Question 1

With perfect price discrimination,a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

Accepted Answer

A)  maximum; consumer 
B)  minimum; producer 
C)  maximum; producer 
D)  minimum; consumer 
E)  None of the above answers is correct. 
A)  maximum; consumer 
B)  minimum; producer 
C)  maximum; producer 
D)  minimum; consumer 
E)  None of the above answers is correct.

Question 2

Total revenue is equal to

Accepted Answer

A)  the change in price resulting from a one-unit increase in quantity sold. 
B)  the amount people will buy at a given price. 
C)  the change in the quantity sold when you change the price by one unit. 
D)  price multiplied by the quantity sold. 
E)  the price at which the good or service is sold. 
A)  the change in price resulting from a one-unit increase in quantity sold. 
B)  the amount people will buy at a given price. 
C)  the change in the quantity sold when you change the price by one unit. 
D)  price multiplied by the quantity sold. 
E)  the price at which the good or service is sold.

Question 3

Price cap regulation

Accepted Answer

A)  does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B)  sets the maximum price these firms can charge. 
C)  gives firms the incentive to exaggerate their costs. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct. 
A)  does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B)  sets the maximum price these firms can charge. 
C)  gives firms the incentive to exaggerate their costs. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct.

Question 4

Can a monopoly make an economic profit in the long run? Explain your answer.

Accepted Answer

A monopoly can make an economic profit i

Question 5

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The amount of consumer surplus 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 6

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.
 $$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { (dollars) }
\end{array} \
\hline 6 & 1 & - & - \
5 & 2 & - & - \
4 & 3 & - & - \
3 & 4 & - & - \
2 & 5 & - & - \
1 & 6 & - & - \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { c c c c } 
\begin{arra

Question 7

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

Accepted Answer

A)  price discriminating. 
B)  a natural monopoly. 
C)  a legal monopoly. 
D)  efficient when profit maximizing. 
E)  an ownership-of-the-market monopoly. 
A)  price discriminating. 
B)  a natural monopoly. 
C)  a legal monopoly. 
D)  efficient when profit maximizing. 
E)  an ownership-of-the-market monopoly.

Question 8

What are a marginal cost pricing rule and an average cost pricing rule? What are the disadvantages and advantages of each?

Accepted Answer

Natural monopolies can be regulated usin

Question 9

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Accepted Answer

Average cost pricing means that the firm

Question 10

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Accepted Answer

A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly. 
A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly.

Question 11

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Accepted Answer

A)  not maximizing its profit and should decrease output to increase its profit. 
B)  not maximizing its profit and should increase output to increase its profit. 
C)  maximizing its profit but should shut down. 
D)  maximizing its profit and should not shut down. 
E)  maximizing its profit but still should decrease output to earn even more profit. 
A)  not maximizing its profit and should decrease output to increase its profit. 
B)  not maximizing its profit and should increase output to increase its profit. 
C)  maximizing its profit but should shut down. 
D)  maximizing its profit and should not shut down. 
E)  maximizing its profit but still should decrease output to earn even more profit.

Question 12

Which of the following is an example of price discrimination?

Accepted Answer

A)  UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B)  Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C)  Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are all correct. 
A)  UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B)  Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C)  Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are all correct.

Question 13

If we compare a perfectly competitive market to a single-price monopoly with the same costs,the monopoly sells

Accepted Answer

A)  the same quantity at a higher price. 
B)  a smaller quantity at a higher price. 
C)  a larger quantity at a lower price. 
D)  a larger quantity at a higher price. 
E)  a smaller quantity at the same price. 
A)  the same quantity at a higher price. 
B)  a smaller quantity at a higher price. 
C)  a larger quantity at a lower price. 
D)  a larger quantity at a higher price. 
E)  a smaller quantity at the same price.

Question 14

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 15

Price discrimination occurs when a firm

Accepted Answer

A)  charges customers different prices for different goods. 
B)  is able to sell different units of a good at different prices. 
C)  charges customers the same price for different goods. 
D)  can determine which of the many market equilibrium prices it will charge. 
E)  has a marginal cost curve that is horizontal. 
A)  charges customers different prices for different goods. 
B)  is able to sell different units of a good at different prices. 
C)  charges customers the same price for different goods. 
D)  can determine which of the many market equilibrium prices it will charge. 
E)  has a marginal cost curve that is horizontal.

Question 16

Patents

Accepted Answer

A)  are granted only to competitive firms and not monopolies. 
B)  require that monopolies increase the amount they produce. 
C)  increase the incentive to capture economies of scale. 
D)  increase the incentive to innovate. 
E)  grant the holder a monopoly that lasts forever. 
A)  are granted only to competitive firms and not monopolies. 
B)  require that monopolies increase the amount they produce. 
C)  increase the incentive to capture economies of scale. 
D)  increase the incentive to innovate. 
E)  grant the holder a monopoly that lasts forever.

Question 17

If a natural monopoly is told to set price equal to average cost,then the firm

Accepted Answer

A)  is not able to set marginal revenue equal to marginal cost. 
B)  automatically also sets price equal to marginal cost. 
C)  will make a substantial economic profit. 
D)  will incur an economic loss. 
E)  sets a price that is lower than its marginal cost. 
A)  is not able to set marginal revenue equal to marginal cost. 
B)  automatically also sets price equal to marginal cost. 
C)  will make a substantial economic profit. 
D)  will incur an economic loss. 
E)  sets a price that is lower than its marginal cost.

Question 18

Price cap regulation is defined as regulation that

Accepted Answer

A)  imposes a price ceiling on the regulated firm. 
B)  encourages firms to exaggerate costs to increase profits. 
C)  uses marginal cost pricing to ensure efficient output. 
D)  uses average cost pricing to ensure costs are covered. 
E)  is essentially the same as rate of return regulation. 
A)  imposes a price ceiling on the regulated firm. 
B)  encourages firms to exaggerate costs to increase profits. 
C)  uses marginal cost pricing to ensure efficient output. 
D)  uses average cost pricing to ensure costs are covered. 
E)  is essentially the same as rate of return regulation.

Question 19

Which of the following is true regarding price discrimination?
i.It converts consumer surplus to economic profit.
ii.A price discriminator must be a monopoly.
iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

Accepted Answer

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

Question 20

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the deadweight loss 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

With perfect price discrimination,a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.

Total revenue is equal to

Price cap regulation

Can a monopoly make an economic profit in the long run? Explain your answer.

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The amount of consumer surplus when the market has a monopoly producer is

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue. Price (dollars) Quantity (units) Total revenue (dollars) Marginal revenue (dollars) 6 1 - - 5 2 - - 4 3 - - 3 4 - - 2 5 - - 1 6 - -

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

What are a marginal cost pricing rule and an average cost pricing rule? What are the disadvantages and advantages of each?

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Which of the following is an example of price discrimination?

If we compare a perfectly competitive market to a single-price monopoly with the same costs,the monopoly sells

Why are water companies considered a natural monopoly?

Price discrimination occurs when a firm

Patents

If a natural monopoly is told to set price equal to average cost,then the firm

Price cap regulation is defined as regulation that

Which of the following is true regarding price discrimination? i.It converts consumer surplus to economic profit. ii.A price discriminator must be a monopoly. iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

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

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

With perfect price discrimination,a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

Total revenue is equal to

Price cap regulation

Can a monopoly make an economic profit in the long run? Explain your answer.

-The figure above shows the demand curve,marginal revenue curve,and marginal cost curve.The amount of consumer surplus when the market has a monopoly producer is

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue. Price (dollars) Quantity (units) Total revenue (dollars) Marginal revenue (dollars) 6 1 - - 5 2 - - 4 3 - - 3 4 - - 2 5 - - 1 6 - -

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

What are a marginal cost pricing rule and an average cost pricing rule? What are the disadvantages and advantages of each?

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Which of the following is an example of price discrimination?

If we compare a perfectly competitive market to a single-price monopoly with the same costs,the monopoly sells

Why are water companies considered a natural monopoly?

Price discrimination occurs when a firm

Patents

If a natural monopoly is told to set price equal to average cost,then the firm

Price cap regulation is defined as regulation that

Which of the following is true regarding price discrimination? i.It converts consumer surplus to economic profit. ii.A price discriminator must be a monopoly. iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

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

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,a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.