Question 1

Price discrimination is

Accepted Answer

A) always illegal in the United States. 
B) defined as charging the same price to all consumers. 
C) defined as charging different prices for different units. 
D) setting the price to minimize the quantity sold. 
E) Both answers A and C are correct. 
A) always illegal in the United States. 
B) defined as charging the same price to all consumers. 
C) defined as charging different prices for different units. 
D) setting the price to minimize the quantity sold. 
E) Both answers A and C are correct.

Question 2

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

Accepted Answer

A) equal to; efficient 
B) above; inefficient 
C) below; efficient 
D) equal to; inefficient 
E) above; efficient 
A) equal to; efficient 
B) above; inefficient 
C) below; efficient 
D) equal to; inefficient 
E) above; efficient

Question 3

How do the price, output, consumer surplus, economic profit, and total surplus for a single-price monopoly compare to that of a competitive industry?

Accepted Answer

For the monopoly, price is hig

Question 4

-The above figure represents the market for cable television in Oakland, Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under an average cost pricing rule, how many households in Oakland are served?

Accepted Answer

A) 20,000 
B) 30,000 
C) 40,000 
D) 50,000 
E) None of the above answers is correct. 
A) 20,000 
B) 30,000 
C) 40,000 
D) 50,000 
E) None of the above answers is correct.

Question 5

The capture theory of regulation is defined as

Accepted Answer

A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests. 
A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests.

Question 6

To maximize its profit, a single-price monopoly produces the quantity at which

Accepted Answer

A) the difference between marginal revenue and marginal cost is as large as possible. 
B) marginal revenue equals marginal cost. 
C) average total cost is at its minimum. 
D) the marginal cost curve intersects the demand curve. 
E) the marginal revenue curve intersects the horizontal axis. 
A) the difference between marginal revenue and marginal cost is as large as possible. 
B) marginal revenue equals marginal cost. 
C) average total cost is at its minimum. 
D) the marginal cost curve intersects the demand curve. 
E) the marginal revenue curve intersects the horizontal axis.

Question 7

A single-price monopoly transfers

Accepted Answer

A) consumer surplus to producers. 
B) producer surplus to consumers. 
C) economic profit to consumers. 
D) economic profit to the government. 
E) economic profit to deadweight loss. 
A) consumer surplus to producers. 
B) producer surplus to consumers. 
C) economic profit to consumers. 
D) economic profit to the government. 
E) economic profit to deadweight loss.

Question 8

-The above figure represents the market for cable television in Oakland, Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under a marginal cost pricing rule, what is the price of cable television in Oakland?

Accepted Answer

A) $40 
B) $30 
C) $20 
D) $10 
E) $0 
A) $40 
B) $30 
C) $20 
D) $10 
E) $0

Question 9

For a monopoly, marginal revenue is equal to

Accepted Answer

A) the amount people buy at a given price. 
B) the amount people buy between two prices. 
C) the change in total revenue brought about by a one-unit increase in quantity sold. 
D) the price multiplied by the quantity sold. 
E) the price of the product. 
A) the amount people buy at a given price. 
B) the amount people buy between two prices. 
C) the change in total revenue brought about by a one-unit increase in quantity sold. 
D) the price multiplied by the quantity sold. 
E) the price of the product.

Question 10

"Because of rent seeking, a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct.Competition amo

Question 11

A natural monopoly

Accepted Answer

A) sells to a single buyer. 
B) sets price equal to marginal revenue. 
C) is a firm than can supply the market at lower average total cost than two or more firms. 
D) produces a natural resource. 
E) faces a horizontal demand curve. 
A) sells to a single buyer. 
B) sets price equal to marginal revenue. 
C) is a firm than can supply the market at lower average total cost than two or more firms. 
D) produces a natural resource. 
E) faces a horizontal demand curve.

Question 12

The assumption that regulation relentlessly seeks out deadweight loss and seeks to eliminate it is called the

Accepted Answer

A) social interest theory of regulation. 
B) capture theory of regulation. 
C) Coase theory of regulation. 
D) socially optimal theory of regulation. 
E) predatory theory of regulation. 
A) social interest theory of regulation. 
B) capture theory of regulation. 
C) Coase theory of regulation. 
D) socially optimal theory of regulation. 
E) predatory theory of regulation.

Question 13

If a natural monopoly is regulated using the marginal cost pricing rule, how will that affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?

Accepted Answer

The marginal cost pricing rule sets the

Question 14

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________, the firm produces ________ units per week.

Accepted Answer

A) the HHI; 50 
B) an average cost pricing rule; 30 
C) rate of return regulation; 40 
D) social interest regulation; 30 
E) a marginal cost pricing rule; 20 
A) the HHI; 50 
B) an average cost pricing rule; 30 
C) rate of return regulation; 40 
D) social interest regulation; 30 
E) a marginal cost pricing rule; 20

Question 15

A monopoly will arise if

Accepted Answer

A) two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B) the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C) Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D) several big pizza chains force several small pizzerias out of business. 
E) people decide they like pizza more than before so some pizzeria's gain new customers. 
A) two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B) the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C) Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D) several big pizza chains force several small pizzerias out of business. 
E) people decide they like pizza more than before so some pizzeria's gain new customers.

Question 16

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 17

-The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly.
a∙What was the competitive price and quantity?
b∙What is the monopoly price and quantity?
c∙What area represents consumer surplus under perfect competition?
d∙What area represents consumer surplus under monopoly?
e∙What area represents the deadweight loss of monopoly?

Accepted Answer

a∙The competitive price was P₂ and the c

Question 18

A price-discriminating monopoly charges

Accepted Answer

A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product, even though there are no differences in costs. 
C) a different price to different buyers, because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer. 
A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product, even though there are no differences in costs. 
C) a different price to different buyers, because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer.

Question 19

-The above figure represents the market for cable television in Oakland, Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.Compared to a marginal cost pricing rule, under an average cost pricing rule, TWC ________ output by ________ households.

Accepted Answer

A) increases; 20,000 
B) decreases; 10,000 
C) increases; 30,000 
D) decreases; 50,000 
E) decreases; 40,000 
A) increases; 20,000 
B) decreases; 10,000 
C) increases; 30,000 
D) decreases; 50,000 
E) decreases; 40,000

Question 20

-The above figure illustrates the market for electric power that is served by the one utility in Alberta, Canada.
a∙If the government did not regulate this utility, what would be the price of a kilowatt hour in this region and how much power would be generated?
b∙If the government regulates the utility and chooses an average cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?
c∙If the government regulates the utility and chooses a marginal cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?

Accepted Answer

a∙The price would be 12¢ a kilowatt hour

Price discrimination is

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.

How do the price, output, consumer surplus, economic profit, and total surplus for a single-price monopoly compare to that of a competitive industry?

-The above figure represents the market for cable television in Oakland, Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under an average cost pricing rule, how many households in Oakland are served?

The capture theory of regulation is defined as

To maximize its profit, a single-price monopoly produces the quantity at which

A single-price monopoly transfers

For a monopoly, marginal revenue is equal to

"Because of rent seeking, a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

A natural monopoly

The assumption that regulation relentlessly seeks out deadweight loss and seeks to eliminate it is called the

If a natural monopoly is regulated using the marginal cost pricing rule, how will that affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?

-The figure above shows a natural monopoly that the government must regulate.If the government uses , the firm produces units per week.

A monopoly will arise if

Competition among rent seekers results in

A price-discriminating monopoly charges

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

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

How do the price, output, consumer surplus, economic profit, and total surplus for a single-price monopoly compare to that of a competitive industry?

-The above figure represents the market for cable television in Oakland, Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under an average cost pricing rule, how many households in Oakland are served?

The capture theory of regulation is defined as

To maximize its profit, a single-price monopoly produces the quantity at which

A single-price monopoly transfers

For a monopoly, marginal revenue is equal to

"Because of rent seeking, a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

A natural monopoly

The assumption that regulation relentlessly seeks out deadweight loss and seeks to eliminate it is called the

If a natural monopoly is regulated using the marginal cost pricing rule, how will that affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________, the firm produces ________ units per week.

A monopoly will arise if

Competition among rent seekers results in

A price-discriminating monopoly charges

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

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.

-The figure above shows a natural monopoly that the government must regulate.If the government uses , the firm produces units per week.