Question 1

Patents

Accepted Answer

A)  are a legal barrier to entry. 
B)  remove legal barriers to entry. 
C)  create economies of scale. 
D)  decrease the incentive to innovate. 
E)  are prohibited in the United States. 
A)  are a legal barrier to entry. 
B)  remove legal barriers to entry. 
C)  create economies of scale. 
D)  decrease the incentive to innovate. 
E)  are prohibited in the United States.

Question 2

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

Accepted Answer

A)  abP₁. 
B)  acP₂. 
C)  bce. 
D)  bed. 
E)  P₁beP₃. 
A)  abP₁. 
B)  acP₂. 
C)  bce. 
D)  bed. 
E)  P₁beP₃.

Question 3

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The capture t

Question 4

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

Accepted Answer

A)  medical doctor 
B)  taxi cab driver 
C)  the local pizza parlor 
D)  the local telephone company 
E)  the local Honda dealership 
A)  medical doctor 
B)  taxi cab driver 
C)  the local pizza parlor 
D)  the local telephone company 
E)  the local Honda dealership

Question 5

If a producer wants a monopoly with a legal barrier to entry,how can this be done?
i.The producer can spend funds lobbying to attain passage of the legal barrier to entry.
ii.The producer can purchase an existing monopoly.
iii.The producer can make rent seeking expenditures.

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii, and iii 
E)  None of the above are ways to acquire a monopoly with a legal barrier to entry. 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii, and iii 
E)  None of the above are ways to acquire a monopoly with a legal barrier to entry.

Question 6

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the deadweight loss created is equal to the area of

Accepted Answer

A)  ABG. 
B)  BEFG. 
C)  BCFG. 
D)  BCE. 
E)  None of the above because there is no deadweight loss created. 
A)  ABG. 
B)  BEFG. 
C)  BCFG. 
D)  BCE. 
E)  None of the above because there is no deadweight loss created.

Question 7

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

Accepted Answer

A)  $38 
B)  $285 
C)  $570 
D)  $19 
E)  There is not enough information given to answer the question. 
A)  $38 
B)  $285 
C)  $570 
D)  $19 
E)  There is not enough information given to answer the question.

Question 8

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

Accepted Answer

A)  greater than but not equal to 
B)  less than 
C)  equal to but not greater than 
D)  not comparable to 
E)  either greater than or equal to 
A)  greater than but not equal to 
B)  less than 
C)  equal to but not greater than 
D)  not comparable to 
E)  either greater than or equal to

Question 9

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________,the firm produces ________ units per week.

Accepted Answer

A)  the HHI; 50 
B)  an average cost pricing rule; 30 
C)  rate of return regulation; 40 
D)  social interest regulation; 30 
E)  a marginal cost pricing rule; 20 
A)  the HHI; 50 
B)  an average cost pricing rule; 30 
C)  rate of return regulation; 40 
D)  social interest regulation; 30 
E)  a marginal cost pricing rule; 20

Question 10

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,he produces ________ pillows per hour.

Accepted Answer

A)  1,000 
B)  3,000 
C)  4,000 
D)  0 
E)  2,000 
A)  1,000 
B)  3,000 
C)  4,000 
D)  0 
E)  2,000

Question 11

The process of price cap regulation includes which of the following?
i.a price ceiling
ii.marginal cost pricing
iii.average cost pricing

Accepted Answer

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

Question 12

A natural monopoly

Accepted Answer

A)  arises as a result of legal barriers to entry. 
B)  occurs when one firm controls a natural resource. 
C)  arises when one firm can meet the entire market demand at a lower average total cost than two or more firms. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  arises as a result of legal barriers to entry. 
B)  occurs when one firm controls a natural resource. 
C)  arises when one firm can meet the entire market demand at a lower average total cost than two or more firms. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 13

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the difference between marginal cost and price

Accepted Answer

A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20. 
A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20.

Question 14

A single-price monopoly has a marginal revenue curve that is

Accepted Answer

A)  horizontal and equal to price. 
B)  downward sloping and lies below the demand curve. 
C)  upward sloping and is the same as its supply curve. 
D)  downward sloping and lies above the demand curve. 
E)  vertical at the profit-maximizing quantity. 
A)  horizontal and equal to price. 
B)  downward sloping and lies below the demand curve. 
C)  upward sloping and is the same as its supply curve. 
D)  downward sloping and lies above the demand curve. 
E)  vertical at the profit-maximizing quantity.

Question 15

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 16

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces ________ output and charges ________ price.

Accepted Answer

A)  a larger; a lower 
B)  a smaller; a lower 
C)  the same; a higher 
D)  a smaller; a higher 
E)  a smaller; the same 
A)  a larger; a lower 
B)  a smaller; a lower 
C)  the same; a higher 
D)  a smaller; a higher 
E)  a smaller; the same

Question 17

The long-run average cost curve of a natural monopoly

Accepted Answer

A)  is positively sloped until it crosses the demand curve. 
B)  intersects the demand curve while it is negative sloped. 
C)  intersects the demand curve while it is positively sloped. 
D)  is the natural monopoly's supply curve. 
E)  is the same as the natural monopoly's demand curve. 
A)  is positively sloped until it crosses the demand curve. 
B)  intersects the demand curve while it is negative sloped. 
C)  intersects the demand curve while it is positively sloped. 
D)  is the natural monopoly's supply curve. 
E)  is the same as the natural monopoly's demand curve.

Question 18

The relationship between marginal revenue and elasticity is

Accepted Answer

A)  when demand is elastic, marginal revenue is positive and when demand is inelastic, marginal revenue is negative. 
B)  whenever the elasticity is positive, marginal revenue is positive. 
C)  whenever the elasticity is negative, marginal revenue is positive. 
D)  when demand is elastic, marginal revenue is negative and when demand is inelastic, marginal revenue is positive. 
E)  that total revenue equals zero at the quantity for which the demand is unit elastic. 
A)  when demand is elastic, marginal revenue is positive and when demand is inelastic, marginal revenue is negative. 
B)  whenever the elasticity is positive, marginal revenue is positive. 
C)  whenever the elasticity is negative, marginal revenue is positive. 
D)  when demand is elastic, marginal revenue is negative and when demand is inelastic, marginal revenue is positive. 
E)  that total revenue equals zero at the quantity for which the demand is unit elastic.

Question 19

Which of the following must a firm be able to do to successfully price discriminate?
i.divide buyers into different groups according to their willingness to pay
ii.prevent resale of the good or service
iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

Accepted Answer

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

Question 20

Why do some utilities have an incentive to exaggerate their costs of production?

Accepted Answer

Because utilities are generally allowed

Patents

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

If a producer wants a monopoly with a legal barrier to entry,how can this be done? i.The producer can spend funds lobbying to attain passage of the legal barrier to entry. ii.The producer can purchase an existing monopoly. iii.The producer can make rent seeking expenditures.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the deadweight loss created is equal to the area of

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

-The figure above shows a natural monopoly that the government must regulate.If the government uses ,the firm produces units per week.

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,he produces ________ pillows per hour.

The process of price cap regulation includes which of the following? i.a price ceiling ii.marginal cost pricing iii.average cost pricing

A natural monopoly

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the difference between marginal cost and price

A single-price monopoly has a marginal revenue curve that is

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces output and charges price.

The long-run average cost curve of a natural monopoly

The relationship between marginal revenue and elasticity is

Which of the following must a firm be able to do to successfully price discriminate? i.divide buyers into different groups according to their willingness to pay ii.prevent resale of the good or service iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

Why do some utilities have an incentive to exaggerate their costs of production?

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

Patents

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

If a producer wants a monopoly with a legal barrier to entry,how can this be done? i.The producer can spend funds lobbying to attain passage of the legal barrier to entry. ii.The producer can purchase an existing monopoly. iii.The producer can make rent seeking expenditures.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the deadweight loss created is equal to the area of

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________,the firm produces ________ units per week.

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,he produces ________ pillows per hour.

The process of price cap regulation includes which of the following? i.a price ceiling ii.marginal cost pricing iii.average cost pricing

A natural monopoly

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the difference between marginal cost and price

A single-price monopoly has a marginal revenue curve that is

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces ________ output and charges ________ price.

The long-run average cost curve of a natural monopoly

The relationship between marginal revenue and elasticity is

Which of the following must a firm be able to do to successfully price discriminate? i.divide buyers into different groups according to their willingness to pay ii.prevent resale of the good or service iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

Why do some utilities have an incentive to exaggerate their costs of production?

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

-The figure above shows a natural monopoly that the government must regulate.If the government uses ,the firm produces units per week.

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces output and charges price.