Question 1

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Accepted Answer

Marginal cost pricing: The regulated pri

Question 2

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

Accepted Answer

A)  the same as its demand curve. 
B)  the same as its supply curve. 
C)  the same as its marginal cost curve. 
D)  a vertical line at the profit-maximizing quantity of output. 
E)  undefined because it does not exist. 
A)  the same as its demand curve. 
B)  the same as its supply curve. 
C)  the same as its marginal cost curve. 
D)  a vertical line at the profit-maximizing quantity of output. 
E)  undefined because it does not exist.

Question 3

A price-discriminating monopoly is a monopoly that

Accepted Answer

A)  sells its output at a single price to all of its customers. 
B)  sells different units of a good or service at different prices. 
C)  has control over the resources used to produce the product. 
D)  has a license to sell the product. 
E)  illegally charges different customers different prices for the good it produces. 
A)  sells its output at a single price to all of its customers. 
B)  sells different units of a good or service at different prices. 
C)  has control over the resources used to produce the product. 
D)  has a license to sell the product. 
E)  illegally charges different customers different prices for the good it produces.

Question 4

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct.Competition amo

Question 5

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 6

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC is left unregulated,what is the price of cable television in Oakland?

Accepted Answer

A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $50 
A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $50

Question 7

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 8

With a natural monopoly

Accepted Answer

A)  no regulation is necessary because it is a natural monopoly. 
B)  regulation takes the form of forcing competition from new firms. 
C)  regulation takes the form of forcing the company out of business. 
D)  regulation can take the form of average cost pricing to allow coverage of costs. 
E)  regulation takes the form of breaking the company into several competing firms. 
A)  no regulation is necessary because it is a natural monopoly. 
B)  regulation takes the form of forcing competition from new firms. 
C)  regulation takes the form of forcing the company out of business. 
D)  regulation can take the form of average cost pricing to allow coverage of costs. 
E)  regulation takes the form of breaking the company into several competing firms.

Question 9

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 10

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 11

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

Question 12

Price discrimination is

Accepted Answer

A)  always illegal in the United States. 
B)  defined as charging the same price to all consumers. 
C)  defined as charging different prices for different units. 
D)  setting the price to minimize the quantity sold. 
E)  Both answers A and C are correct. 
A)  always illegal in the United States. 
B)  defined as charging the same price to all consumers. 
C)  defined as charging different prices for different units. 
D)  setting the price to minimize the quantity sold. 
E)  Both answers A and C are correct.

Question 13

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

Accepted Answer

A)  does not change, that is, it remains constant. 
B)  falls. 
C)  rises. 
D)  might rise or fall depending on whether the demand for food is elastic or inelastic. 
E)  might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve. 
A)  does not change, that is, it remains constant. 
B)  falls. 
C)  rises. 
D)  might rise or fall depending on whether the demand for food is elastic or inelastic. 
E)  might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve.

Question 14

For a natural monopoly,economies of scale

Accepted Answer

A)  exist along the long-run average cost curve at least until it crosses the market demand curve. 
B)  and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C)  lead to a legal barrier to entry. 
D)  as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E)  are totally absent. 
A)  exist along the long-run average cost curve at least until it crosses the market demand curve. 
B)  and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C)  lead to a legal barrier to entry. 
D)  as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E)  are totally absent.

Question 15

Which of the following industries is most likely closest to achieving perfect price discrimination?

Accepted Answer

A)  the airline industry 
B)  the wheat industry 
C)  the textbook industry 
D)  the toilet paper industry 
E)  the soft drink industry 
A)  the airline industry 
B)  the wheat industry 
C)  the textbook industry 
D)  the toilet paper industry 
E)  the soft drink industry

Question 16

-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 price per pillow is

Accepted Answer

A)  $70. 
B)  $60. 
C)  $40. 
D)  $100. 
E)  $30. 
A)  $70. 
B)  $60. 
C)  $40. 
D)  $100. 
E)  $30.

Question 17

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and

Question 18

-In the figure above,complete the graph of the electric utility company by adding the marginal revenue and marginal cost curves.Assume the marginal cost is constant at 4¢ per kilowatt-hour.Now discuss the marginal cost pricing rule and the average cost pricing rule regulators might use to regulate the firm.Be sure to state the price and quantity that are selected for each option.Also,what price and quantity does the firm select if it is not regulated?

Accepted Answer

@#IMG-DLM& The completed figure is above.Two metho

Question 19

Which of the following statements about price discrimination is false?

Accepted Answer

A)  Price discrimination is a method for a seller to capture some consumer surplus. 
B)  Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C)  Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D)  Price discrimination increases a monopoly's profit. 
E)  All forms of price discrimination are illegal. 
A)  Price discrimination is a method for a seller to capture some consumer surplus. 
B)  Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C)  Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D)  Price discrimination increases a monopoly's profit. 
E)  All forms of price discrimination are illegal.

Question 20

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under a marginal cost pricing rule,what is the price of cable television in Oakland?

Accepted Answer

A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $0 
A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $0

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

A price-discriminating monopoly is a monopoly that

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

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

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC is left unregulated,what is the price of cable television in Oakland?

A monopoly can arise when

With a natural monopoly

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

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

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

Price discrimination is

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

For a natural monopoly,economies of scale

Which of the following industries is most likely closest to achieving perfect price discrimination?

-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 price per pillow is

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Which of the following statements about price discrimination is false?

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

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

A price-discriminating monopoly is a monopoly that

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

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

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC is left unregulated,what is the price of cable television in Oakland?

A monopoly can arise when

With a natural monopoly

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

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

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

Price discrimination is

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

For a natural monopoly,economies of scale

Which of the following industries is most likely closest to achieving perfect price discrimination?

-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 price per pillow is

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Which of the following statements about price discrimination is false?

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

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