  setting a maximum price the monopoly may charge and maintaining it for many years. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost. 
A)  setting the monopoly's price equal to its average total cost. 
B)  requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C)  setting a maximum price the monopoly may charge and maintaining it for many years. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost.

Question 19

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

Accepted Answer

A)  There are barriers to entry. 
B)  The monopoly must be keeping the amount earned secret. 
C)  The market must be too small. 
D)  The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E)  Nothing, other firms will enter and will compete away the profit. 
A)  There are barriers to entry. 
B)  The monopoly must be keeping the amount earned secret. 
C)  The market must be too small. 
D)  The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E)  Nothing, other firms will enter and will compete away the profit.

Question 20

In States where the government runs liquor stores,the monopoly results from

Accepted Answer

A)  economies of scale. 
B)  legal restrictions. 
C)  control of an essential resource. 
D)  patents. 
E)  public fear. 
A)  economies of scale. 
B)  legal restrictions. 
C)  control of an essential resource. 
D)  patents. 
E)  public fear.

In equilibrium,rent seeking eliminates the

A "buy one,get one for half price" promotion is an example of

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

How should a natural monopoly be regulated under the social interest theory of regulation?

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The deadweight loss when the market has a monopoly producer is

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

A monopoly produces a product and there barriers to entry into the market.

Under a marginal cost pricing rule,a natural monopoly

If a monopoly can perfectly price discriminate,

A monopoly sells different units of its good or service for .

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the length of the double sided arrow is the

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

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

A single-price monopoly

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly,the amount of the gain in producer surplus is the area ________.

Earning-sharing regulation involves

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

In States where the government runs liquor stores,the monopoly results 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

In equilibrium,rent seeking eliminates the

A "buy one,get one for half price" promotion is an example of

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

How should a natural monopoly be regulated under the social interest theory of regulation?

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The deadweight loss when the market has a monopoly producer is

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

A monopoly produces a product ________ and there ________ barriers to entry into the market.

Under a marginal cost pricing rule,a natural monopoly

If a monopoly can perfectly price discriminate,

A ________ monopoly sells different units of its good or service for ________.

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the length of the double sided arrow is the

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

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

A single-price monopoly

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly,the amount of the gain in producer surplus is the area ________.

Earning-sharing regulation involves

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

In States where the government runs liquor stores,the monopoly results 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

A monopoly produces a product and there barriers to entry into the market.

A monopoly sells different units of its good or service for .