Question 1

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Accepted Answer

A)  not maximizing its profit and should decrease output to increase its profit. 
B)  not maximizing its profit and should increase output to increase its profit. 
C)  maximizing its profit but should shut down. 
D)  maximizing its profit and should not shut down. 
E)  maximizing its profit but still should decrease output to earn even more profit. 
A)  not maximizing its profit and should decrease output to increase its profit. 
B)  not maximizing its profit and should increase output to increase its profit. 
C)  maximizing its profit but should shut down. 
D)  maximizing its profit and should not shut down. 
E)  maximizing its profit but still should decrease output to earn even more profit.

Question 2

The capture theory of regulation is defined as

Accepted Answer

A)  the use of regulations to assure the efficient use of resources. 
B)  the constant reapplication of regulation on the cable TV industry. 
C)  the use of regulation to assist producers to maximize profits. 
D)  the removal of regulations on business activities. 
E)  regulation that focuses on consumers' interests and ignores producers' interests. 
A)  the use of regulations to assure the efficient use of resources. 
B)  the constant reapplication of regulation on the cable TV industry. 
C)  the use of regulation to assist producers to maximize profits. 
D)  the removal of regulations on business activities. 
E)  regulation that focuses on consumers' interests and ignores producers' interests.

Question 3

With perfect price discrimination,the level of output

Accepted Answer

A)  exceeds the efficient quantity. 
B)  is the same as the amount produced by any monopoly that price discriminates. 
C)  is the same as the amount produced in a perfectly competitive market. 
D)  equals the amount produced by a single-price monopoly. 
E)  is unknown. 
A)  exceeds the efficient quantity. 
B)  is the same as the amount produced by any monopoly that price discriminates. 
C)  is the same as the amount produced in a perfectly competitive market. 
D)  equals the amount produced by a single-price monopoly. 
E)  is unknown.

Question 4

The capture theory of regulation assumes that regulation benefits

Accepted Answer

A)  producers. 
B)  consumers. 
C)  government. 
D)  the general public. 
E)  the regulators. 
A)  producers. 
B)  consumers. 
C)  government. 
D)  the general public. 
E)  the regulators.

Question 5

A monopoly will arise if

Accepted Answer

A)  two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B)  the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C)  Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D)  several big pizza chains force several small pizzerias out of business. 
E)  people decide they like pizza more than before so some pizzeria's gain new customers. 
A)  two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B)  the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C)  Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D)  several big pizza chains force several small pizzerias out of business. 
E)  people decide they like pizza more than before so some pizzeria's gain new customers.

Question 6

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Accepted Answer

A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly. 
A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly.

Question 7

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

Accepted Answer

A)  The ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC. 
B)  The demand curve is downward sloping, therefore price falls as quantity increases. 
C)  The MC is constant and equal to price. 
D)  Because output is determined by setting MC equal to the price, consumer surplus is maximized. 
E)  The firm's MR is always less than its price. 
A)  The ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC. 
B)  The demand curve is downward sloping, therefore price falls as quantity increases. 
C)  The MC is constant and equal to price. 
D)  Because output is determined by setting MC equal to the price, consumer surplus is maximized. 
E)  The firm's MR is always less than its price.

Question 8

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 9

To be able to price discriminate,a firm must

Accepted Answer

A)  have a public franchise. 
B)  be a natural monopoly. 
C)  be able to prevent resales of its good. 
D)  have a patent. 
E)  have an ownership barrier to entry. 
A)  have a public franchise. 
B)  be a natural monopoly. 
C)  be able to prevent resales of its good. 
D)  have a patent. 
E)  have an ownership barrier to entry.

Question 10

-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 11

The demand curve for a monopoly is

Accepted Answer

A)  horizontal because the demand is perfectly elastic. 
B)  downward sloping. 
C)  vertical because the demand is perfectly inelastic. 
D)  upward sloping. 
E)  undefined because it is the only supplier in the market. 
A)  horizontal because the demand is perfectly elastic. 
B)  downward sloping. 
C)  vertical because the demand is perfectly inelastic. 
D)  upward sloping. 
E)  undefined because it is the only supplier in the market.

Question 12

A natural monopoly's output is less if it is regulated with

Accepted Answer

A)  a marginal cost pricing rule than if it is unregulated. 
B)  an average cost pricing rule than if it is unregulated. 
C)  an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D)  a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E)  More information about the firm's demand is needed to determine how its output depends on what regulation it faces. 
A)  a marginal cost pricing rule than if it is unregulated. 
B)  an average cost pricing rule than if it is unregulated. 
C)  an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D)  a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E)  More information about the firm's demand is needed to determine how its output depends on what regulation it faces.

Question 13

A monopoly market has

Accepted Answer

A)  a few firms. 
B)  a single firm. 
C)  two dominating firms in the market. 
D)  only two firms in it. 
E)  some unspecified number of firms in it. 
A)  a few firms. 
B)  a single firm. 
C)  two dominating firms in the market. 
D)  only two firms in it. 
E)  some unspecified number of firms in it.

Question 14

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 15

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

Accepted Answer

A)  ABH 
B)  BFGH 
C)  ACG 
D)  BDEH 
E)  ACE 
A)  ABH 
B)  BFGH 
C)  ACG 
D)  BDEH 
E)  ACE

Question 16

How does marginal revenue compare to price for a single-price monopoly?

Accepted Answer

Marginal r

Question 17

When a regulatory agency uses rate of return regulation,the

Accepted Answer

A)  agency is able to eliminate the deadweight loss. 
B)  firm's managers have an incentive to inflate the firm's costs. 
C)  regulated firm's profit must be maximized for the market to be efficient. 
D)  regulated firm must receive a government subsidy. 
E)  the agency is using a form of marginal cost pricing. 
A)  agency is able to eliminate the deadweight loss. 
B)  firm's managers have an incentive to inflate the firm's costs. 
C)  regulated firm's profit must be maximized for the market to be efficient. 
D)  regulated firm must receive a government subsidy. 
E)  the agency is using a form of marginal cost pricing.

Question 18

-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 difference between marginal cost and price

Accepted Answer

A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20. 
A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20.

Question 19

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

Accepted Answer

A)  a natural monopoly. 
B)  a marginal cost pricing rule. 
C)  an average cost pricing rule. 
D)  the capture theory of regulation. 
E)  the social interest theory of regulation. 
A)  a natural monopoly. 
B)  a marginal cost pricing rule. 
C)  an average cost pricing rule. 
D)  the capture theory of regulation. 
E)  the social interest theory of regulation.

Question 20

The key idea behind price discrimination is to convert consumer surplus into

Accepted Answer

A)  a barrier to entry. 
B)  economic profit. 
C)  deadweight loss. 
D)  monopoly power. 
E)  total cost. 
A)  a barrier to entry. 
B)  economic profit. 
C)  deadweight loss. 
D)  monopoly power. 
E)  total cost.

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

The capture theory of regulation is defined as

With perfect price discrimination,the level of output

The capture theory of regulation assumes that regulation benefits

A monopoly will arise if

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

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

To be able to price discriminate,a firm must

-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 demand curve for a monopoly is

A natural monopoly's output is less if it is regulated with

A monopoly market has

The social interest theory of regulation is defined as the

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

How does marginal revenue compare to price for a single-price monopoly?

When a regulatory agency uses rate of return regulation,the

-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 difference between marginal cost and price

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

The key idea behind price discrimination is to convert consumer surplus into

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

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Exam 16: Monopoly

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

The capture theory of regulation is defined as

With perfect price discrimination,the level of output

The capture theory of regulation assumes that regulation benefits

A monopoly will arise if

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

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

To be able to price discriminate,a firm must

-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 demand curve for a monopoly is

A natural monopoly's output is less if it is regulated with

A monopoly market has

The social interest theory of regulation is defined as the

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

How does marginal revenue compare to price for a single-price monopoly?

When a regulatory agency uses rate of return regulation,the

-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 difference between marginal cost and price

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

The key idea behind price discrimination is to convert consumer surplus into

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