Question 1

Comparing single-price monopoly to perfect competition,monopoly

Accepted Answer

A)  increases the amount of consumer surplus. 
B)  has the same amount of consumer surplus. 
C)  has no consumer surplus. 
D)  decreases the amount of consumer surplus. 
E)  decreases the amount of economic profit. 
A)  increases the amount of consumer surplus. 
B)  has the same amount of consumer surplus. 
C)  has no consumer surplus. 
D)  decreases the amount of consumer surplus. 
E)  decreases the amount of economic profit. D

Question 2

A monopoly is a market with

Accepted Answer

A)  many suppliers each producing an identical product. 
B)  no barriers to entry. 
C)  many substitutes. 
D)  one supplier. 
E)  many suppliers each producing a slightly different product. 
A)  many suppliers each producing an identical product. 
B)  no barriers to entry. 
C)  many substitutes. 
D)  one supplier. 
E)  many suppliers each producing a slightly different product. D

Question 3

If a regulatory agency sets the price equal to marginal cost for a natural monopoly,the

Accepted Answer

A)  government might have to provide a subsidy to the firm to keep it in business. 
B)  price is the same as the unregulated monopoly price. 
C)  firm makes an economic profit, though not the maximum economic profit. 
D)  firm makes the maximum economic profit. 
E)  firm makes zero economic profit. 
A)  government might have to provide a subsidy to the firm to keep it in business. 
B)  price is the same as the unregulated monopoly price. 
C)  firm makes an economic profit, though not the maximum economic profit. 
D)  firm makes the maximum economic profit. 
E)  firm makes zero economic profit. A

Question 4

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output,the price must fall to $20.What is the marginal revenue of the 11th unit?

Accepted Answer

A)  $41 
B)  $20 
C)  $10 
D)  $1 
E)  $220 
A)  $41 
B)  $20 
C)  $10 
D)  $1 
E)  $220

Question 5

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Accepted Answer

Price discrimination helps businesses ca

Question 6

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

Accepted Answer

A)  $52 
B)  $18 
C)  $60 
D)  $12 
E)  $20 
A)  $52 
B)  $18 
C)  $60 
D)  $12 
E)  $20

Question 7

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The social in

Question 8

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 9

Fixed costs are ________ in a natural monopoly,so average total cost ________ as output increases.

Accepted Answer

A)  large; increases 
B)  large; decreases 
C)  small; increases 
D)  small; decreases 
E)  nonexistent; decreases 
A)  large; increases 
B)  large; decreases 
C)  small; increases 
D)  small; decreases 
E)  nonexistent; decreases

Question 10

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 11

A natural monopoly's average cost curve
i.intersects the demand curve while the average cost curve slopes downward.
ii.reaches its minimum before it intersects the demand curve.
iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

Accepted Answer

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

Question 12

For a regulated natural monopoly,the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

Accepted Answer

A)  equal to; efficient 
B)  above; inefficient 
C)  below; efficient 
D)  equal to; inefficient 
E)  above; efficient 
A)  equal to; efficient 
B)  above; inefficient 
C)  below; efficient 
D)  equal to; inefficient 
E)  above; efficient

Question 13

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

Accepted Answer

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

Question 14

The social interest theory of regulation asserts that regulation

Accepted Answer

A)  seeks an efficient use of resources. 
B)  is aimed at keeping prices as low as possible. 
C)  helps firms maximize economic profit. 
D)  of a natural monopoly must be done using rate of return regulation. 
E)  does not work for society as well as would allowing the firms freedom from regulation. 
A)  seeks an efficient use of resources. 
B)  is aimed at keeping prices as low as possible. 
C)  helps firms maximize economic profit. 
D)  of a natural monopoly must be done using rate of return regulation. 
E)  does not work for society as well as would allowing the firms freedom from regulation.

Question 15

If a firm successfully price discriminates,it increases
i.consumer surplus.
ii.deadweight loss.
iii.economic profit.

Accepted Answer

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

Question 16

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the firm

Accepted Answer

A)  avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss. 
B)  incurs an economic loss, but produces the efficient quantity and creates a deadweight loss. 
C)  avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss. 
D)  avoids an economic loss, produces the efficient quantity, and creates a deadweight loss. 
E)  incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss. 
A)  avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss. 
B)  incurs an economic loss, but produces the efficient quantity and creates a deadweight loss. 
C)  avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss. 
D)  avoids an economic loss, produces the efficient quantity, and creates a deadweight loss. 
E)  incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss.

Question 17

Patents
i.encourage the invention of new products and production methods.
ii.generally discourage innovation
iii.are exclusive rights granted to the inventor of a product or service.

Accepted Answer

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

Question 18

The U.S.Postal Service has a monopoly over first-class mail service because

Accepted Answer

A)  the government has granted this agency a public franchise. 
B)  stamps are copyrighted. 
C)  stamps are trademarked. 
D)  stamps are patented. 
E)  it owns a vital resource, namely all mailboxes. 
A)  the government has granted this agency a public franchise. 
B)  stamps are copyrighted. 
C)  stamps are trademarked. 
D)  stamps are patented. 
E)  it owns a vital resource, namely all mailboxes.

Question 19

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

Accepted Answer

When the total revenue is at i

Question 20

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

Accepted Answer

A)  greater with marginal cost pricing but average cost pricing allows for costs to be covered. 
B)  the same under both cases but the profit is greater with average cost pricing. 
C)  greater under average cost pricing but profits are greater with marginal cost pricing. 
D)  the same but profits are greater with marginal cost pricing. 
E)  greater with marginal cost pricing and the firm's profit is larger with marginal cost pricing. 
A)  greater with marginal cost pricing but average cost pricing allows for costs to be covered. 
B)  the same under both cases but the profit is greater with average cost pricing. 
C)  greater under average cost pricing but profits are greater with marginal cost pricing. 
D)  the same but profits are greater with marginal cost pricing. 
E)  greater with marginal cost pricing and the firm's profit is larger with marginal cost pricing.

Comparing single-price monopoly to perfect competition,monopoly

A monopoly is a market with

If a regulatory agency sets the price equal to marginal cost for a natural monopoly,the

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output,the price must fall to $20.What is the marginal revenue of the 11th unit?

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

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

Fixed costs are in a natural monopoly,so average total cost as output increases.

Total revenue is equal to

A natural monopoly's average cost curve i.intersects the demand curve while the average cost curve slopes downward. ii.reaches its minimum before it intersects the demand curve. iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

For a regulated natural monopoly,the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

The social interest theory of regulation asserts that regulation

If a firm successfully price discriminates,it increases i.consumer surplus. ii.deadweight loss. iii.economic profit.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the firm

Patents i.encourage the invention of new products and production methods. ii.generally discourage innovation iii.are exclusive rights granted to the inventor of a product or service.

The U.S.Postal Service has a monopoly over first-class mail service because

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

Getting Started

The Usand 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

Comparing single-price monopoly to perfect competition,monopoly

A monopoly is a market with

If a regulatory agency sets the price equal to marginal cost for a natural monopoly,the

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output,the price must fall to $20.What is the marginal revenue of the 11th unit?

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

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

Fixed costs are ________ in a natural monopoly,so average total cost ________ as output increases.

Total revenue is equal to

A natural monopoly's average cost curve i.intersects the demand curve while the average cost curve slopes downward. ii.reaches its minimum before it intersects the demand curve. iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

For a regulated natural monopoly,the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

The social interest theory of regulation asserts that regulation

If a firm successfully price discriminates,it increases i.consumer surplus. ii.deadweight loss. iii.economic profit.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the firm

Patents i.encourage the invention of new products and production methods. ii.generally discourage innovation iii.are exclusive rights granted to the inventor of a product or service.

The U.S.Postal Service has a monopoly over first-class mail service because

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

Getting Started

The Usand 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

Fixed costs are in a natural monopoly,so average total cost as output increases.

For a regulated natural monopoly,the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.