Question 1

Which of the following is the best example of a natural monopoly?

Accepted Answer

A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug 
A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug

Question 2

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 3

Comparing single-price monopoly to perfect competition, monopoly

Accepted Answer

A) increases the amount of consumer surplus. 
B) has the same amount of consumer surplus. 
C) has no consumer surplus. 
D) decreases the amount of consumer surplus. 
E) decreases the amount of economic profit. 
A) increases the amount of consumer surplus. 
B) has the same amount of consumer surplus. 
C) has no consumer surplus. 
D) decreases the amount of consumer surplus. 
E) decreases the amount of economic profit.

Question 4

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Accepted Answer

The monopoly practicing perfec

Question 5

A monopoly can arise when

Accepted Answer

A) there are diseconomies of scale. 
B) there are barriers to entry and no close substitutes for the good being produced. 
C) a firm cannot price discriminate. 
D) firms engage in rent seeking. 
E) a firm must set MR equal to MC in order to maximize its profit. 
A) there are diseconomies of scale. 
B) there are barriers to entry and no close substitutes for the good being produced. 
C) a firm cannot price discriminate. 
D) firms engage in rent seeking. 
E) a firm must set MR equal to MC in order to maximize its profit.

Question 6

-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 7

Which of the following is (are)price discrimination?
I∙charging different prices based on differences in production cost
Ii∙charging business flyers a higher airfare than tourists
Iii∙charging more for the first pizza than the second

Accepted Answer

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

Question 8

To maximize its profit, a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Accepted Answer

A) MR = MC; MR > MC 
B) MR > MC; MR = MC 
C) MR = MC; MR = MC 
D) MR > MC; MR > MC 
E) P = ATC; P = ATC 
A) MR = MC; MR > MC 
B) MR > MC; MR = MC 
C) MR = MC; MR = MC 
D) MR > MC; MR > MC 
E) P = ATC; P = ATC

Question 9

A natural monopoly is one that arises from

Accepted Answer

A) patent law. 
B) economies of scale. 
C) copyright law. 
D) any government-imposed barrier to entry. 
E) mergers. 
A) patent law. 
B) economies of scale. 
C) copyright law. 
D) any government-imposed barrier to entry. 
E) mergers.

Question 10

Monopolies ________ fair and ________ efficient.

Accepted Answer

A) are always; are not 
B) might be; are always 
C) might be; might be 
D) are always; are always 
E) are never; are always 
A) are always; are not 
B) might be; are always 
C) might be; might be 
D) are always; are always 
E) are never; are always

Question 11

When a rent-seeking equilibrium is reached, the

Accepted Answer

A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated. 
A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated.

Question 12

A price-discriminating monopoly is a monopoly that

Accepted Answer

A) sells its output at a single price to all of its customers. 
B) sells different units of a good or service at different prices. 
C) has control over the resources used to produce the product. 
D) has a license to sell the product. 
E) illegally charges different customers different prices for the good it produces. 
A) sells its output at a single price to all of its customers. 
B) sells different units of a good or service at different prices. 
C) has control over the resources used to produce the product. 
D) has a license to sell the product. 
E) illegally charges different customers different prices for the good it produces.

Question 13

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost.The monopoly can increase its profit by ________.

Accepted Answer

A) shutting down 
B) lowering its price and increasing its output 
C) raising its price and decreasing its output 
D) lowering its price and decreasing its output 
E) not changing its price and increasing its output 
A) shutting down 
B) lowering its price and increasing its output 
C) raising its price and decreasing its output 
D) lowering its price and decreasing its output 
E) not changing its price and increasing its output

Question 14

Price cap regulation is regulation that

Accepted Answer

A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated. 
A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated.

Question 15

Which of the following statements is correct?

Accepted Answer

A) Monopolies are guaranteed to earn an economic profit. 
B) The market demand and the firm's demand are the same for a monopoly. 
C) Monopolies have perfectly inelastic demand for the product sold. 
D) Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E) Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve. 
A) Monopolies are guaranteed to earn an economic profit. 
B) The market demand and the firm's demand are the same for a monopoly. 
C) Monopolies have perfectly inelastic demand for the product sold. 
D) Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E) Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve.

Question 16

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

Accepted Answer

Price discrimination is selling a good o

Question 17

For a single-price monopoly, price is

Accepted Answer

A) greater than marginal revenue. 
B) one half of marginal revenue. 
C) equal to marginal revenue. 
D) unrelated to marginal revenue. 
E) always less than average total cost when the firm maximizes its profit. 
A) greater than marginal revenue. 
B) one half of marginal revenue. 
C) equal to marginal revenue. 
D) unrelated to marginal revenue. 
E) always less than average total cost when the firm maximizes its profit.

Question 18

Price cap regulation involves

Accepted Answer

A) setting the monopoly's price equal to its average total cost. 
B) setting the monopoly's price equal to its profit-maximizing price. 
C) setting a maximum price the monopoly may charge. 
D) assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E) setting the monopoly's price equal to its marginal cost. 
A) setting the monopoly's price equal to its average total cost. 
B) setting the monopoly's price equal to its profit-maximizing price. 
C) setting a maximum price the monopoly may charge. 
D) assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E) setting the monopoly's price equal to its marginal cost.

Question 19

In the figure below, draw and label the demand and cost curves of a monopoly.Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

Accepted Answer

@#IMG-DLM& The compl

Question 20

In equilibrium, rent seeking eliminates the

Accepted Answer

A) deadweight loss. 
B) economic profit. 
C) consumer surplus. 
D) demand for the product. 
E) opportunity to price discriminate. 
A) deadweight loss. 
B) economic profit. 
C) consumer surplus. 
D) demand for the product. 
E) opportunity to price discriminate.

Which of the following is the best example of a natural monopoly?

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

Comparing single-price monopoly to perfect competition, monopoly

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

A monopoly can arise when

-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.

Which of the following is (are)price discrimination? I∙charging different prices based on differences in production cost Ii∙charging business flyers a higher airfare than tourists Iii∙charging more for the first pizza than the second

To maximize its profit, a perfectly competitive firm produces so that and a single-price monopoly produces so that .

A natural monopoly is one that arises from

Monopolies fair and efficient.

When a rent-seeking equilibrium is reached, the

A price-discriminating monopoly is a monopoly that

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost.The monopoly can increase its profit by ________.

Price cap regulation is regulation that

Which of the following statements is correct?

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

For a single-price monopoly, price is

Price cap regulation involves

In the figure below, draw and label the demand and cost curves of a monopoly.Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

In equilibrium, rent seeking eliminates the

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

Which of the following is the best example of a natural monopoly?

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

Comparing single-price monopoly to perfect competition, monopoly

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

A monopoly can arise when

-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.

Which of the following is (are)price discrimination? I∙charging different prices based on differences in production cost Ii∙charging business flyers a higher airfare than tourists Iii∙charging more for the first pizza than the second

To maximize its profit, a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

A natural monopoly is one that arises from

Monopolies ________ fair and ________ efficient.

When a rent-seeking equilibrium is reached, the

A price-discriminating monopoly is a monopoly that

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost.The monopoly can increase its profit by ________.

Price cap regulation is regulation that

Which of the following statements is correct?

Define price discrimination.What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

For a single-price monopoly, price is

Price cap regulation involves

In the figure below, draw and label the demand and cost curves of a monopoly.Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

In equilibrium, rent seeking eliminates the

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 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.

To maximize its profit, a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Monopolies fair and efficient.