Question 1

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

Accepted Answer

A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) cQ₂0P₂. 
A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) cQ₂0P₂.

Question 2

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Accepted Answer

A) a natural monopoly develops. 
B) the monopoly encounters competition. 
C) economic profit is reduced to zero. 
D) the monopoly converts all of the consumer surplus into economic profit. 
E) there is always the opportunity to price discriminate. 
A) a natural monopoly develops. 
B) the monopoly encounters competition. 
C) economic profit is reduced to zero. 
D) the monopoly converts all of the consumer surplus into economic profit. 
E) there is always the opportunity to price discriminate.

Question 3

Monopolies are inefficient because, at the profit-maximizing output level,

Accepted Answer

A) MC = MR. 
B) MC does not equal MR. 
C) MB = MC. 
D) MB does not equal MC. 
E) P = ATC. 
A) MC = MR. 
B) MC does not equal MR. 
C) MB = MC. 
D) MB does not equal MC. 
E) P = ATC.

Question 4

The above figure shows a market.
-The figure above shows that monopoly is ________ because it produces a level of output at which ________.

Accepted Answer

A) inefficient; marginal benefit equals marginal cost 
B) efficient; marginal benefit equals marginal cost 
C) efficient; marginal benefit exceeds marginal cost 
D) inefficient; marginal benefit exceeds marginal cost 
E) efficient; producer surplus is maximized 
A) inefficient; marginal benefit equals marginal cost 
B) efficient; marginal benefit equals marginal cost 
C) efficient; marginal benefit exceeds marginal cost 
D) inefficient; marginal benefit exceeds marginal cost 
E) efficient; producer surplus is maximized

Question 5

-The above figure represents the cost, market demand, and marginal revenue curves for a monopoly.
a∙Indicate the price and quantity a single-price monopoly selects by labeling the price Pm and the quantity Qm.
b∙In the figure, lightly shade in the area that represents the single-price monopoly's economic profit.
c∙Indicate the quantity a perfectly price-discriminating monopoly selects by labeling it Qppd.
d∙In the figure, more darkly shade in the area that represents the additional economic profit the monopoly earns as a result of the perfect price discrimination.

Accepted Answer

@#IMG-DLM& 
a∙The price is labeled Pm and the quan

Question 6

The above figure shows a market.
-If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly, the amount of the gain in 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 7

A price-discriminating monopoly

Accepted Answer

A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly. 
A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly.

Question 8

The figure above shows a natural monopoly.
-In the figure above, if the firm is regulated using an average cost pricing rule, the economic loss created is equal to the area of

Accepted Answer

A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no economic loss created. 
A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no economic loss created.

Question 9

When used with a natural monopoly, an average cost pricing rule results in

Accepted Answer

A) the efficient level of output. 
B) economic losses for the firm. 
C) the need for government to subsidize the natural monopoly. 
D) zero economic profit for the firm. 
E) the firm making an economic profit. 
A) the efficient level of output. 
B) economic losses for the firm. 
C) the need for government to subsidize the natural monopoly. 
D) zero economic profit for the firm. 
E) the firm making an economic profit.

Question 10

The capture theory of regulation is that regulations

Accepted Answer

A) help producers to maximize economic profits. 
B) mean producers suffer losses. 
C) result in diseconomies of scale. 
D) benefit society, not producers. 
E) benefit the regulators, not the producers or the consumers. 
A) help producers to maximize economic profits. 
B) mean producers suffer losses. 
C) result in diseconomies of scale. 
D) benefit society, not producers. 
E) benefit the regulators, not the producers or the consumers.

Question 11

Fixed costs are ________ in a natural monopoly, so average total cost ________ as output increases.

Accepted Answer

A) large; increases 
B) large; decreases 
C) small; increases 
D) small; decreases 
E) nonexistent; decreases 
A) large; increases 
B) large; decreases 
C) small; increases 
D) small; decreases 
E) nonexistent; decreases

Question 12

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

Accepted Answer

A) The ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC. 
B) The demand curve is downward sloping, therefore price falls as quantity increases. 
C) The MC is constant and equal to price. 
D) Because output is determined by setting MC equal to the price, consumer surplus is maximized. 
E) The firm's MR is always less than its price. 
A) The ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC. 
B) The demand curve is downward sloping, therefore price falls as quantity increases. 
C) The MC is constant and equal to price. 
D) Because output is determined by setting MC equal to the price, consumer surplus is maximized. 
E) The firm's MR is always less than its price.

Question 13

One way a monopoly can convert additional consumer surplus into economic profit is to

Accepted Answer

A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost. 
A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost.

Question 14

Gene's Car Wash is a natural monopoly.To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10.Gene's average total cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4.If Gene is regulated using an average cost pricing rule, the price he is allowed to charge to wash 100 cars is

Accepted Answer

A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400. 
A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400.

Question 15

Price discrimination occurs when a firm

Accepted Answer

A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal. 
A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal.

Question 16

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve.The amount of consumer surplus when the market has a monopoly producer is

Accepted Answer

A) ace. 
B) abf. 
C) bcd. 
D) bcef. 
E) acd. 
A) ace. 
B) abf. 
C) bcd. 
D) bcef. 
E) acd.

Question 17

Natural barriers to entry arise when, over the relevant range of output, there

Accepted Answer

A) are diseconomies of scale. 
B) are constant returns to scale. 
C) are several firms who produce at the lowest average cost. 
D) are economies of scale. 
E) is one firm that owns a key natural resource. 
A) are diseconomies of scale. 
B) are constant returns to scale. 
C) are several firms who produce at the lowest average cost. 
D) are economies of scale. 
E) is one firm that owns a key natural resource.

Question 18

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 19

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

Accepted Answer

A) local restaurant 
B) local distributor of natural gas 
C) local book store 
D) clothing store 
E) local bank 
A) local restaurant 
B) local distributor of natural gas 
C) local book store 
D) clothing store 
E) local bank

Question 20

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

Accepted Answer

A) Breaking up firms that are 
B) Regulating 
C) Outlawing price discrimination by 
D) Refusing to grant patents to 
E) Giving incentives to firms to become 
A) Breaking up firms that are 
B) Regulating 
C) Outlawing price discrimination by 
D) Refusing to grant patents to 
E) Giving incentives to firms to become

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Monopolies are inefficient because, at the profit-maximizing output level,

The above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .

The above figure shows a market. -If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly, the amount of the gain in producer surplus is the area ________.

A price-discriminating monopoly

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the economic loss created is equal to the area of

When used with a natural monopoly, an average cost pricing rule results in

The capture theory of regulation is that regulations

Fixed costs are in a natural monopoly, so average total cost as output increases.

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

One way a monopoly can convert additional consumer surplus into economic profit is to

Price discrimination occurs when a firm

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve.The amount of consumer surplus when the market has a monopoly producer is

Natural barriers to entry arise when, over the relevant range of output, there

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

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

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

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

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Monopolies are inefficient because, at the profit-maximizing output level,

The above figure shows a market. -The figure above shows that monopoly is ________ because it produces a level of output at which ________.

The above figure shows a market. -If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly, the amount of the gain in producer surplus is the area ________.

A price-discriminating monopoly

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the economic loss created is equal to the area of

When used with a natural monopoly, an average cost pricing rule results in

The capture theory of regulation is that regulations

Fixed costs are ________ in a natural monopoly, so average total cost ________ as output increases.

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

One way a monopoly can convert additional consumer surplus into economic profit is to

Price discrimination occurs when a firm

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve.The amount of consumer surplus when the market has a monopoly producer is

Natural barriers to entry arise when, over the relevant range of output, there

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

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

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

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 above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .

Fixed costs are in a natural monopoly, so average total cost as output increases.