Question 1

Which one of the following is most likely to be a natural monopoly?

Accepted Answer

A) sandwich shops 
B) printing services 
C) welding services 
D) automotive service 
E) electric utilities 
A) sandwich shops 
B) printing services 
C) welding services 
D) automotive service 
E) electric utilities E

Question 2

An efficient use of resources occurs when

Accepted Answer

A) a deadweight loss arises. 
B) total social benefit from a good equals its total social cost. 
C) producer surplus is eliminated. 
D) consumer surplus is maximized. 
E) a monopoly practices perfect price discrimination. 
A) a deadweight loss arises. 
B) total social benefit from a good equals its total social cost. 
C) producer surplus is eliminated. 
D) consumer surplus is maximized. 
E) a monopoly practices perfect price discrimination. D

Question 3

Rate of return regulation can end up serving the self-interest of the firm if

Accepted Answer

A) there is a great demand for the good. 
B) there is a competitive struggle to determine which firms will supply the market. 
C) the regulated firm overstates its costs of production. 
D) price is set at average total cost. 
E) the rate is set too low. 
A) there is a great demand for the good. 
B) there is a competitive struggle to determine which firms will supply the market. 
C) the regulated firm overstates its costs of production. 
D) price is set at average total cost. 
E) the rate is set too low. C

Question 4

The marginal revenue curve for a single-price monopoly

Accepted Answer

A) is below its demand curve. 
B) is the same as the demand curve. 
C) lies above its demand curve. 
D) is horizontal. 
E) has a slope equal to the slope of the demand curve. 
A) is below its demand curve. 
B) is the same as the demand curve. 
C) lies above its demand curve. 
D) is horizontal. 
E) has a slope equal to the slope of the demand curve.

Question 5

Use the figure below to answer the following questions.
   
Figure 13.2.2
-Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Accepted Answer

A) $3 
B) $4 
C) $6 
D) $9 
E) $7 
A) $3 
B) $4 
C) $6 
D) $9 
E) $7

Question 6

Use the figure below to answer the following questions.
   
Figure 13.3.4
-Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Accepted Answer

A) Q₁ and price is P₁. 
B) Q₁ and price is P₃. 
C) Q₂ and price is P₂. 
D) Q₃ and price is P₀. 
E) Q₄ and price is 0. 
A) Q₁ and price is P₁. 
B) Q₁ and price is P₃. 
C) Q₂ and price is P₂. 
D) Q₃ and price is P₀. 
E) Q₄ and price is 0.

Question 7

A monopoly

Accepted Answer

A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges only if it increases the quantity that it sells. 
E) faces a perfectly inelastic demand. 
A) faces a perfectly elastic demand. 
B) ignores the demand curve because it is the only seller. 
C) can raise the price it charges only if it decreases the quantity that it sells. 
D) can raise the price it charges only if it increases the quantity that it sells. 
E) faces a perfectly inelastic demand.

Question 8

Use the information below to answer the following questions.
Fact 13.1.1
The following statements give some information about seven markets.
1. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase its market share.
2. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
3. A barrier to entry exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
-Refer to Fact 13.1.1.The firm described in statement ________ is a natural monopoly.The firm described in statement ________ is a legal monopoly.

Accepted Answer

A) 7; 6 
B) 2; 7 
C) 6; 7 
D) 2; 6 
E) 1; 4 
A) 7; 6 
B) 2; 7 
C) 6; 7 
D) 2; 6 
E) 1; 4

Question 9

For the regulated natural monopoly, an average cost pricing rule sets price equal to

Accepted Answer

A) marginal cost. 
B) total fixed cost. 
C) average variable cost. 
D) average fixed cost. 
E) average total cost. 
A) marginal cost. 
B) total fixed cost. 
C) average variable cost. 
D) average fixed cost. 
E) average total cost.

Question 10

A perfect price-discriminating monopoly produces

Accepted Answer

A) less than a single-price monopoly. 
B) more than a single-price monopoly but less than a perfectly competitive industry. 
C) less than a monopoly that practices price discrimination but not perfect price discrimination. 
D) more than a perfectly competitive industry. 
E) the same amount as a perfectly competitive industry. 
A) less than a single-price monopoly. 
B) more than a single-price monopoly but less than a perfectly competitive industry. 
C) less than a monopoly that practices price discrimination but not perfect price discrimination. 
D) more than a perfectly competitive industry. 
E) the same amount as a perfectly competitive industry.

Question 11

For a monopoly able to practice perfect price discrimination, the market

Accepted Answer

A) supply curve is horizontal. 
B) supply curve is the same as the marginal revenue curve. 
C) demand curve is the same as the marginal cost curve. 
D) demand curve is the same as the marginal revenue curve. 
E) demand curve is horizontal. 
A) supply curve is horizontal. 
B) supply curve is the same as the marginal revenue curve. 
C) demand curve is the same as the marginal cost curve. 
D) demand curve is the same as the marginal revenue curve. 
E) demand curve is horizontal.

Question 12

Which of the following is least likely to be a natural monopoly?

Accepted Answer

A) subway services 
B) electric utilities 
C) water and sewer services 
D) taxicab service 
E) cable television services 
A) subway services 
B) electric utilities 
C) water and sewer services 
D) taxicab service 
E) cable television services

Question 13

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Accepted Answer

A) only Pfizer. 
B) Canada Post, Pfizer, and Rogers Communications. 
C) Canada Post and Pfizer. 
D) only Canada Post. 
E) only Rogers Communications. 
A) only Pfizer. 
B) Canada Post, Pfizer, and Rogers Communications. 
C) Canada Post and Pfizer. 
D) only Canada Post. 
E) only Rogers Communications.

Question 14

Social interest theory states that

Accepted Answer

A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations promote the attainment of an inefficient outcome. 
D) regulation maximizes economic profit. 
E) rate of return regulation is best for all parties. 
A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations promote the attainment of an inefficient outcome. 
D) regulation maximizes economic profit. 
E) rate of return regulation is best for all parties.

Question 15

Capture theory states that

Accepted Answer

A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations lead to deadweight loss. 
D) regulation eliminates economic profit. 
E) rate of return regulation is best for all parties. 
A) public officials favour consumers over producers. 
B) regulations promote the attainment of an efficient outcome. 
C) regulations lead to deadweight loss. 
D) regulation eliminates economic profit. 
E) rate of return regulation is best for all parties.

Question 16

To prevent monopoly from arising, there must be

Accepted Answer

A) a single supplier of a good in the market. 
B) no close substitutes for the good. 
C) barriers preventing entry of other firms. 
D) freedom of entry into the market. 
E) economies of scale. 
A) a single supplier of a good in the market. 
B) no close substitutes for the good. 
C) barriers preventing entry of other firms. 
D) freedom of entry into the market. 
E) economies of scale.

Question 17

Use the figure below to answer the following questions.
   
Figure 13.2.3
-Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Accepted Answer

A) 20 tickets 
B) 30 tickets 
C) 50 tickets 
D) 60 tickets 
E) 100 tickets 
A) 20 tickets 
B) 30 tickets 
C) 50 tickets 
D) 60 tickets 
E) 100 tickets

Question 18

Which of the following markets will have the largest deadweight loss?

Accepted Answer

A) a single-price monopoly 
B) a perfectly competitive market 
C) a perfectly price discriminating monopoly 
D) both B and C 
E) both A and C 
A) a single-price monopoly 
B) a perfectly competitive market 
C) a perfectly price discriminating monopoly 
D) both B and C 
E) both A and C

Question 19

A single-price monopolist

Accepted Answer

A) maximizes economic profit by producing the quantity at which marginal revenue equals marginal cost. 
B) maximizes economic profit by producing the quantity at which marginal revenue equals average total cost. 
C) can increase the price and the quantity sold simultaneously. 
D) is not restricted by the law of demand. 
E) can sell as much as it wants at a given price because it is the only seller. 
A) maximizes economic profit by producing the quantity at which marginal revenue equals marginal cost. 
B) maximizes economic profit by producing the quantity at which marginal revenue equals average total cost. 
C) can increase the price and the quantity sold simultaneously. 
D) is not restricted by the law of demand. 
E) can sell as much as it wants at a given price because it is the only seller.

Question 20

A monopolist under marginal cost pricing has an incentive to

Accepted Answer

A) inflate costs. 
B) produce more than the efficient quantity of output. 
C) produce less than the efficient quantity of output. 
D) maximize consumer surplus. 
E) produce the efficient quantity of output. 
A) inflate costs. 
B) produce more than the efficient quantity of output. 
C) produce less than the efficient quantity of output. 
D) maximize consumer surplus. 
E) produce the efficient quantity of output.

Which one of the following is most likely to be a natural monopoly?

An efficient use of resources occurs when

Rate of return regulation can end up serving the self-interest of the firm if

The marginal revenue curve for a single-price monopoly

Use the figure below to answer the following questions. Figure 13.2.2 -Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Use the figure below to answer the following questions. Figure 13.3.4 -Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

A monopoly

For the regulated natural monopoly, an average cost pricing rule sets price equal to

A perfect price-discriminating monopoly produces

For a monopoly able to practice perfect price discrimination, the market

Which of the following is least likely to be a natural monopoly?

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Social interest theory states that

Capture theory states that

To prevent monopoly from arising, there must be

Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Which of the following markets will have the largest deadweight loss?

A single-price monopolist

A monopolist under marginal cost pricing has an incentive to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 13: Monopoly

Which one of the following is most likely to be a natural monopoly?

An efficient use of resources occurs when

Rate of return regulation can end up serving the self-interest of the firm if

The marginal revenue curve for a single-price monopoly

Use the figure below to answer the following questions. Figure 13.2.2 -Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Use the figure below to answer the following questions. Figure 13.3.4 -Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

A monopoly

For the regulated natural monopoly, an average cost pricing rule sets price equal to

A perfect price-discriminating monopoly produces

For a monopoly able to practice perfect price discrimination, the market

Which of the following is least likely to be a natural monopoly?

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Social interest theory states that

Capture theory states that

To prevent monopoly from arising, there must be

Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Which of the following markets will have the largest deadweight loss?

A single-price monopolist

A monopolist under marginal cost pricing has an incentive to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters