Question 1

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 2

-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 a monopoly,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 3

A natural monopoly is one that arises from

Accepted Answer

A)  patent law. 
B)  copyright law. 
C)  a firm buying all of a natural resource. 
D)  economies of scale. 
E)  ownership of a natural resource. 
A)  patent law. 
B)  copyright law. 
C)  a firm buying all of a natural resource. 
D)  economies of scale. 
E)  ownership of a natural resource.

Question 4

Competition among rent seekers results in

Accepted Answer

A)  higher rents. 
B)  firms earning normal profits. 
C)  firms setting lower prices. 
D)  lower costs. 
E)  all competing firms earning an economic profit. 
A)  higher rents. 
B)  firms earning normal profits. 
C)  firms setting lower prices. 
D)  lower costs. 
E)  all competing firms earning an economic profit.

Question 5

Which of the following is correct for a single-price monopoly?
i.The firm can determine the quantity it produces and the price it charges.
ii.It would never profitably produce output in the inelastic range of its demand.
iii.Its marginal revenue is less than price.

Accepted Answer

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

Question 6

-The above figure represents the cost,market demand,and marginal revenue curves for a monopoly.
a.Indicate the price and quantity a single-price monopoly selects by labeling the price Pm and the quantity Qm.
b.In the figure,lightly shade in the area that represents the single-price monopoly's economic profit.
c.Indicate the quantity a perfectly price-discriminating monopoly selects by labeling it Qppd.
d.In the figure,more darkly shade in the area that represents the additional economic profit the monopoly earns as a result of the perfect price discrimination.

Accepted Answer

@#IMG-DLM& 
a.The price is labeled Pm and the quan

Question 7

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

Accepted Answer

A)  greater than but not equal to 
B)  less than 
C)  equal to but not greater than 
D)  not comparable to 
E)  either greater than or equal to 
A)  greater than but not equal to 
B)  less than 
C)  equal to but not greater than 
D)  not comparable to 
E)  either greater than or equal to

Question 8

-Ron's Hamburger Joint is the only restaurant in town.The above figure represents Ron's cost,the market demand,and marginal revenue curves.Ron operates as a single-price monopoly.
a.How many hamburgers does Ron produce?
b.What price does Ron charge for a hamburger?
c.What is Ron's total revenue?
d.What is his total cost?
e.What is Ron's economic profit?

Accepted Answer

a.Ron produces 20 hamburgers p

Question 9

In order to maximize its profit,a single-price monopoly produces the amount of output so that

Accepted Answer

A)  P = MC. 
B)  MR = MC. 
C)  P = MC - MR. 
D)  P = MR. 
E)  P = ATC. 
A)  P = MC. 
B)  MR = MC. 
C)  P = MC - MR. 
D)  P = MR. 
E)  P = ATC.

Question 10

Which of the following is NOT correct about a single-price monopoly?

Accepted Answer

A)  Maximum profit is found where demand is the most inelastic. 
B)  Marginal revenue is negative when demand is inelastic. 
C)  Marginal revenue is positive when demand is elastic. 
D)  To sell more output, the firm must lower its price. 
E)  To maximize its profit, the firm produces so that marginal revenue equals marginal cost. 
A)  Maximum profit is found where demand is the most inelastic. 
B)  Marginal revenue is negative when demand is inelastic. 
C)  Marginal revenue is positive when demand is elastic. 
D)  To sell more output, the firm must lower its price. 
E)  To maximize its profit, the firm produces so that marginal revenue equals marginal cost.

Question 11

Price discrimination occurs when a firm

Accepted Answer

A)  charges customers different prices for different goods. 
B)  is able to sell different units of a good at different prices. 
C)  charges customers the same price for different goods. 
D)  can determine which of the many market equilibrium prices it will charge. 
E)  has a marginal cost curve that is horizontal. 
A)  charges customers different prices for different goods. 
B)  is able to sell different units of a good at different prices. 
C)  charges customers the same price for different goods. 
D)  can determine which of the many market equilibrium prices it will charge. 
E)  has a marginal cost curve that is horizontal.

Question 12

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

Accepted Answer

A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive. 
A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive.

Question 13

The social interest theory of regulation assumes that

Accepted Answer

A)  regulation is against the public interest. 
B)  the public is indifferent to regulation. 
C)  regulation seeks an efficient use of resources. 
D)  the public cares deeply about regulation. 
E)  regulators are captured by the firms being regulated. 
A)  regulation is against the public interest. 
B)  the public is indifferent to regulation. 
C)  regulation seeks an efficient use of resources. 
D)  the public cares deeply about regulation. 
E)  regulators are captured by the firms being regulated.

Question 14

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,the dark triangle is the

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  total cost. 
E)  economic profit. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  total cost. 
E)  economic profit.

Question 15

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Accepted Answer

A)  not change. 
B)  increase. 
C)  decrease. 
D)  either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E)  None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly. 
A)  not change. 
B)  increase. 
C)  decrease. 
D)  either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E)  None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.

Question 16

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes,some monopolies are created by gover

Question 17

Assume someone organizes all farms in the nation into a monopoly.What is the monopoly's marginal cost curve?

Accepted Answer

A)  It is a horizontal line at the competitive industry's price. 
B)  It is a vertical line at the formerly competitive industry's quantity. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is the formerly competitive industry's supply curve. 
E)  It is the same as the formally competitive industry's average total cost curve. 
A)  It is a horizontal line at the competitive industry's price. 
B)  It is a vertical line at the formerly competitive industry's quantity. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is the formerly competitive industry's supply curve. 
E)  It is the same as the formally competitive industry's average total cost curve.

Question 18

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A)  marginal revenue is negative when output exceeds 100 units. 
B)  elasticity of demand is less than 1 when output exceeds 100 units. 
C)  marginal revenue is 0 when output equals 100 units. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  marginal revenue is negative when output exceeds 100 units. 
B)  elasticity of demand is less than 1 when output exceeds 100 units. 
C)  marginal revenue is 0 when output equals 100 units. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 19

A natural barrier to entry is defined as a barrier that arises because of

Accepted Answer

A)  technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms. 
B)  patents or licenses that exclude others from producing a good or service. 
C)  many firms producing the good and thereby allowing choice for all consumers. 
D)  anticompetitive practices by a firm that keep other firms from producing. 
E)  one firm owning a key natural resource. 
A)  technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms. 
B)  patents or licenses that exclude others from producing a good or service. 
C)  many firms producing the good and thereby allowing choice for all consumers. 
D)  anticompetitive practices by a firm that keep other firms from producing. 
E)  one firm owning a key natural resource.

Question 20

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.At this output,average total cost is $15.What is the total profit earned?

Accepted Answer

A)  $225 
B)  $285 
C)  $345 
D)  $570 
E)  $19 
A)  $225 
B)  $285 
C)  $345 
D)  $570 
E)  $19

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

-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 a monopoly,the quantity of steak is

A natural monopoly is one that arises from

Competition among rent seekers results in

Which of the following is correct for a single-price monopoly? i.The firm can determine the quantity it produces and the price it charges. ii.It would never profitably produce output in the inelastic range of its demand. iii.Its marginal revenue is less than price.

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

In order to maximize its profit,a single-price monopoly produces the amount of output so that

Which of the following is NOT correct about a single-price monopoly?

Price discrimination occurs when a firm

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

The social interest theory of regulation assumes that

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the dark triangle is the

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Assume someone organizes all farms in the nation into a monopoly.What is the monopoly's marginal cost curve?

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

A natural barrier to entry is defined as a barrier that arises because of

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.At this output,average total cost is $15.What is the total profit earned?

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

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

-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 a monopoly,the quantity of steak is

A natural monopoly is one that arises from

Competition among rent seekers results in

Which of the following is correct for a single-price monopoly? i.The firm can determine the quantity it produces and the price it charges. ii.It would never profitably produce output in the inelastic range of its demand. iii.Its marginal revenue is less than price.

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

In order to maximize its profit,a single-price monopoly produces the amount of output so that

Which of the following is NOT correct about a single-price monopoly?

Price discrimination occurs when a firm

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

The social interest theory of regulation assumes that

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the dark triangle is the

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Assume someone organizes all farms in the nation into a monopoly.What is the monopoly's marginal cost curve?

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

A natural barrier to entry is defined as a barrier that arises because of

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.At this output,average total cost is $15.What is the total profit earned?

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