Question 1

Which creates a larger deadweight loss, perfect competition or a single-price monopoly?

Accepted Answer

The single-price monopoly crea

Question 2

-Ron's Hamburger Joint is the only restaurant in town.The above figure represents Ron's cost, the market demand, and marginal revenue curves.Ron operates as a single-price monopoly.
a∙How many hamburgers does Ron produce?
b∙What price does Ron charge for a hamburger?
c∙What is Ron's total revenue?
d∙What is his total cost?
e∙What is Ron's economic profit?

Accepted Answer

a∙Ron produces 20 hamburgers p

Question 3

-The above figure shows the demand for cable and the cable company's cost of providing cable.
a∙What price and quantity will be produced if the company is unregulated and profit maximizes?
b∙What price and quantity will be produced if the company is regulated using the marginal cost pricing rule?
c∙What is the advantage of the marginal cost pricing rule?
d∙What price and quantity will be produced if the company is regulated using the average cost pricing rule?
e∙What is the advantage of the average cost pricing rule?

Accepted Answer

a∙The price will be $90 per month and th

Question 4

To be able to price discriminate, a firm must

Accepted Answer

A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct. 
A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct.

Question 5

A single-price monopoly has a marginal revenue curve that is

Accepted Answer

A) horizontal and equal to price. 
B) downward sloping and lies below the demand curve. 
C) upward sloping and is the same as its supply curve. 
D) downward sloping and lies above the demand curve. 
E) vertical at the profit-maximizing quantity. 
A) horizontal and equal to price. 
B) downward sloping and lies below the demand curve. 
C) upward sloping and is the same as its supply curve. 
D) downward sloping and lies above the demand curve. 
E) vertical at the profit-maximizing quantity.

Question 6

Assume someone organizes all farms in the nation into a single-price monopoly.As a result, the price consumers pay for food

Accepted Answer

A) does not change, that is, it remains constant. 
B) falls. 
C) rises. 
D) might rise or fall depending on whether the demand for food is elastic or inelastic. 
E) might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve. 
A) does not change, that is, it remains constant. 
B) falls. 
C) rises. 
D) might rise or fall depending on whether the demand for food is elastic or inelastic. 
E) might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve.

Question 7

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 8

Which of the following is an example of price discrimination?

Accepted Answer

A) UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B) Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C) Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are all correct. 
A) UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B) Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C) Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are all correct.

Question 9

Why do some utilities have an incentive to exaggerate their costs of production?

Accepted Answer

Because utilities are generally allowed

Question 10

For a single-price monopoly, price is

Accepted Answer

A) equal to marginal revenue. 
B) greater than marginal revenue. 
C) less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D) less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E) equal to zero because the firm is not a price taker. 
A) equal to marginal revenue. 
B) greater than marginal revenue. 
C) less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D) less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E) equal to zero because the firm is not a price taker.

Question 11

-"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is partially correct becau

Question 12

Which of the following must exist for a firm to engage in price discrimination?

Accepted Answer

A) The firm must be able to identify and separate its buyers into different classes, and the low-price buyers cannot resell the product to the high-price buyers. 
B) The firm must face an inelastic demand. 
C) The firm must be able to realize economies of scale. 
D) The firm must have no more than one class of buyer. 
E) The firm must be a natural monopoly. 
A) The firm must be able to identify and separate its buyers into different classes, and the low-price buyers cannot resell the product to the high-price buyers. 
B) The firm must face an inelastic demand. 
C) The firm must be able to realize economies of scale. 
D) The firm must have no more than one class of buyer. 
E) The firm must be a natural monopoly.

Question 13

A natural monopoly's average cost curve
I∙intersects the demand curve while the average cost curve slopes downward.
Ii∙reaches its minimum before it intersects the demand curve.
Iii∙intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

Accepted Answer

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

Question 14

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost, the firm

Accepted Answer

A) makes zero economic profit. 
B) makes an economic profit. 
C) incurs an economic loss. 
D) makes a normal-economic profit. 
E) makes either zero economic profit or an economic profit, depending on whether the firm's average total cost equals or is less than its marginal cost. 
A) makes zero economic profit. 
B) makes an economic profit. 
C) incurs an economic loss. 
D) makes a normal-economic profit. 
E) makes either zero economic profit or an economic profit, depending on whether the firm's average total cost equals or is less than its marginal cost.

Question 15

-In the above figure, for a single-price monopoly the deadweight loss is equal to the area

Accepted Answer

A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) P₁beP₃. 
A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) P₁beP₃.

Question 16

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using an average cost pricing rule, the

Question 17

Which of the following statements is FALSE?

Accepted Answer

A) A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B) A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C) In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D) The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E) In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm. 
A) A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B) A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C) In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D) The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E) In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm.

Question 18

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and

Question 19

Compared to setting a single price, if a firm can price discriminate it

Accepted Answer

A) makes a larger economic profit. 
B) makes a lower economic profit. 
C) makes zero economic profit. 
D) has no change in its economic profit from when it set a single price. 
E) might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve. 
A) makes a larger economic profit. 
B) makes a lower economic profit. 
C) makes zero economic profit. 
D) has no change in its economic profit from when it set a single price. 
E) might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve.

Question 20

A firm that is a natural monopoly

Accepted Answer

A) can supply the entire market at a lower average total cost than two or more firms. 
B) has very small fixed costs and very large marginal costs. 
C) is infrequently regulated because having one firm serve the market is economically sound. 
D) cannot make an economic profit if it is not regulated because it must serve a very large customer base. 
E) produces the efficient quantity of output when it is not regulated. 
A) can supply the entire market at a lower average total cost than two or more firms. 
B) has very small fixed costs and very large marginal costs. 
C) is infrequently regulated because having one firm serve the market is economically sound. 
D) cannot make an economic profit if it is not regulated because it must serve a very large customer base. 
E) produces the efficient quantity of output when it is not regulated.

Which creates a larger deadweight loss, perfect competition or a single-price monopoly?

To be able to price discriminate, a firm must

A single-price monopoly has a marginal revenue curve that is

Assume someone organizes all farms in the nation into a single-price monopoly.As a result, the price consumers pay for food

What are the conditions that define a monopoly?

Which of the following is an example of price discrimination?

Why do some utilities have an incentive to exaggerate their costs of production?

For a single-price monopoly, price is

-"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

Which of the following must exist for a firm to engage in price discrimination?

A natural monopoly's average cost curve I∙intersects the demand curve while the average cost curve slopes downward. Ii∙reaches its minimum before it intersects the demand curve. Iii∙intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost, the firm

-In the above figure, for a single-price monopoly the deadweight loss is equal to the area

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Which of the following statements is FALSE?

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Compared to setting a single price, if a firm can price discriminate it

A firm that is a natural monopoly

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 creates a larger deadweight loss, perfect competition or a single-price monopoly?

To be able to price discriminate, a firm must

A single-price monopoly has a marginal revenue curve that is

Assume someone organizes all farms in the nation into a single-price monopoly.As a result, the price consumers pay for food

What are the conditions that define a monopoly?

Which of the following is an example of price discrimination?

Why do some utilities have an incentive to exaggerate their costs of production?

For a single-price monopoly, price is

-"A single-price monopoly charges a higher price and produces more output than a perfectly competitive industry." Is the previous statement correct or incorrect? Explain your answer.

Which of the following must exist for a firm to engage in price discrimination?

A natural monopoly's average cost curve I∙intersects the demand curve while the average cost curve slopes downward. Ii∙reaches its minimum before it intersects the demand curve. Iii∙intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

At a level of output when regulators require a natural monopoly to set a price that is equal to marginal cost, the firm

-In the above figure, for a single-price monopoly the deadweight loss is equal to the area

When a natural monopoly is regulated using an average cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Which of the following statements is FALSE?

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Compared to setting a single price, if a firm can price discriminate it

A firm that is a natural monopoly

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