Question 1

When compared to a perfectly competitive market, a single-price monopoly with the same costs produces ________ output and charges ________ price.

Accepted Answer

A) a larger; a lower 
B) a smaller; a lower 
C) the same; a higher 
D) a smaller; a higher 
E) a smaller; the same 
A) a larger; a lower 
B) a smaller; a lower 
C) the same; a higher 
D) a smaller; a higher 
E) a smaller; the same

Question 2

Capture theory is

Accepted Answer

A) an economic theory of regulation. 
B) a model about perfect competition. 
C) the same as the public interest theory. 
D) the theory that regulators capture firms' attention by dictating a very low price. 
E) a theory that explains behavior of competitive firms. 
A) an economic theory of regulation. 
B) a model about perfect competition. 
C) the same as the public interest theory. 
D) the theory that regulators capture firms' attention by dictating a very low price. 
E) a theory that explains behavior of competitive firms.

Question 3

Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________.

Accepted Answer

A) rise; customers 
B) fall; customers 
C) rise; suppliers 
D) fall; suppliers 
E) rise; competitors 
A) rise; customers 
B) fall; customers 
C) rise; suppliers 
D) fall; suppliers 
E) rise; competitors

Question 4

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 5

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

Question 6

Which of the following is NOT correct about a single-price monopoly?

Accepted Answer

A) Maximum profit is found where demand is the most inelastic. 
B) Marginal revenue is negative when demand is inelastic. 
C) Marginal revenue is positive when demand is elastic. 
D) To sell more output, the firm must lower its price. 
E) To maximize its profit, the firm produces so that marginal revenue equals marginal cost. 
A) Maximum profit is found where demand is the most inelastic. 
B) Marginal revenue is negative when demand is inelastic. 
C) Marginal revenue is positive when demand is elastic. 
D) To sell more output, the firm must lower its price. 
E) To maximize its profit, the firm produces so that marginal revenue equals marginal cost.

Question 7

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could, then that firm has

Accepted Answer

A) patented the market. 
B) a natural monopoly. 
C) increasing average total costs. 
D) a legal barrier to entry. 
E) a discriminatory monopoly. 
A) patented the market. 
B) a natural monopoly. 
C) increasing average total costs. 
D) a legal barrier to entry. 
E) a discriminatory monopoly.

Question 8

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 9

-In the above figure, a perfectly competitive market will have a price of ________ and a single-price monopoly will have a price of ________.

Accepted Answer

A) P₁ and quantity of Q₁; P₂ and quantity of Q₂ 
B) P₂ and quantity of Q₂; P₁ and quantity of Q₁ 
C) P₃ and quantity of Q₃; P₁ and quantity of Q₁ 
D) P₂ and quantity of Q₂; P₃ and quantity of Q₁ 
E) P₂ and quantity of Q₁; P₁ and quantity of Q₁ 
A) P₁ and quantity of Q₁; P₂ and quantity of Q₂ 
B) P₂ and quantity of Q₂; P₁ and quantity of Q₁ 
C) P₃ and quantity of Q₃; P₁ and quantity of Q₁ 
D) P₂ and quantity of Q₂; P₃ and quantity of Q₁ 
E) P₂ and quantity of Q₁; P₁ and quantity of Q₁

Question 10

The table below gives a monopoly's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.
 $$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { (dollars) }
\end{array} \
\hline 15 & 0 & - & - \
13 & 1 & - & - \
11 & 2 & - & - \
9 & 3 & - & - \
7 & 4 & - & - \
5 & 5 & - & - \
3 & 6 & - & - \
1 & 7 & - & - \
0 & 8 & - & - \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { c c c c } 
\begin{arra

Question 11

Price discrimination is possible, in part, because

Accepted Answer

A) costs of production vary as output increases. 
B) monopolies are regulated. 
C) monopolies don't profit maximize. 
D) the willingness to pay can vary among groups of buyers. 
E) monopolies face horizontal demand curves. 
A) costs of production vary as output increases. 
B) monopolies are regulated. 
C) monopolies don't profit maximize. 
D) the willingness to pay can vary among groups of buyers. 
E) monopolies face horizontal demand curves.

Question 12

-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 quantity of steak is ________ pounds and when the market is a monopoly the quantity of steak is ________ pounds.

Accepted Answer

A) 2,000; 4,000 
B) 3,000; 2,000 
C) 4,000; 4,000 
D) 5,000; 3,000 
E) 4,000; less than 2,000 pounds. 
A) 2,000; 4,000 
B) 3,000; 2,000 
C) 4,000; 4,000 
D) 5,000; 3,000 
E) 4,000; less than 2,000 pounds.

Question 13

A "buy one, get one for half price" promotion is an example of

Accepted Answer

A) price discriminating among units of a good. 
B) price discriminating among groups of buyers. 
C) a legal monopoly. 
D) a natural monopoly. 
E) marketing by a perfectly competitive firm designed to increase the firm's sales. 
A) price discriminating among units of a good. 
B) price discriminating among groups of buyers. 
C) a legal monopoly. 
D) a natural monopoly. 
E) marketing by a perfectly competitive firm designed to increase the firm's sales.

Question 14

The total revenue test using the price elasticity of demand

Accepted Answer

A) explains why monopolies will only operate on the elastic portion of their demand curve. 
B) explains why monopolies will only operate on the inelastic portion of their demand curves. 
C) demonstrates why a monopoly can earn an economic profit in the long run. 
D) determines whether a monopoly can perfectly price discriminate or not. 
E) cannot be used for a price discriminating monopoly. 
A) explains why monopolies will only operate on the elastic portion of their demand curve. 
B) explains why monopolies will only operate on the inelastic portion of their demand curves. 
C) demonstrates why a monopoly can earn an economic profit in the long run. 
D) determines whether a monopoly can perfectly price discriminate or not. 
E) cannot be used for a price discriminating monopoly.

Question 15

A monopoly can set any price it wants. So why does it still produce at a point where MR = MC, just like a perfectly competitive firm?

Accepted Answer

The point where MR = MC maximizes any fi

Question 16

Total revenue is equal to

Accepted Answer

A) the change in price resulting from a one-unit increase in quantity sold. 
B) the amount people will buy at a given price. 
C) the change in the quantity sold when you change the price by one unit. 
D) price multiplied by the quantity sold. 
E) the price at which the good or service is sold. 
A) the change in price resulting from a one-unit increase in quantity sold. 
B) the amount people will buy at a given price. 
C) the change in the quantity sold when you change the price by one unit. 
D) price multiplied by the quantity sold. 
E) the price at which the good or service is sold.

Question 17

Define price discrimination. What factors must be present in order for a firm to price discriminate?
 Why do firms price discriminate?

Accepted Answer

Price discrimination is selling a good o

Question 18

A monopoly

Accepted Answer

A) is not protected by barriers to entry. 
B) produces a good with no close substitutes. 
C) faces a downward-sloping demand curve. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) is not protected by barriers to entry. 
B) produces a good with no close substitutes. 
C) faces a downward-sloping demand curve. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 19

The demand schedule for a single-price monopoly is given in the table below. Calculate the marginal revenue.
 $$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { (dollars) }
\end{array} \
\hline 0 & 24 & \
1 & 22 & - \
2 & 20 & - \
3 & 18 & - \
4 & 16 & - \
5 & 14 & - \
6 & 12 & - \
7 & 10 & - \
8 & 8 & - \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { c c c } 
\begin{array}

Question 20

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.

When compared to a perfectly competitive market, a single-price monopoly with the same costs produces output and charges price.

Capture theory is

Under earnings-sharing regulation, if a firm's profits above a certain level, they must be shared with the firm's .

A monopoly is

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.

Which of the following is NOT correct about a single-price monopoly?

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could, then that firm has

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 the above figure, a perfectly competitive market will have a price of and a single-price monopoly will have a price of .

The table below gives a monopoly's demand schedule. Complete the table by calculating the total revenue and the marginal revenue. Quantity (units) Price (dollars) Total revenue (dollars) Marginal revenue (dollars) 15 0 - - 13 1 - - 11 2 - - 9 3 - - 7 4 - - 5 5 - - 3 6 - - 1 7 - - 0 8 - -

Price discrimination is possible, in part, because

A "buy one, get one for half price" promotion is an example of

The total revenue test using the price elasticity of demand

A monopoly can set any price it wants. So why does it still produce at a point where MR = MC, just like a perfectly competitive firm?

Total revenue is equal to

Define price discrimination. What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

A monopoly

The demand schedule for a single-price monopoly is given in the table below. Calculate the marginal revenue. Quantity (units) Price (dollars) Marginal revenue (dollars) 0 24 1 22 - 2 20 - 3 18 - 4 16 - 5 14 - 6 12 - 7 10 - 8 8 -

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,

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

When compared to a perfectly competitive market, a single-price monopoly with the same costs produces ________ output and charges ________ price.

Capture theory is

Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________.

A monopoly is

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.

Which of the following is NOT correct about a single-price monopoly?

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could, then that firm has

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 the above figure, a perfectly competitive market will have a price of ________ and a single-price monopoly will have a price of ________.

The table below gives a monopoly's demand schedule. Complete the table by calculating the total revenue and the marginal revenue. Quantity (units) Price (dollars) Total revenue (dollars) Marginal revenue (dollars) 15 0 - - 13 1 - - 11 2 - - 9 3 - - 7 4 - - 5 5 - - 3 6 - - 1 7 - - 0 8 - -

Price discrimination is possible, in part, because

A "buy one, get one for half price" promotion is an example of

The total revenue test using the price elasticity of demand

A monopoly can set any price it wants. So why does it still produce at a point where MR = MC, just like a perfectly competitive firm?

Total revenue is equal to

Define price discrimination. What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?

A monopoly

The demand schedule for a single-price monopoly is given in the table below. Calculate the marginal revenue. Quantity (units) Price (dollars) Marginal revenue (dollars) 0 24 1 22 - 2 20 - 3 18 - 4 16 - 5 14 - 6 12 - 7 10 - 8 8 -

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,

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

When compared to a perfectly competitive market, a single-price monopoly with the same costs produces output and charges price.

Under earnings-sharing regulation, if a firm's profits above a certain level, they must be shared with the firm's .

-In the above figure, a perfectly competitive market will have a price of and a single-price monopoly will have a price of .