Question 1

Ownership of a necessary input creates what type of barrier to entry?

Accepted Answer

A) legal barrier to entry 
B) natural barrier to entry 
C) a public franchise 
D) a government license 
E) ownership barrier to entry 
A) legal barrier to entry 
B) natural barrier to entry 
C) a public franchise 
D) a government license 
E) ownership barrier to entry

Question 2

Can a monopoly make an economic profit in the long run? Explain your answer.

Accepted Answer

A monopoly can make an economic profit i

Question 3

A monopoly is

Accepted Answer

A) a price taker. 
B) able to ignore the demand for its product when setting its price. 
C) able to set the price for its product. 
D) able to earn only a normal profit in the long run. 
E) a firm with no marginal revenue curve. 
A) a price taker. 
B) able to ignore the demand for its product when setting its price. 
C) able to set the price for its product. 
D) able to earn only a normal profit in the long run. 
E) a firm with no marginal revenue curve.

Question 4

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∙MR = MC when 3 haircuts are produced.
Ii∙If the firm charges each customer the same price for a haircut, the price of a haircut is $42.
Iii∙The firm's MC equals $30.

Accepted Answer

A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) None of the above are correct. 
A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) None of the above are correct.

Question 5

Earning-sharing regulation involves

Accepted Answer

A) setting the monopoly's price equal to its average total cost. 
B) requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C) setting a maximum price the monopoly may charge and maintaining it for many years. 
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) requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C) setting a maximum price the monopoly may charge and maintaining it for many years. 
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 6

Suppose that along a linear demand curve, the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A) marginal revenue is negative when output exceeds 100 units. 
B) elasticity of demand is less than 1 when output exceeds 100 units. 
C) marginal revenue is 0 when output equals 100 units. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct. 
A) marginal revenue is negative when output exceeds 100 units. 
B) elasticity of demand is less than 1 when output exceeds 100 units. 
C) marginal revenue is 0 when output equals 100 units. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct.

Question 7

In contrast to competitive firms, single-price monopolies

Accepted Answer

A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply. 
A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply.

Question 8

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Accepted Answer

A) The producer benefits, but consumers and society are harmed. 
B) The producer and society are harmed, but consumers benefit. 
C) The producer and society benefit, but consumers are harmed. 
D) The producer is harmed, but consumers and society benefit. 
E) The producer, consumers, and society all benefit. 
A) The producer benefits, but consumers and society are harmed. 
B) The producer and society are harmed, but consumers benefit. 
C) The producer and society benefit, but consumers are harmed. 
D) The producer is harmed, but consumers and society benefit. 
E) The producer, consumers, and society all benefit.

Question 9

Why will a profit-maximizing, single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

Accepted Answer

When total revenue is at its maximum, th

Question 10

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a monopoly producer of pillows stuffed with parrot feathers.When the pillow market is a monopoly, the price of a pillow is ________ and if the pillow market is perfectly competitive, the price of a pillow is ________.

Accepted Answer

A) $40; $20 
B) $70; $60 
C) $40; $60 
D) $60; $40 
E) $100; $40 
A) $40; $20 
B) $70; $60 
C) $40; $60 
D) $60; $40 
E) $100; $40

Question 11

Patents

Accepted Answer

A) are granted only to competitive firms and not monopolies. 
B) require that monopolies increase the amount they produce. 
C) increase the incentive to capture economies of scale. 
D) increase the incentive to innovate. 
E) grant the holder a monopoly that lasts forever. 
A) are granted only to competitive firms and not monopolies. 
B) require that monopolies increase the amount they produce. 
C) increase the incentive to capture economies of scale. 
D) increase the incentive to innovate. 
E) grant the holder a monopoly that lasts forever.

Question 12

The demand curve facing a single-price monopoly

Accepted Answer

A) lies below the marginal revenue curve. 
B) lies above the marginal revenue curve. 
C) is the same as only the marginal revenue curve. 
D) is the same as only the marginal cost curve. 
E) is the same as both the marginal revenue curve and the marginal cost curve. 
A) lies below the marginal revenue curve. 
B) lies above the marginal revenue curve. 
C) is the same as only the marginal revenue curve. 
D) is the same as only the marginal cost curve. 
E) is the same as both the marginal revenue curve and the marginal cost curve.

Question 13

Assume someone organizes all farms in the nation into a monopoly.As a result, consumer surplus will

Accepted Answer

A) not change. 
B) increase. 
C) decrease. 
D) either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly. 
A) not change. 
B) increase. 
C) decrease. 
D) either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.

Question 14

The U.S.Postal Service has a monopoly over first-class mail service because

Accepted Answer

A) the government has granted this agency a public franchise. 
B) stamps are copyrighted. 
C) stamps are trademarked. 
D) stamps are patented. 
E) it owns a vital resource, namely all mailboxes. 
A) the government has granted this agency a public franchise. 
B) stamps are copyrighted. 
C) stamps are trademarked. 
D) stamps are patented. 
E) it owns a vital resource, namely all mailboxes.

Question 15

-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 perfectly competitive, the price of a pound of steak is ________ and when it is a monopoly, the price of a pound of steak is ________.

Accepted Answer

A) $4; $20 
B) $8; $4 
C) $8; $12 
D) $4; $8 
E) $4; $12 
A) $4; $20 
B) $8; $4 
C) $8; $12 
D) $4; $8 
E) $4; $12

Question 16

The figure above shows a firm's demand and average total cost curves.
-The situation in the figure above creates a barrier to entry for a second firm because
I∙a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss.
Ii∙a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers.
Iii∙the first firm's average total cost curve indicates it has been given a patent for the product.

Accepted Answer

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

Question 17

An example of a monopoly would be

Accepted Answer

A) one of many U.S. wheat farmers. 
B) one of the few U.S. auto makers. 
C) AT&T cell phone service. 
D) the local water company. 
E) Taco Bell 
A) one of many U.S. wheat farmers. 
B) one of the few U.S. auto makers. 
C) AT&T cell phone service. 
D) the local water company. 
E) Taco Bell

Question 18

The figure above shows a natural monopoly.
-In the figure above, if the firm is regulated using an average cost pricing rule, the consumer surplus 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 consumer surplus created. 
A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no consumer surplus created.

Question 19

-A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

Accepted Answer

A) It is maximizing profit. 
B) To increase profit, it should produce less. 
C) To increase profit, it should produce more. 
D) It should shut down. 
E) It is making an economic profit. 
A) It is maximizing profit. 
B) To increase profit, it should produce less. 
C) To increase profit, it should produce more. 
D) It should shut down. 
E) It is making an economic profit.

Question 20

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

Accepted Answer

A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly. 
A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly.

Ownership of a necessary input creates what type of barrier to entry?

Can a monopoly make an economic profit in the long run? Explain your answer.

A monopoly is

Earning-sharing regulation involves

Suppose that along a linear demand curve, the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

In contrast to competitive firms, single-price monopolies

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Why will a profit-maximizing, single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

Patents

The demand curve facing a single-price monopoly

Assume someone organizes all farms in the nation into a monopoly.As a result, consumer surplus will

The U.S.Postal Service has a monopoly over first-class mail service because

An example of a monopoly would be

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

-A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

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

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Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopolistic Competition

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Exam 16: Monopoly

Ownership of a necessary input creates what type of barrier to entry?

Can a monopoly make an economic profit in the long run? Explain your answer.

A monopoly is

Earning-sharing regulation involves

Suppose that along a linear demand curve, the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

In contrast to competitive firms, single-price monopolies

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Why will a profit-maximizing, single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

Patents

The demand curve facing a single-price monopoly

Assume someone organizes all farms in the nation into a monopoly.As a result, consumer surplus will

The U.S.Postal Service has a monopoly over first-class mail service because

An example of a monopoly would be

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

-A single-price monopoly has marginal cost of $23 and marginal revenue of $28.Which of the following is definitely correct?

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

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