Question 1

Which of the following statements is correct?

Accepted Answer

A)  Monopolies are guaranteed to earn an economic profit. 
B)  The market demand and the firm's demand are the same for a monopoly. 
C)  Monopolies have perfectly inelastic demand for the product sold. 
D)  Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E)  Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve. 
A)  Monopolies are guaranteed to earn an economic profit. 
B)  The market demand and the firm's demand are the same for a monopoly. 
C)  Monopolies have perfectly inelastic demand for the product sold. 
D)  Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E)  Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve.

Question 2

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

Accepted Answer

The price will fall and output will incr

Question 3

In contrast to competitive firms,single-price monopolies

Accepted Answer

A)  do not have to worry about market demand. 
B)  sell only if demand is inelastic. 
C)  can never incur a loss. 
D)  can make an economic profit indefinitely. 
E)  must take the price that is determined by the market demand and market supply. 
A)  do not have to worry about market demand. 
B)  sell only if demand is inelastic. 
C)  can never incur a loss. 
D)  can make an economic profit indefinitely. 
E)  must take the price that is determined by the market demand and market supply.

Question 4

Who receives benefits if regulation works according to social interest theory?

Accepted Answer

A)  the entire economy 
B)  cohesive interest groups 
C)  everyone not in the cohesive interest group 
D)  the regulators 
E)  It is impossible to determine who benefits. 
A)  the entire economy 
B)  cohesive interest groups 
C)  everyone not in the cohesive interest group 
D)  the regulators 
E)  It is impossible to determine who benefits.

Question 5

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

Accepted Answer

A)  legal; illegal 
B)  natural; legal 
C)  natural; illegal 
D)  natural; rent seeking 
E)  ownership; rent seeking 
A)  legal; illegal 
B)  natural; legal 
C)  natural; illegal 
D)  natural; rent seeking 
E)  ownership; rent seeking

Question 6

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,the dark triangle is the

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  total cost. 
E)  economic profit. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  total cost. 
E)  economic profit.

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 a monopoly,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

A barrier to entry is

Accepted Answer

A)  the economic term for diseconomies of scale. 
B)  illegal in most markets. 
C)  anything that protects a firm from the arrival of new competitors. 
D)  a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E)  the same as rent seeking. 
A)  the economic term for diseconomies of scale. 
B)  illegal in most markets. 
C)  anything that protects a firm from the arrival of new competitors. 
D)  a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E)  the same as rent seeking.

Question 9

The social interest theory of regulation is defined as the

Accepted Answer

A)  use of regulations to maximize firms' profits. 
B)  use of regulations to assure an efficient use of resources. 
C)  removal of regulations on business activities. 
D)  implementation and removal of regulations on the cable TV industry. 
E)  use of rate of return regulation. 
A)  use of regulations to maximize firms' profits. 
B)  use of regulations to assure an efficient use of resources. 
C)  removal of regulations on business activities. 
D)  implementation and removal of regulations on the cable TV industry. 
E)  use of rate of return regulation.

Question 10

To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Accepted Answer

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

Question 11

Arnie's Airlines decides to offer different fares to different customers for the same trip.Arnie's price discriminates because Arnie

Accepted Answer

A)  wants to convert consumer surplus to deadweight loss. 
B)  wants to help some buyers with lower fares. 
C)  has different costs for the same flight. 
D)  wants to convert consumer surplus to economic profit. 
E)  wants to convert producer surplus to consumer surplus. 
A)  wants to convert consumer surplus to deadweight loss. 
B)  wants to help some buyers with lower fares. 
C)  has different costs for the same flight. 
D)  wants to convert consumer surplus to economic profit. 
E)  wants to convert producer surplus to consumer surplus.

Question 12

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Accepted Answer

A)  monopoly. 
B)  a barrier to entry. 
C)  behavior that is not profit-maximizing. 
D)  price discrimination. 
E)  rent seeking. 
A)  monopoly. 
B)  a barrier to entry. 
C)  behavior that is not profit-maximizing. 
D)  price discrimination. 
E)  rent seeking.

Question 13

Is a single-price monopoly efficient?

Accepted Answer

A)  Yes, because it creates a deadweight loss. 
B)  No, because it creates a deadweight loss. 
C)  Yes, because consumers gain and producers lose some of their surpluses. 
D)  Yes, because consumers lose and producers gain some of their surpluses. 
E)  Yes, because it produces the quantity at which MR = MC. 
A)  Yes, because it creates a deadweight loss. 
B)  No, because it creates a deadweight loss. 
C)  Yes, because consumers gain and producers lose some of their surpluses. 
D)  Yes, because consumers lose and producers gain some of their surpluses. 
E)  Yes, because it produces the quantity at which MR = MC.

Question 14

Rent seeking is the act of obtaining special treatment by ________ to create ________.

Accepted Answer

A)  a monopoly; consumer surplus 
B)  the government; economic profit 
C)  consumers; a monopoly 
D)  the government; consumer surplus 
E)  competitive producers; a monopoly 
A)  a monopoly; consumer surplus 
B)  the government; economic profit 
C)  consumers; a monopoly 
D)  the government; consumer surplus 
E)  competitive producers; a monopoly

Question 15

A natural monopoly is one that arises from

Accepted Answer

A)  patent law. 
B)  economies of scale. 
C)  copyright law. 
D)  any government-imposed barrier to entry. 
E)  mergers. 
A)  patent law. 
B)  economies of scale. 
C)  copyright law. 
D)  any government-imposed barrier to entry. 
E)  mergers.

Question 16

A monopoly can arise when

Accepted Answer

A)  there are diseconomies of scale. 
B)  there are barriers to entry and no close substitutes for the good being produced. 
C)  a firm cannot price discriminate. 
D)  firms engage in rent seeking. 
E)  a firm must set MR equal to MC in order to maximize its profit. 
A)  there are diseconomies of scale. 
B)  there are barriers to entry and no close substitutes for the good being produced. 
C)  a firm cannot price discriminate. 
D)  firms engage in rent seeking. 
E)  a firm must set MR equal to MC in order to maximize its profit.

Question 17

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 18

A firm that is a natural monopoly

Accepted Answer

A)  can supply the entire market at a lower average total cost than two or more firms. 
B)  has very small fixed costs and very large marginal costs. 
C)  is infrequently regulated because having one firm serve the market is economically sound. 
D)  cannot make an economic profit if it is not regulated because it must serve a very large customer base. 
E)  produces the efficient quantity of output when it is not regulated. 
A)  can supply the entire market at a lower average total cost than two or more firms. 
B)  has very small fixed costs and very large marginal costs. 
C)  is infrequently regulated because having one firm serve the market is economically sound. 
D)  cannot make an economic profit if it is not regulated because it must serve a very large customer base. 
E)  produces the efficient quantity of output when it is not regulated.

Question 19

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

Accepted Answer

A)  marginal revenue will exceed marginal cost. 
B)  profit will be maximized. 
C)  marginal revenue will be negative. 
D)  marginal revenue will be maximized. 
E)  both the marginal revenue and the price will be negative. 
A)  marginal revenue will exceed marginal cost. 
B)  profit will be maximized. 
C)  marginal revenue will be negative. 
D)  marginal revenue will be maximized. 
E)  both the marginal revenue and the price will be negative.

Question 20

-The figure above shows a natural monopoly that the government must regulate.Which of the following pairs most likely results in similar outcomes?

Accepted Answer

A)  marginal cost pricing and rate of return regulation 
B)  marginal cost pricing and a two-part tariff 
C)  average cost pricing and rate of return regulation 
D)  predatory pricing and price caps 
E)  marginal cost pricing and price cap regulation 
A)  marginal cost pricing and rate of return regulation 
B)  marginal cost pricing and a two-part tariff 
C)  average cost pricing and rate of return regulation 
D)  predatory pricing and price caps 
E)  marginal cost pricing and price cap regulation

Which of the following statements is correct?

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

In contrast to competitive firms,single-price monopolies

Who receives benefits if regulation works according to social interest theory?

Two types of barriers to entry are called barriers to entry and barriers to entry.

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the dark triangle is the

-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 a monopoly,the price of a pound of steak is

A barrier to entry is

The social interest theory of regulation is defined as the

To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Arnie's Airlines decides to offer different fares to different customers for the same trip.Arnie's price discriminates because Arnie

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Is a single-price monopoly efficient?

Rent seeking is the act of obtaining special treatment by to create .

A natural monopoly is one that arises from

A monopoly can arise when

What are the conditions that define a monopoly?

A firm that is a natural monopoly

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

-The figure above shows a natural monopoly that the government must regulate.Which of the following pairs most likely results in similar outcomes?

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

Which of the following statements is correct?

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

In contrast to competitive firms,single-price monopolies

Who receives benefits if regulation works according to social interest theory?

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the dark triangle is the

-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 a monopoly,the price of a pound of steak is

A barrier to entry is

The social interest theory of regulation is defined as the

To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Arnie's Airlines decides to offer different fares to different customers for the same trip.Arnie's price discriminates because Arnie

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Is a single-price monopoly efficient?

Rent seeking is the act of obtaining special treatment by ________ to create ________.

A natural monopoly is one that arises from

A monopoly can arise when

What are the conditions that define a monopoly?

A firm that is a natural monopoly

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

-The figure above shows a natural monopoly that the government must regulate.Which of the following pairs most likely results in similar outcomes?

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

Two types of barriers to entry are called barriers to entry and barriers to entry.

To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Rent seeking is the act of obtaining special treatment by to create .