Question 1

To be able to price discriminate, a firm must

Accepted Answer

A) have a public franchise. 
B) be a natural monopoly. 
C) be able to prevent resales of its good. 
D) have a patent. 
E) have an ownership barrier to entry. 
A) have a public franchise. 
B) be a natural monopoly. 
C) be able to prevent resales of its good. 
D) have a patent. 
E) have an ownership barrier to entry.

Question 2

The social interest theory of regulation asserts that regulation

Accepted Answer

A) seeks an efficient use of resources. 
B) is aimed at keeping prices as low as possible. 
C) helps firms maximize economic profit. 
D) of a natural monopoly must be done using rate of return regulation. 
E) does not work for society as well as would allowing the firms freedom from regulation. 
A) seeks an efficient use of resources. 
B) is aimed at keeping prices as low as possible. 
C) helps firms maximize economic profit. 
D) of a natural monopoly must be done using rate of return regulation. 
E) does not work for society as well as would allowing the firms freedom from regulation.

Question 3

The social interest theory of regulation is that

Accepted Answer

A) regulators help producers maximize economic profit. 
B) regulation seeks to increase the government's revenue. 
C) regulation causes producers to produce at a point where they are earning normal profits. 
D) regulation seeks an efficient use of resources. 
E) regulation focuses on the consumers' interests and ignores producers' interests. 
A) regulators help producers maximize economic profit. 
B) regulation seeks to increase the government's revenue. 
C) regulation causes producers to produce at a point where they are earning normal profits. 
D) regulation seeks an efficient use of resources. 
E) regulation focuses on the consumers' interests and ignores producers' interests.

Question 4

A single-price monopoly

Accepted Answer

A) must practice price discrimination. 
B) can lower its price for only a few select consumers if it wants to increase its sales. 
C) will set its price equal to a consumer's willingness to pay. 
D) must lower the price for all customers if it wants to increase its sales. 
E) is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly. 
A) must practice price discrimination. 
B) can lower its price for only a few select consumers if it wants to increase its sales. 
C) will set its price equal to a consumer's willingness to pay. 
D) must lower the price for all customers if it wants to increase its sales. 
E) is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly.

Question 5

With price discrimination, a monopoly

Accepted Answer

A) converts consumer surplus into economic profit. 
B) converts producer surplus into economic profit. 
C) can charge a single price to all customers. 
D) produces less output than if it does not price discriminate. 
E) converts consumer surplus into deadweight loss. 
A) converts consumer surplus into economic profit. 
B) converts producer surplus into economic profit. 
C) can charge a single price to all customers. 
D) produces less output than if it does not price discriminate. 
E) converts consumer surplus into deadweight loss.

Question 6

A natural monopoly is one that arises from

Accepted Answer

A) patent law. 
B) economies of scale. 
C) copyright law. 
D) any government-imposed barrier to entry. 
E) mergers. 
A) patent law. 
B) economies of scale. 
C) copyright law. 
D) any government-imposed barrier to entry. 
E) mergers.

Question 7

When a regulatory agency uses rate of return regulation, the

Accepted Answer

A) agency is able to eliminate the deadweight loss. 
B) firm's managers have an incentive to inflate the firm's costs. 
C) regulated firm's profit must be maximized for the market to be efficient. 
D) regulated firm must receive a government subsidy. 
E) agency is using a form of marginal cost pricing. 
A) agency is able to eliminate the deadweight loss. 
B) firm's managers have an incentive to inflate the firm's costs. 
C) regulated firm's profit must be maximized for the market to be efficient. 
D) regulated firm must receive a government subsidy. 
E) agency is using a form of marginal cost pricing.

Question 8

With a natural monopoly

Accepted Answer

A) no regulation is necessary because it is a natural monopoly. 
B) regulation takes the form of forcing competition from new firms. 
C) regulation takes the form of forcing the company out of business. 
D) regulation can take the form of average cost pricing to allow coverage of costs. 
E) regulation takes the form of breaking the company into several competing firms. 
A) no regulation is necessary because it is a natural monopoly. 
B) regulation takes the form of forcing competition from new firms. 
C) regulation takes the form of forcing the company out of business. 
D) regulation can take the form of average cost pricing to allow coverage of costs. 
E) regulation takes the form of breaking the company into several competing firms.

Question 9

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 10

-A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. At what price will this firm sell the output?

Accepted Answer

A) $19 
B) $38 
C) $285 
D) $570 
E) There is not enough information given to answer the question. 
A) $19 
B) $38 
C) $285 
D) $570 
E) There is not enough information given to answer the question.

Question 11

A single-price monopoly can sell 1 unit for $9.00. To sell 2 units, the price must be $8.50 per unit. The marginal revenue from selling the second unit is

Accepted Answer

A) $17.50. 
B) $17.00. 
C) $8.50. 
D) $8.00. 
E) $9.00 
A) $17.50. 
B) $17.00. 
C) $8.50. 
D) $8.00. 
E) $9.00

Question 12

Rent seeking is defined as

Accepted Answer

A) charging higher prices for an apartment. 
B) the act of obtaining special treatment by the government to create an economic profit. 
C) charging a price below marginal cost. 
D) selling a greater quantity than is profitable. 
E) charging different prices for different units of the good or service. 
A) charging higher prices for an apartment. 
B) the act of obtaining special treatment by the government to create an economic profit. 
C) charging a price below marginal cost. 
D) selling a greater quantity than is profitable. 
E) charging different prices for different units of the good or service.

Question 13

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 14

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Accepted Answer

Marginal cost pricing sets the price equ

Question 15

"Price discrimination allows a monopoly to increase its economic profit by capturing part of the consumer surplus and turning it into economic profit." Is the previous statement correct or incorrect?
 If the statement is correct, why is it important in understanding firms' behaviors?
 If it is incorrect, why is it incorrect?

Accepted Answer

The statement is correct. The statement

Question 16

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars per unit) }
\end{array} \
\hline 1 & 8 \
\hline 2 & 7 \
\hline 3 & 6 \
\hline 4 & 5 \
\hline 5 & 4 \
\hline 6 & 3 \
\hline
\end{array}$$
-The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 5 to 6 units?

Accepted Answer

A) $18 
B) $4 
C) $3 
D) -$2 
A) $18 
B) $4 
C) $3 
D) -$2

Question 17

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 18

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes, some monopolies are created by gove

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

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic, its marginal revenue for ham and eggs is

Accepted Answer

A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined. 
A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined.

To be able to price discriminate, a firm must

The social interest theory of regulation asserts that regulation

The social interest theory of regulation is that

A single-price monopoly

With price discrimination, a monopoly

A natural monopoly is one that arises from

When a regulatory agency uses rate of return regulation, the

With a natural monopoly

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

-A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. At what price will this firm sell the output?

A single-price monopoly can sell 1 unit for $9.00. To sell 2 units, the price must be $8.50 per unit. The marginal revenue from selling the second unit is

Rent seeking is defined as

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

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Quantity (units) Price (dollars per unit) 1 8 2 7 3 6 4 5 5 4 6 3 -The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 5 to 6 units?

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.

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

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

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic, its marginal revenue for ham and eggs is

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

To be able to price discriminate, a firm must

The social interest theory of regulation asserts that regulation

The social interest theory of regulation is that

A single-price monopoly

With price discrimination, a monopoly

A natural monopoly is one that arises from

When a regulatory agency uses rate of return regulation, the

With a natural monopoly

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

-A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. At what price will this firm sell the output?

A single-price monopoly can sell 1 unit for $9.00. To sell 2 units, the price must be $8.50 per unit. The marginal revenue from selling the second unit is

Rent seeking is defined as

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

Compare and contrast the marginal cost and average cost pricing rules for regulating natural monopolies.

Quantity (units) Price (dollars per unit) 1 8 2 7 3 6 4 5 5 4 6 3 -The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 5 to 6 units?

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.

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

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

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic, its marginal revenue for ham and eggs is

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