Question 1

Price discrimination is prevented in situations where

Accepted Answer

A) customers can resell the good. 
B) firms have monopolies. 
C) there are legal barriers to entry. 
D) there are no close substitutes for the good or service. 
E) customers have different willingnesses to pay for the good. 
A) customers can resell the good. 
B) firms have monopolies. 
C) there are legal barriers to entry. 
D) there are no close substitutes for the good or service. 
E) customers have different willingnesses to pay for the good.

Question 2

Describe the difference between social interest theory of regulation and the capture theory of regulation.

Accepted Answer

Both are theories of regulation but they

Question 3

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

Accepted Answer

A) The regulated firm ends up earning an economic profit. 
B) Consumers pay too much for the product of the monopoly. 
C) This policy is a two-part tariff, which creates inefficiency. 
D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. 
E) The regulated firm goes out of business if it is subsidized. 
A) The regulated firm ends up earning an economic profit. 
B) Consumers pay too much for the product of the monopoly. 
C) This policy is a two-part tariff, which creates inefficiency. 
D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. 
E) The regulated firm goes out of business if it is subsidized.

Question 4

A single-price monopoly

Accepted Answer

A) sets a single, different price for each consumer. 
B) sets a single price for all consumers. 
C) asks each consumer what single price they would be willing to pay. 
D) sets a single, different price for each of two different groups. 
E) sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay. 
A) sets a single, different price for each consumer. 
B) sets a single price for all consumers. 
C) asks each consumer what single price they would be willing to pay. 
D) sets a single, different price for each of two different groups. 
E) sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay.

Question 5

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above, the length of the double sided arrow is the

Accepted Answer

A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) economic loss per unit. 
E) economic profit. 
A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) economic loss per unit. 
E) economic profit.

Question 6

When a monopoly price discriminates, it

Accepted Answer

A) increases the amount of consumer surplus. 
B) decreases its economic profit. 
C) converts consumer surplus into economic profit. 
D) converts economic profit into consumer surplus. 
E) has no effect on the deadweight loss in the market. 
A) increases the amount of consumer surplus. 
B) decreases its economic profit. 
C) converts consumer surplus into economic profit. 
D) converts economic profit into consumer surplus. 
E) has no effect on the deadweight loss in the market.

Question 7

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 8

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output, the price must fall to $20.What is the marginal revenue of the 11th unit?

Accepted Answer

A) $41 
B) $20 
C) $10 
D) $1 
E) $220 
A) $41 
B) $20 
C) $10 
D) $1 
E) $220

Question 9

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

Accepted Answer

A) patent 
B) copyright 
C) public franchise 
D) government license 
E) natural barrier 
A) patent 
B) copyright 
C) public franchise 
D) government license 
E) natural barrier

Question 10

A monopoly creates a deadweight loss because the monopoly

Accepted Answer

A) sets a price that is too low. 
B) makes a normal profit. 
C) does not maximize profit. 
D) produces less than the efficient quantity. 
E) produces more than the efficient quantity. 
A) sets a price that is too low. 
B) makes a normal profit. 
C) does not maximize profit. 
D) produces less than the efficient quantity. 
E) produces more than the efficient quantity.

Question 11

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 12

Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________.

Accepted Answer

A) rise; customers 
B) fall; customers 
C) rise; suppliers 
D) fall; suppliers 
E) rise; competitors 
A) rise; customers 
B) fall; customers 
C) rise; suppliers 
D) fall; suppliers 
E) rise; competitors

Question 13

Which of the following can be a barrier to entry?
I∙ownership of a necessary input
Ii∙requiring a government license
Iii∙large diseconomies of scale

Accepted Answer

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

Question 14

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

Accepted Answer

In the short run, a monopoly can make an

Question 15

-In the above figure, the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

Accepted Answer

A) 200; $10 
B) 300; $20 
C) 500; $50 
D) 200; $30 
E) 300; $30 
A) 200; $10 
B) 300; $20 
C) 500; $50 
D) 200; $30 
E) 300; $30

Question 16

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

Accepted Answer

A) Hard cover books are long lasting and paperbacks can rip easily. 
B) Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C) A hardcover is the publishers' way of rewarding the avid readers. 
D) Publishers are not sure of the demand. 
E) Publishers cannot price discriminate. 
A) Hard cover books are long lasting and paperbacks can rip easily. 
B) Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C) A hardcover is the publishers' way of rewarding the avid readers. 
D) Publishers are not sure of the demand. 
E) Publishers cannot price discriminate.

Question 17

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 18

"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.If

Question 19

-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 20

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

Accepted Answer

A) offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B) lower its prices to younger customers too. 
C) prevent senior citizens from reselling their rooms to younger customers. 
D) shift its demand curve rightward. 
E) determine if a senior citizen can pay a higher price. 
A) offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B) lower its prices to younger customers too. 
C) prevent senior citizens from reselling their rooms to younger customers. 
D) shift its demand curve rightward. 
E) determine if a senior citizen can pay a higher price.

Price discrimination is prevented in situations where

Describe the difference between social interest theory of regulation and the capture theory of regulation.

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

A single-price monopoly

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, the length of the double sided arrow is the

When a monopoly price discriminates, it

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 ________.

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output, the price must fall to $20.What is the marginal revenue of the 11th unit?

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

A monopoly creates a deadweight loss because the monopoly

With perfect price discrimination, the level of output

Under earnings-sharing regulation, if a firm's profits above a certain level, they must be shared with the firm's .

Which of the following can be a barrier to entry? I∙ownership of a necessary input Ii∙requiring a government license Iii∙large diseconomies of scale

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

-In the above figure, the profit-maximizing output for this single-price monopoly is units and the price is .

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

The social interest theory of regulation is defined as the

"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?

-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

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

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

Price discrimination is prevented in situations where

Describe the difference between social interest theory of regulation and the capture theory of regulation.

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

A single-price monopoly

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, the length of the double sided arrow is the

When a monopoly price discriminates, it

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 ________.

Suppose a monopoly can sell 10 units of output for $21.In order to sell 11 units of output, the price must fall to $20.What is the marginal revenue of the 11th unit?

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

A monopoly creates a deadweight loss because the monopoly

With perfect price discrimination, the level of output

Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________.

Which of the following can be a barrier to entry? I∙ownership of a necessary input Ii∙requiring a government license Iii∙large diseconomies of scale

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

-In the above figure, the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

The social interest theory of regulation is defined as the

"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect?

-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

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

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

Under earnings-sharing regulation, if a firm's profits above a certain level, they must be shared with the firm's .

-In the above figure, the profit-maximizing output for this single-price monopoly is units and the price is .