Question 1

We define a monopoly as a market with

Accepted Answer

A)  one supplier and no barriers to entry. 
B)  one supplier with barriers to entry. 
C)  many suppliers with no barriers to entry. 
D)  many suppliers with barriers to entry. 
E)  a few suppliers and barriers to entry. 
A)  one supplier and no barriers to entry. 
B)  one supplier with barriers to entry. 
C)  many suppliers with no barriers to entry. 
D)  many suppliers with barriers to entry. 
E)  a few suppliers and barriers to entry.

Question 2

Firms that can effectively price discriminate

Accepted Answer

A)  can be either perfectly competitive firms or monopolies. 
B)  can prevent the resale of their products. 
C)  have only one class of buyers, buyers willing to pay a high price. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  can be either perfectly competitive firms or monopolies. 
B)  can prevent the resale of their products. 
C)  have only one class of buyers, buyers willing to pay a high price. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 3

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

Accepted Answer

A)  2,000 pounds. 
B)  3,000 pounds. 
C)  4,000 pounds. 
D)  5,000 pounds. 
E)  less than 2,000 pounds. 
A)  2,000 pounds. 
B)  3,000 pounds. 
C)  4,000 pounds. 
D)  5,000 pounds. 
E)  less than 2,000 pounds.

Question 4

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

Accepted Answer

A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00 
A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00

Question 5

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

Question 6

A single-price monopoly

Accepted Answer

A)  must practice price discrimination. 
B)  can lower its price for only a few select consumers if it wants to increase its sales. 
C)  will set its price equal to a consumer's willingness to pay. 
D)  must lower the price for all customers if it wants to increase its sales. 
E)  is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly. 
A)  must practice price discrimination. 
B)  can lower its price for only a few select consumers if it wants to increase its sales. 
C)  will set its price equal to a consumer's willingness to pay. 
D)  must lower the price for all customers if it wants to increase its sales. 
E)  is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly.

Question 7

A difference between a perfectly competitive industry and a monopoly is that

Accepted Answer

A)  in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B)  a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C)  only monopolies have an incentive to maximize profit. 
D)  perfectly competitive firms can have a public franchise. 
E)  a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run. 
A)  in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B)  a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C)  only monopolies have an incentive to maximize profit. 
D)  perfectly competitive firms can have a public franchise. 
E)  a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run.

Question 8

A single-price monopoly transfers

Accepted Answer

A)  consumer surplus to producers. 
B)  producer surplus to consumers. 
C)  economic profit to consumers. 
D)  economic profit to the government. 
E)  economic profit to deadweight loss. 
A)  consumer surplus to producers. 
B)  producer surplus to consumers. 
C)  economic profit to consumers. 
D)  economic profit to the government. 
E)  economic profit to deadweight loss.

Question 9

An airline company

Accepted Answer

A)  cannot price discriminate because it is against the law. 
B)  price discriminates by charging higher prices to business travelers. 
C)  price discriminates by charging lower prices to business travelers. 
D)  price discriminates even though its profits are lower because competition forces it to do so. 
E)  has fewer customers because it price discriminates than it would have if it did not price discriminate. 
A)  cannot price discriminate because it is against the law. 
B)  price discriminates by charging higher prices to business travelers. 
C)  price discriminates by charging lower prices to business travelers. 
D)  price discriminates even though its profits are lower because competition forces it to do so. 
E)  has fewer customers because it price discriminates than it would have if it did not price discriminate.

Question 10

Natural barriers to entry arise when,over the relevant range of output,there

Accepted Answer

A)  are diseconomies of scale. 
B)  are constant returns to scale. 
C)  are several firms who produce at the lowest average cost. 
D)  are economies of scale. 
E)  is one firm that owns a key natural resource. 
A)  are diseconomies of scale. 
B)  are constant returns to scale. 
C)  are several firms who produce at the lowest average cost. 
D)  are economies of scale. 
E)  is one firm that owns a key natural resource.

Question 11

-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,how many households in Oakland are served?

Accepted Answer

A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  10,000 
A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  10,000

Question 12

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________,the firm produces ________ units per week.

Accepted Answer

A)  the HHI; 50 
B)  an average cost pricing rule; 30 
C)  rate of return regulation; 40 
D)  social interest regulation; 30 
E)  a marginal cost pricing rule; 20 
A)  the HHI; 50 
B)  an average cost pricing rule; 30 
C)  rate of return regulation; 40 
D)  social interest regulation; 30 
E)  a marginal cost pricing rule; 20

Question 13

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the deadweight loss 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 14

A natural monopoly

Accepted Answer

A)  faces more competition after regulation. 
B)  might exaggerate its costs if it is regulated using rate of return regulation. 
C)  might falsely minimize its costs if it is regulated using rate of return regulation. 
D)  might falsely minimize its costs if it is regulated using a marginal cost pricing rule. 
E)  is allowed to maximize its profit under a marginal cost pricing rule. 
A)  faces more competition after regulation. 
B)  might exaggerate its costs if it is regulated using rate of return regulation. 
C)  might falsely minimize its costs if it is regulated using rate of return regulation. 
D)  might falsely minimize its costs if it is regulated using a marginal cost pricing rule. 
E)  is allowed to maximize its profit under a marginal cost pricing rule.

Question 15

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  greater than in the long run and less than in the short run than 
E)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  greater than in the long run and less than in the short run than 
E)  not comparable to

Question 16

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

Accepted Answer

A)  that the firm makes a normal profit. 
B)  that the firm maximizes its profit. 
C)  that consumer surplus is less than what it would be if the firm maximized its profit. 
D)  an efficient level of production. 
E)  that the firm makes an economic profit. 
A)  that the firm makes a normal profit. 
B)  that the firm maximizes its profit. 
C)  that consumer surplus is less than what it would be if the firm maximized its profit. 
D)  an efficient level of production. 
E)  that the firm makes an economic profit.

Question 17

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

Accepted Answer

A)  It is maximizing profit. 
B)  To increase profit, it should produce less. 
C)  To increase profit, it should produce more. 
D)  It should shut down. 
E)  It is making an economic profit. 
A)  It is maximizing profit. 
B)  To increase profit, it should produce less. 
C)  To increase profit, it should produce more. 
D)  It should shut down. 
E)  It is making an economic profit.

Question 18

Which of the following is a characteristic of monopoly?

Accepted Answer

A)  The firm faces competition from many other firms. 
B)  The firm produces a product that has many close substitutes. 
C)  There are barriers to enter the market. 
D)  The firm's demand is perfectly elastic. 
E)  The firm produces a product identical to that produced by its many competitors. 
A)  The firm faces competition from many other firms. 
B)  The firm produces a product that has many close substitutes. 
C)  There are barriers to enter the market. 
D)  The firm's demand is perfectly elastic. 
E)  The firm produces a product identical to that produced by its many competitors.

Question 19

A barrier to entry is

Accepted Answer

A)  the economic term for diseconomies of scale. 
B)  illegal in most markets. 
C)  anything that protects a firm from the arrival of new competitors. 
D)  a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E)  the same as rent seeking. 
A)  the economic term for diseconomies of scale. 
B)  illegal in most markets. 
C)  anything that protects a firm from the arrival of new competitors. 
D)  a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E)  the same as rent seeking.

Question 20

When a natural monopoly is regulated using an average cost pricing rule,what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using an average cost pricing rule,the m

We define a monopoly as a market with

Firms that can effectively price discriminate

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

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

A single-price monopoly

A difference between a perfectly competitive industry and a monopoly is that

A single-price monopoly transfers

An airline company

Natural barriers to entry arise when,over the relevant range of output,there

-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,how many households in Oakland are served?

-The figure above shows a natural monopoly that the government must regulate.If the government uses ,the firm produces units per week.

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

A natural monopoly

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

Which of the following is a characteristic of monopoly?

A barrier to entry is

When a natural monopoly is regulated using an average cost pricing rule,what can you say about the firm's profit and the market's efficiency?

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

We define a monopoly as a market with

Firms that can effectively price discriminate

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

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

A single-price monopoly

A difference between a perfectly competitive industry and a monopoly is that

A single-price monopoly transfers

An airline company

Natural barriers to entry arise when,over the relevant range of output,there

-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,how many households in Oakland are served?

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________,the firm produces ________ units per week.

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

A natural monopoly

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

Which of the following is a characteristic of monopoly?

A barrier to entry is

When a natural monopoly is regulated using an average cost pricing rule,what can you say about the firm's profit and the market's efficiency?

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 figure above shows a natural monopoly that the government must regulate.If the government uses ,the firm produces units per week.