Question 1

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

Accepted Answer

A)  offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B)  lower its prices to younger customers too. 
C)  prevent senior citizens from reselling their rooms to younger customers. 
D)  shift its demand curve rightward. 
E)  determine if a senior citizen can pay a higher price. 
A)  offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B)  lower its prices to younger customers too. 
C)  prevent senior citizens from reselling their rooms to younger customers. 
D)  shift its demand curve rightward. 
E)  determine if a senior citizen can pay a higher price.

Question 2

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

Accepted Answer

A)  It is a horizontal line at the competitive industry's price. 
B)  It is a line that lies below the new monopoly's demand curve. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is identical to the demand curve for the monopolist's output. 
E)  It is a line that lies above the new monopoly's demand curve. 
A)  It is a horizontal line at the competitive industry's price. 
B)  It is a line that lies below the new monopoly's demand curve. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is identical to the demand curve for the monopolist's output. 
E)  It is a line that lies above the new monopoly's demand curve.

Question 3

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 4

Monopolies are inefficient because,at the profit-maximizing output level,

Accepted Answer

A)  MC = MR. 
B)  MC does not equal MR. 
C)  MB = MC. 
D)  MB does not equal MC. 
E)  P = ATC. 
A)  MC = MR. 
B)  MC does not equal MR. 
C)  MB = MC. 
D)  MB does not equal MC. 
E)  P = ATC.

Question 5

The above figure shows a market.
-If the market was a monopoly,the quantity would be ________ and the price would be ________; if the market tis perfectly competitive,the quantity would be ________ and the price would be ________.

Accepted Answer

A)  Q₁; P₁; Q₂; P₂ 
B)  Q₂; P₁; Q₁; P₂ 
C)  Q₁; P₁; Q₂; P₁ 
D)  Q₁; P₂; Q₂; P₁ 
E)  Q₁; P₂; Q₁; P₁ 
A)  Q₁; P₁; Q₂; P₂ 
B)  Q₂; P₁; Q₁; P₂ 
C)  Q₁; P₁; Q₂; P₁ 
D)  Q₁; P₂; Q₂; P₁ 
E)  Q₁; P₂; Q₁; P₁

Question 6

A "buy one,get one for half price" promotion is an example of

Accepted Answer

A)  price discriminating among units of a good. 
B)  price discriminating among groups of buyers. 
C)  a legal monopoly. 
D)  a natural monopoly. 
E)  marketing by a perfectly competitive firm designed to increase the firm's sales. 
A)  price discriminating among units of a good. 
B)  price discriminating among groups of buyers. 
C)  a legal monopoly. 
D)  a natural monopoly. 
E)  marketing by a perfectly competitive firm designed to increase the firm's sales.

Question 7

The above figure shows a market.
-If the market in the figure above is perfectly competitive,consumer surplus 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

Question 8

A ________ monopoly sells different units of its good or service for ________.

Accepted Answer

A)  price-discriminating; different prices 
B)  price-discriminating; the same price 
C)  single-price; the same price 
D)  single-price; different prices 
E)  Both Answers A and C are correct. 
A)  price-discriminating; different prices 
B)  price-discriminating; the same price 
C)  single-price; the same price 
D)  single-price; different prices 
E)  Both Answers A and C are correct.

Question 9

Which of the following goods is the best example of a natural monopoly?

Accepted Answer

A)  distribution of electricity 
B)  diamonds 
C)  first-class mail 
D)  a patented good 
E)  blouses 
A)  distribution of electricity 
B)  diamonds 
C)  first-class mail 
D)  a patented good 
E)  blouses

Question 10

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

Accepted Answer

Price discrimination is selling a good o

Question 11

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the consumer surplus 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 consumer surplus created. 
A)  ABG. 
B)  BEFG. 
C)  BCFG. 
D)  BCE. 
E)  None of the above because there is no consumer surplus created.

Question 12

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

Accepted Answer

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

Question 13

If total revenue falls when output increases,marginal revenue is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  greater than total revenue. 
E)  elastic. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  greater than total revenue. 
E)  elastic.

Question 14

With price discrimination,a monopoly

Accepted Answer

A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  can charge a single price to all customers. 
D)  produces less output than if it does not price discriminate. 
E)  converts consumer surplus into deadweight loss. 
A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  can charge a single price to all customers. 
D)  produces less output than if it does not price discriminate. 
E)  converts consumer surplus into deadweight loss.

Question 15

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot pillows,a monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,Paul produces ________ pillows per hour and if the market was perfectly competitive,________ pillows per hour would be produced.

Accepted Answer

A)  0; 4,000 
B)  3,000; 4,000 
C)  4,000; 4,000 
D)  3,000; 3,000 
E)  0; 3,000 
A)  0; 4,000 
B)  3,000; 4,000 
C)  4,000; 4,000 
D)  3,000; 3,000 
E)  0; 3,000

Question 16

"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 17

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

Accepted Answer

A)  discrimination among units of a good. 
B)  discrimination between groups of buyers. 
C)  perfect price discrimination. 
D)  perfect cost minimization. 
E)  the normal amount of economic profit. 
A)  discrimination among units of a good. 
B)  discrimination between groups of buyers. 
C)  perfect price discrimination. 
D)  perfect cost minimization. 
E)  the normal amount of economic profit.

Question 18

One of the requirements for a monopoly is that

Accepted Answer

A)  products are high priced. 
B)  there are several close substitutes for the product. 
C)  there is a product with no close substitutes. 
D)  the product cannot be produced by small firms. 
E)  there is no barrier to entry. 
A)  products are high priced. 
B)  there are several close substitutes for the product. 
C)  there is a product with no close substitutes. 
D)  the product cannot be produced by small firms. 
E)  there is no barrier to entry.

Question 19

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 20

The U.S.Postal Service's monopoly on first-class mail service is the result of

Accepted Answer

A)  a natural monopoly. 
B)  a patent. 
C)  a public franchise. 
D)  a government license. 
E)  an ownership barrier to entry. 
A)  a natural monopoly. 
B)  a patent. 
C)  a public franchise. 
D)  a government license. 
E)  an ownership barrier to entry.

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

A natural monopoly

Monopolies are inefficient because,at the profit-maximizing output level,

The above figure shows a market. -If the market was a monopoly,the quantity would be and the price would be ; if the market tis perfectly competitive,the quantity would be and the price would be .

A "buy one,get one for half price" promotion is an example of

The above figure shows a market. -If the market in the figure above is perfectly competitive,consumer surplus is the area ________.

A monopoly sells different units of its good or service for .

Which of the following goods is the best example of a natural monopoly?

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

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

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

If total revenue falls when output increases,marginal revenue is

With price discrimination,a monopoly

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

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

One of the requirements for a monopoly is that

Price cap regulation is defined as regulation that

The U.S.Postal Service's monopoly on first-class mail service is the result of

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

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

A natural monopoly

Monopolies are inefficient because,at the profit-maximizing output level,

The above figure shows a market. -If the market was a monopoly,the quantity would be ________ and the price would be ________; if the market tis perfectly competitive,the quantity would be ________ and the price would be ________.

A "buy one,get one for half price" promotion is an example of

The above figure shows a market. -If the market in the figure above is perfectly competitive,consumer surplus is the area ________.

A ________ monopoly sells different units of its good or service for ________.

Which of the following goods is the best example of a natural monopoly?

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

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

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

If total revenue falls when output increases,marginal revenue is

With price discrimination,a monopoly

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

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

One of the requirements for a monopoly is that

Price cap regulation is defined as regulation that

The U.S.Postal Service's monopoly on first-class mail service is the result of

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

The above figure shows a market. -If the market was a monopoly,the quantity would be and the price would be ; if the market tis perfectly competitive,the quantity would be and the price would be .

A monopoly sells different units of its good or service for .