Question 1

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 2

When a firm is regulated so it uses an average cost pricing rule, the price

Accepted Answer

A) exceeds average total cost. 
B) equals marginal cost. 
C) is less than marginal cost. 
D) equals average total cost. 
E) equals marginal revenue. 
A) exceeds average total cost. 
B) equals marginal cost. 
C) is less than marginal cost. 
D) equals average total cost. 
E) equals marginal revenue.

Question 3

A monopoly is a market with

Accepted Answer

A) many suppliers each producing an identical product. 
B) no barriers to entry. 
C) many substitutes. 
D) one supplier. 
E) many suppliers each producing a slightly different product. 
A) many suppliers each producing an identical product. 
B) no barriers to entry. 
C) many substitutes. 
D) one supplier. 
E) many suppliers each producing a slightly different product.

Question 4

A natural monopoly's output is less if it is regulated with

Accepted Answer

A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces. 
A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces.

Question 5

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

Accepted Answer

A) all types of monopoly 
B) only single-price monopoly 
C) only perfect price discrimination 
D) only price discrimination on the basis of the number of units purchased 
E) any monopoly that price discriminates 
A) all types of monopoly 
B) only single-price monopoly 
C) only perfect price discrimination 
D) only price discrimination on the basis of the number of units purchased 
E) any monopoly that price discriminates

Question 6

-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 is left unregulated, how many households in Oakland are served?

Accepted Answer

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

Question 7

Price cap regulation

Accepted Answer

A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct. 
A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct.

Question 8

Which of the following describes a barrier to entry?

Accepted Answer

A) something that establishes a barrier to expanding output 
B) anything that protects a firm from the arrival of new competitors 
C) a government regulation that bars a monopoly from earning an economic profit 
D) firms already in the market incurring economic losses so that no new firm wants to enter the market 
E) Firms are legally prohibited from exiting the market in order to enter another market. 
A) something that establishes a barrier to expanding output 
B) anything that protects a firm from the arrival of new competitors 
C) a government regulation that bars a monopoly from earning an economic profit 
D) firms already in the market incurring economic losses so that no new firm wants to enter the market 
E) Firms are legally prohibited from exiting the market in order to enter another market.

Question 9

We define a monopoly as a market with

Accepted Answer

A) one supplier and no barriers to entry. 
B) one supplier with barriers to entry. 
C) many suppliers with no barriers to entry. 
D) many suppliers with barriers to entry. 
E) a few suppliers and barriers to entry. 
A) one supplier and no barriers to entry. 
B) one supplier with barriers to entry. 
C) many suppliers with no barriers to entry. 
D) many suppliers with barriers to entry. 
E) a few suppliers and barriers to entry.

Question 10

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

Accepted Answer

A) the Pittsburgh Penguins hockey team, a National Hockey League team 
B) Ford Motors, the large automobile producing company 
C) Florida Power and Light, an electric utility in Florida 
D) Sony, the Japanese producer of the Playstation III 
E) JCPenney, the large department store chain 
A) the Pittsburgh Penguins hockey team, a National Hockey League team 
B) Ford Motors, the large automobile producing company 
C) Florida Power and Light, an electric utility in Florida 
D) Sony, the Japanese producer of the Playstation III 
E) JCPenney, the large department store chain

Question 11

-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, what is the price of cable television in Oakland?

Accepted Answer

A) $40 
B) $30 
C) $20 
D) $10 
E) $50 
A) $40 
B) $30 
C) $20 
D) $10 
E) $50

Question 12

-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 what price will this firm sell the output?

Accepted Answer

A) $19 
B) $38 
C) $285 
D) $570 
E) There is not enough information given to answer the question. 
A) $19 
B) $38 
C) $285 
D) $570 
E) There is not enough information given to answer the question.

Question 13

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

Accepted Answer

A) legal; illegal 
B) natural; legal 
C) natural; illegal 
D) natural; rent seeking 
E) ownership; rent seeking 
A) legal; illegal 
B) natural; legal 
C) natural; illegal 
D) natural; rent seeking 
E) ownership; rent seeking

Question 14

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

Accepted Answer

When the total revenue is at i

Question 15

In States where the government runs liquor stores, the monopoly results from

Accepted Answer

A) economies of scale. 
B) legal restrictions. 
C) control of an essential resource. 
D) patents. 
E) public fear. 
A) economies of scale. 
B) legal restrictions. 
C) control of an essential resource. 
D) patents. 
E) public fear.

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 gove

Question 17

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer.Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

Accepted Answer

Because the monopoly does control the ma

Question 18

If a natural monopoly is regulated using

Accepted Answer

A) a marginal cost pricing rule, the firm maximizes its profit. 
B) an average cost pricing rule, the firm incurs an economic loss. 
C) a total cost pricing rule, the firm will exit the industry. 
D) a marginal cost pricing rule, the firm incurs an economic loss. 
E) an average cost pricing rule, the firm maximizes its profit. 
A) a marginal cost pricing rule, the firm maximizes its profit. 
B) an average cost pricing rule, the firm incurs an economic loss. 
C) a total cost pricing rule, the firm will exit the industry. 
D) a marginal cost pricing rule, the firm incurs an economic loss. 
E) an average cost pricing rule, the firm maximizes its profit.

Question 19

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above, which of the following statements are correct?
I∙When 3 haircuts are produced, the firm's ATC is $10.
Ii∙If the firm charges each customer the same price for a haircut, the price of a haircut is $14.
Iii∙The firm's is NOT a perfect competitor.

Accepted Answer

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

Question 20

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs?
I∙Consumer surplus decreases.
Ii∙Economic profit increases.
Iii∙A deadweight loss is created.

Accepted Answer

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

Why are water companies considered a natural monopoly?

When a firm is regulated so it uses an average cost pricing rule, the price

A monopoly is a market with

A natural monopoly's output is less if it is regulated with

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

-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 is left unregulated, how many households in Oakland are served?

Price cap regulation

Which of the following describes a barrier to entry?

We define a monopoly as a market with

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

-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 what price will this firm sell the output?

Two types of barriers to entry are called barriers to entry and barriers to entry.

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

In States where the government runs liquor stores, the monopoly results from

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

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer.Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

If a natural monopoly is regulated using

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs? I∙Consumer surplus decreases. Ii∙Economic profit increases. Iii∙A deadweight loss is created.

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

Why are water companies considered a natural monopoly?

When a firm is regulated so it uses an average cost pricing rule, the price

A monopoly is a market with

A natural monopoly's output is less if it is regulated with

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

-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 is left unregulated, how many households in Oakland are served?

Price cap regulation

Which of the following describes a barrier to entry?

We define a monopoly as a market with

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

-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 what price will this firm sell the output?

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

In States where the government runs liquor stores, the monopoly results from

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

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer.Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

If a natural monopoly is regulated using

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs? I∙Consumer surplus decreases. Ii∙Economic profit increases. Iii∙A deadweight loss is created.

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

Two types of barriers to entry are called barriers to entry and barriers to entry.