Question 1

To maximize its profit,a single-price monopoly produces the quantity at which

Accepted Answer

A)  the difference between marginal revenue and marginal cost is as large as possible. 
B)  marginal revenue equals marginal cost. 
C)  average total cost is at its minimum. 
D)  the marginal cost curve intersects the demand curve. 
E)  the marginal revenue curve intersects the horizontal axis. 
A)  the difference between marginal revenue and marginal cost is as large as possible. 
B)  marginal revenue equals marginal cost. 
C)  average total cost is at its minimum. 
D)  the marginal cost curve intersects the demand curve. 
E)  the marginal revenue curve intersects the horizontal axis.

Question 2

Can a monopoly make an economic profit in the long run? Explain your answer.

Accepted Answer

A monopoly can make an economic profit i

Question 3

"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is partially correct becau

Question 4

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

Accepted Answer

A)  ownership of the only ferry across Puget Sound for twenty miles 
B)  the United States Postal Service 
C)  the cable television company in your hometown 
D)  owning the only licensed taxicab in town 
E)  producing a patented drug 
A)  ownership of the only ferry across Puget Sound for twenty miles 
B)  the United States Postal Service 
C)  the cable television company in your hometown 
D)  owning the only licensed taxicab in town 
E)  producing a patented drug

Question 5

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

Accepted Answer

The point where MR = MC maximizes any fi

Question 6

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost,the firm

Accepted Answer

A)  makes zero economic profit. 
B)  makes an economic profit. 
C)  incurs an economic loss. 
D)  makes a normal-economic profit. 
E)  makes either zero economic profit or an economic profit, depending on whether the firm's average total cost equals or is less than its marginal cost. 
A)  makes zero economic profit. 
B)  makes an economic profit. 
C)  incurs an economic loss. 
D)  makes a normal-economic profit. 
E)  makes either zero economic profit or an economic profit, depending on whether the firm's average total cost equals or is less than its marginal cost.

Question 7

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

Accepted Answer

A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2 
A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2

Question 8

-The table above gives the demand for a monopolist's output.Between which two quantities is marginal revenue equal to 0?

Accepted Answer

A)  4 and 5 
B)  3 and 4 
C)  2 and 3 
D)  1 and 2 
A)  4 and 5 
B)  3 and 4 
C)  2 and 3 
D)  1 and 2

Question 9

Compared to setting a single price,if a firm can price discriminate it

Accepted Answer

A)  makes a larger economic profit. 
B)  makes a lower economic profit. 
C)  makes zero economic profit. 
D)  has no change in its economic profit from when it set a single price. 
E)  might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve. 
A)  makes a larger economic profit. 
B)  makes a lower economic profit. 
C)  makes zero economic profit. 
D)  has no change in its economic profit from when it set a single price. 
E)  might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve.

Question 10

Gene's Car Wash is a natural monopoly.To wash 100 cars a week,if Gene is unregulated,he would charge a price of $10.Gene's average total cost for washing 100 cars is $8,his average variable cost is $6,and his marginal cost is $4.If Gene is regulated using an average cost pricing rule,the price he is allowed to charge to wash 100 cars is

Accepted Answer

A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $400. 
A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $400.

Question 11

A monopoly is

Accepted Answer

A)  a price taker. 
B)  able to ignore the demand for its product when setting its price. 
C)  able to set the price for its product. 
D)  able to earn only a normal profit in the long run. 
E)  a firm with no marginal revenue curve. 
A)  a price taker. 
B)  able to ignore the demand for its product when setting its price. 
C)  able to set the price for its product. 
D)  able to earn only a normal profit in the long run. 
E)  a firm with no marginal revenue curve.

Question 12

The good produced by a monopoly

Accepted Answer

A)  has perfect substitutes. 
B)  has no substitutes at all. 
C)  has no close substitutes. 
D)  can be easily duplicated. 
E)  must be unable to be resold. 
A)  has perfect substitutes. 
B)  has no substitutes at all. 
C)  has no close substitutes. 
D)  can be easily duplicated. 
E)  must be unable to be resold.

Question 13

Under earnings-sharing regulation,if a firm's profits ________ above a certain level,they must be shared with the firm's ________.

Accepted Answer

A)  rise; customers 
B)  fall; customers 
C)  rise; suppliers 
D)  fall; suppliers 
E)  rise; competitors 
A)  rise; customers 
B)  fall; customers 
C)  rise; suppliers 
D)  fall; suppliers 
E)  rise; competitors

Question 14

Earning-sharing regulation involves

Accepted Answer

A)  setting the monopoly's price equal to its average total cost. 
B)  requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C)  setting a maximum price the monopoly may charge and maintaining it for many years. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost. 
A)  setting the monopoly's price equal to its average total cost. 
B)  requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C)  setting a maximum price the monopoly may charge and maintaining it for many years. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost.

Question 15

Comparing a perfectly competitive market to a single-price monopoly with the same costs,we see that

Accepted Answer

A)  both markets are equally efficient in their use of resources. 
B)  the monopoly market always is more efficient in the use of resources. 
C)  the perfectly competitive market achieves efficiency in resource use while the monopoly market does not. 
D)  the monopoly market achieves efficiency in resource use while perfectly competitive market does not. 
E)  None of the above answers is correct because comparing a perfectly competitive market to a monopoly is impossible. 
A)  both markets are equally efficient in their use of resources. 
B)  the monopoly market always is more efficient in the use of resources. 
C)  the perfectly competitive market achieves efficiency in resource use while the monopoly market does not. 
D)  the monopoly market achieves efficiency in resource use while perfectly competitive market does not. 
E)  None of the above answers is correct because comparing a perfectly competitive market to a monopoly is impossible.

Question 16

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

Accepted Answer

A)  choosing output levels according to the profit-maximizing rule. 
B)  using price discrimination. 
C)  increasing production. 
D)  decreasing production. 
E)  decreasing its marginal cost but not changing its average total cost. 
A)  choosing output levels according to the profit-maximizing rule. 
B)  using price discrimination. 
C)  increasing production. 
D)  decreasing production. 
E)  decreasing its marginal cost but not changing its average total cost.

Question 17

Which of the following statements is correct?

Accepted Answer

A)  Any firm can price discriminate. 
B)  Only firms that sell high-priced products can price discriminate. 
C)  In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D)  In order to price discriminate, the firms must sell a low-priced product. 
E)  Price discrimination is always illegal. 
A)  Any firm can price discriminate. 
B)  Only firms that sell high-priced products can price discriminate. 
C)  In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D)  In order to price discriminate, the firms must sell a low-priced product. 
E)  Price discrimination is always illegal.

Question 18

For a single-price monopoly,price is

Accepted Answer

A)  equal to marginal revenue. 
B)  greater than marginal revenue. 
C)  less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D)  less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E)  equal to zero because the firm is not a price taker. 
A)  equal to marginal revenue. 
B)  greater than marginal revenue. 
C)  less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D)  less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E)  equal to zero because the firm is not a price taker.

Question 19

In a monopoly,producers ________ and consumers ________.

Accepted Answer

A)  gain; lose 
B)  lose; lose 
C)  lose; gain 
D)  gain; gain 
E)  gain; do not gain or lose 
A)  gain; lose 
B)  lose; lose 
C)  lose; gain 
D)  gain; gain 
E)  gain; do not gain or lose

Question 20

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

Accepted Answer

The profit-maximizing output i

To maximize its profit,a single-price monopoly produces the quantity at which

Can a monopoly make an economic profit in the long run? Explain your answer.

"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

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

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost,the firm

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

-The table above gives the demand for a monopolist's output.Between which two quantities is marginal revenue equal to 0?

Compared to setting a single price,if a firm can price discriminate it

A monopoly is

The good produced by a monopoly

Under earnings-sharing regulation,if a firm's profits above a certain level,they must be shared with the firm's .

Earning-sharing regulation involves

Comparing a perfectly competitive market to a single-price monopoly with the same costs,we see that

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

Which of the following statements is correct?

For a single-price monopoly,price is

In a monopoly,producers and consumers .

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

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

To maximize its profit,a single-price monopoly produces the quantity at which

Can a monopoly make an economic profit in the long run? Explain your answer.

"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

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

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost,the firm

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

-The table above gives the demand for a monopolist's output.Between which two quantities is marginal revenue equal to 0?

Compared to setting a single price,if a firm can price discriminate it

A monopoly is

The good produced by a monopoly

Under earnings-sharing regulation,if a firm's profits ________ above a certain level,they must be shared with the firm's ________.

Earning-sharing regulation involves

Comparing a perfectly competitive market to a single-price monopoly with the same costs,we see that

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

Which of the following statements is correct?

For a single-price monopoly,price is

In a monopoly,producers ________ and consumers ________.

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

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

Under earnings-sharing regulation,if a firm's profits above a certain level,they must be shared with the firm's .

In a monopoly,producers and consumers .