Question 1

A natural monopoly arises when

Accepted Answer

A) one firm controls the supply of a unique resource. 
B) a firm has many small firms that it can control. 
C) there are firms which act together as a monopoly. 
D) the long-run average cost curve slopes downward as it crosses the demand curve. 
E) one firm naturally convinces the government to limit competition in the market. 
A) one firm controls the supply of a unique resource. 
B) a firm has many small firms that it can control. 
C) there are firms which act together as a monopoly. 
D) the long-run average cost curve slopes downward as it crosses the demand curve. 
E) one firm naturally convinces the government to limit competition in the market.

Question 2

For a single-price monopoly, price is

Accepted Answer

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

Question 3

If a monopoly is able to perfectly price discriminate, then consumer surplus is

Accepted Answer

A) equal to zero. 
B) maximized. 
C) unchanged from what it is with a single-price monopoly. 
D) unchanged from what it is in a perfectly competitive industry. 
E) not zero but is less than with a single-price monopoly. 
A) equal to zero. 
B) maximized. 
C) unchanged from what it is with a single-price monopoly. 
D) unchanged from what it is in a perfectly competitive industry. 
E) not zero but is less than with a single-price monopoly.

Question 4

The figure above shows a natural monopoly that the government must regulate. Which of the following pairs most likely results in similar outcomes?

Accepted Answer

A) marginal cost pricing and rate of return regulation 
B) marginal cost pricing and a two-part tariff 
C) average cost pricing and rate of return regulation 
D) predatory pricing and price caps 
E) marginal cost pricing and price cap regulation 
A) marginal cost pricing and rate of return regulation 
B) marginal cost pricing and a two-part tariff 
C) average cost pricing and rate of return regulation 
D) predatory pricing and price caps 
E) marginal cost pricing and price cap regulation

Question 5

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

Accepted Answer

A) offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B) lower its prices to younger customers too. 
C) prevent senior citizens from reselling their rooms to younger customers. 
D) shift its demand curve rightward. 
E) determine if a senior citizen can pay a higher price. 
A) offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B) lower its prices to younger customers too. 
C) prevent senior citizens from reselling their rooms to younger customers. 
D) shift its demand curve rightward. 
E) determine if a senior citizen can pay a higher price.

Question 6

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 7

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 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 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 9

A legal barrier is created when a firm

Accepted Answer

A) has economies of scale, which allow it to produce at a lower cost than two or more firms. 
B) is granted a public franchise, government license, patent, or copyright. 
C) produces a unique product or service. 
D) produces a standardized product or service. 
E) has an ownership barrier to entry. 
A) has economies of scale, which allow it to produce at a lower cost than two or more firms. 
B) is granted a public franchise, government license, patent, or copyright. 
C) produces a unique product or service. 
D) produces a standardized product or service. 
E) has an ownership barrier to entry.

Question 10

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

Accepted Answer

Because utilities are generally allowed

Question 11

Rate of return regulation is designed to allow a natural monopoly to

Accepted Answer

A) make an economic profit. 
B) make zero economic profit. 
C) underestimate its average cost. 
D) compete with any firm entering the market. 
E) make zero normal profit. 
A) make an economic profit. 
B) make zero economic profit. 
C) underestimate its average cost. 
D) compete with any firm entering the market. 
E) make zero normal profit.

Question 12

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above, the dark triangle is the

Accepted Answer

A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) total cost. 
E) economic profit. 
A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) total cost. 
E) economic profit.

Question 13

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 14

Rent seeking is the act of obtaining special treatment by ________ to create ________.

Accepted Answer

A) a monopoly; consumer surplus 
B) the government; economic profit 
C) consumers; a monopoly 
D) the government; consumer surplus 
E) competitive producers; a monopoly 
A) a monopoly; consumer surplus 
B) the government; economic profit 
C) consumers; a monopoly 
D) the government; consumer surplus 
E) competitive producers; a monopoly

Question 15

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 16

"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 am

Question 17

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 18

A natural barrier to entry is defined as a barrier that arises because of

Accepted Answer

A) technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms. 
B) patents or licenses that exclude others from producing a good or service. 
C) many firms producing the good and thereby allowing choice for all consumers. 
D) anticompetitive practices by a firm that keep other firms from producing. 
E) one firm owning a key natural resource. 
A) technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms. 
B) patents or licenses that exclude others from producing a good or service. 
C) many firms producing the good and thereby allowing choice for all consumers. 
D) anticompetitive practices by a firm that keep other firms from producing. 
E) one firm owning a key natural resource.

Question 19

Suppose that a regulatory agency helps producers maximize economic profit. This type of regulation coincides with

Accepted Answer

A) a natural monopoly. 
B) a marginal cost pricing rule. 
C) an average cost pricing rule. 
D) the capture theory of regulation. 
E) the social interest theory of regulation. 
A) a natural monopoly. 
B) a marginal cost pricing rule. 
C) an average cost pricing rule. 
D) the capture theory of regulation. 
E) the social interest theory of regulation.

Question 20

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.

A natural monopoly arises when

For a single-price monopoly, price is

If a monopoly is able to perfectly price discriminate, then consumer surplus is

The figure above shows a natural monopoly that the government must regulate. Which of the following pairs most likely results in similar outcomes?

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

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

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

-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?

A legal barrier is created when a firm

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

Rate of return regulation is designed to allow a natural monopoly to

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, the dark triangle is the

Price discrimination is

Rent seeking is the act of obtaining special treatment by to create .

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

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

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

A natural barrier to entry is defined as a barrier that arises because of

Suppose that a regulatory agency helps producers maximize economic profit. This type of regulation coincides with

If a natural monopoly is regulated using

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 12: Monopoly

A natural monopoly arises when

For a single-price monopoly, price is

If a monopoly is able to perfectly price discriminate, then consumer surplus is

The figure above shows a natural monopoly that the government must regulate. Which of the following pairs most likely results in similar outcomes?

In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to

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

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

-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?

A legal barrier is created when a firm

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

Rate of return regulation is designed to allow a natural monopoly to

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, the dark triangle is the

Price discrimination is

Rent seeking is the act of obtaining special treatment by ________ to create ________.

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

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

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

A natural barrier to entry is defined as a barrier that arises because of

Suppose that a regulatory agency helps producers maximize economic profit. This type of regulation coincides with

If a natural monopoly is regulated using

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Rent seeking is the act of obtaining special treatment by to create .