Question 1

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

Accepted Answer

A)  legal; illegal 
B)  natural; legal 
C)  natural; illegal 
D)  natural; rent seeking 
E)  ownership; rent seeking 
A)  legal; illegal 
B)  natural; legal 
C)  natural; illegal 
D)  natural; rent seeking 
E)  ownership; rent seeking

Question 2

A monopoly produces a product ________ and there ________ barriers to entry into the market.

Accepted Answer

A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are 
A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are

Question 3

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

Accepted Answer

A)  least cost pricing and average cost pricing. 
B)  price discrimination and two-part tariff pricing. 
C)  zero profit pricing. 
D)  profit-maximizing pricing. 
E)  None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss. 
A)  least cost pricing and average cost pricing. 
B)  price discrimination and two-part tariff pricing. 
C)  zero profit pricing. 
D)  profit-maximizing pricing. 
E)  None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.

Question 4

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

Accepted Answer

A)  Arnie's profit increases. 
B)  consumer surplus increases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie can no longer set a price that depends upon the buyer's willingness to pay. 
A)  Arnie's profit increases. 
B)  consumer surplus increases. 
C)  Arnie's revenues decrease. 
D)  Arnie's sells fewer tickets. 
E)  Arnie can no longer set a price that depends upon the buyer's willingness to pay.

Question 5

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

Accepted Answer

A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude. 
A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude.

Question 6

-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 price of a pound of steak is

Accepted Answer

A)  $4. 
B)  $8. 
C)  $12. 
D)  $20. 
E)  $2. 
A)  $4. 
B)  $8. 
C)  $12. 
D)  $20. 
E)  $2.

Question 7

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Accepted Answer

Because the monopoly does control the ma

Question 8

Give an example of price discrimination.

Accepted Answer

Price discrimination occurs wh

Question 9

What potential problem is there with rate of return pricing?

Accepted Answer

The monopolist might exaggerate its cost

Question 10

Which of the following would create a natural monopoly?

Accepted Answer

A)  ownership of all the available units of a necessary input 
B)  an exclusive right granted to supply a good or service 
C)  requirement of a government license before the firm can sell the good or service 
D)  technology enabling a single firm to produce at a lower average total cost than two or more firms 
E)  a patent granted the producer of the good or service 
A)  ownership of all the available units of a necessary input 
B)  an exclusive right granted to supply a good or service 
C)  requirement of a government license before the firm can sell the good or service 
D)  technology enabling a single firm to produce at a lower average total cost than two or more firms 
E)  a patent granted the producer of the good or service

Question 11

The demand curve facing a single-price monopoly

Accepted Answer

A)  lies below the marginal revenue curve. 
B)  lies above the marginal revenue curve. 
C)  is the same as only the marginal revenue curve. 
D)  is the same as only the marginal cost curve. 
E)  is the same as both the marginal revenue curve and the marginal cost curve. 
A)  lies below the marginal revenue curve. 
B)  lies above the marginal revenue curve. 
C)  is the same as only the marginal revenue curve. 
D)  is the same as only the marginal cost curve. 
E)  is the same as both the marginal revenue curve and the marginal cost curve.

Question 12

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

Accepted Answer

A)  $17.50. 
B)  $17.00. 
C)  $8.50. 
D)  $8.00. 
E)  $9.00 
A)  $17.50. 
B)  $17.00. 
C)  $8.50. 
D)  $8.00. 
E)  $9.00

Question 13

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements are correct?
i.When 3 haircuts are produced,the firm's ATC is $10.
ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
iii.The firm's is NOT a perfect competitor.

Accepted Answer

A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii

Question 14

A profit-maximizing output for a single-price monopoly is determined by the intersection of the ________ curves and the profit-maximizing price is found on the ________ curve.

Accepted Answer

A)  marginal cost and marginal revenue; marginal revenue 
B)  marginal cost and marginal revenue; demand 
C)  total revenue and total cost, total revenue 
D)  marginal cost and average total cost; demand 
E)  demand and supply; supply 
A)  marginal cost and marginal revenue; marginal revenue 
B)  marginal cost and marginal revenue; demand 
C)  total revenue and total cost, total revenue 
D)  marginal cost and average total cost; demand 
E)  demand and supply; supply

Question 15

Rent seeking

Accepted Answer

A)  is the act of obtaining special treatment by the government to create economic profit. 
B)  is the attempt to get rent from tardy renters. 
C)  occurs when landlords advertise for apartments and other property for rent. 
D)  is an attempt to sell a property and capture economic profit. 
E)  occurs when a firm charges different prices for different units of its good or service. 
A)  is the act of obtaining special treatment by the government to create economic profit. 
B)  is the attempt to get rent from tardy renters. 
C)  occurs when landlords advertise for apartments and other property for rent. 
D)  is an attempt to sell a property and capture economic profit. 
E)  occurs when a firm charges different prices for different units of its good or service.

Question 16

If a monopoly can perfectly price discriminate,

Accepted Answer

A)  all the demanders pay one price. 
B)  it minimizes its profit. 
C)  it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D)  it produces less output than would be produced if the market was a perfectly competitive industry. 
E)  it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry. 
A)  all the demanders pay one price. 
B)  it minimizes its profit. 
C)  it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D)  it produces less output than would be produced if the market was a perfectly competitive industry. 
E)  it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry.

Question 17

-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 is ________ per pillow and the marginal cost is ________ per pillow.

Accepted Answer

A)  $60; $60 
B)  $60; $40 
C)  $70; $60 
D)  $70; $40 
E)  $100; $40 
A)  $60; $60 
B)  $60; $40 
C)  $70; $60 
D)  $70; $40 
E)  $100; $40

Question 18

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 19

Which of the following statements is FALSE?

Accepted Answer

A)  A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B)  A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C)  In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D)  The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E)  In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm. 
A)  A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B)  A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C)  In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D)  The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E)  In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm.

Question 20

-The above table gives the demand schedule for a single-price monopoly.If the marginal cost is $3,the profit maximizing output for the monopoly will be between

Accepted Answer

A)  1 to 2 units. 
B)  2 to 3 units. 
C)  3 to 4 units. 
D)  4 to 5 units. 
E)  Exactly 5 units. 
A)  1 to 2 units. 
B)  2 to 3 units. 
C)  3 to 4 units. 
D)  4 to 5 units. 
E)  Exactly 5 units.

Two types of barriers to entry are called barriers to entry and barriers to entry.

A monopoly produces a product and there barriers to entry into the market.

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

-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 price of a pound of steak is

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Give an example of price discrimination.

What potential problem is there with rate of return pricing?

Which of the following would create a natural monopoly?

The demand curve facing a single-price monopoly

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

A profit-maximizing output for a single-price monopoly is determined by the intersection of the curves and the profit-maximizing price is found on the curve.

Rent seeking

If a monopoly can perfectly price discriminate,

-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 is per pillow and the marginal cost is per pillow.

What are the conditions that define a monopoly?

Which of the following statements is FALSE?

-The above table gives the demand schedule for a single-price monopoly.If the marginal cost is $3,the profit maximizing output for the monopoly will be between

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

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

A monopoly produces a product ________ and there ________ barriers to entry into the market.

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

Arnie's Airlines is a monopoly airline that is able to price discriminate.If Arnie's decides to price discriminate,then

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

-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 price of a pound of steak is

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Give an example of price discrimination.

What potential problem is there with rate of return pricing?

Which of the following would create a natural monopoly?

The demand curve facing a single-price monopoly

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

A profit-maximizing output for a single-price monopoly is determined by the intersection of the ________ curves and the profit-maximizing price is found on the ________ curve.

Rent seeking

If a monopoly can perfectly price discriminate,

-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 is ________ per pillow and the marginal cost is ________ per pillow.

What are the conditions that define a monopoly?

Which of the following statements is FALSE?

-The above table gives the demand schedule for a single-price monopoly.If the marginal cost is $3,the profit maximizing output for the monopoly will be between

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

Two types of barriers to entry are called barriers to entry and barriers to entry.

A monopoly produces a product and there barriers to entry into the market.

A profit-maximizing output for a single-price monopoly is determined by the intersection of the curves and the profit-maximizing price is found on the curve.

-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 is per pillow and the marginal cost is per pillow.