Question 1

Which of the following is a characteristic of monopoly?

Accepted Answer

A) The firm faces competition from many other firms. 
B) The firm produces a product that has many close substitutes. 
C) There are barriers to enter the market. 
D) The firm's demand is perfectly elastic. 
E) The firm produces a product identical to that produced by its many competitors. 
A) The firm faces competition from many other firms. 
B) The firm produces a product that has many close substitutes. 
C) There are barriers to enter the market. 
D) The firm's demand is perfectly elastic. 
E) The firm produces a product identical to that produced by its many competitors.

Question 2

If a single-price monopoly is making a large economic profit, what keeps other firms from competing away the profit?

Accepted Answer

A) There are barriers to entry. 
B) The monopoly must be keeping the amount earned secret. 
C) The market must be too small. 
D) The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E) Nothing, other firms will enter and will compete away the profit. 
A) There are barriers to entry. 
B) The monopoly must be keeping the amount earned secret. 
C) The market must be too small. 
D) The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E) Nothing, other firms will enter and will compete away the profit.

Question 3

In a monopoly, producers ________ and consumers ________.

Accepted Answer

A) gain; lose 
B) lose; lose 
C) lose; gain 
D) gain; gain 
E) gain; do not gain or lose 
A) gain; lose 
B) lose; lose 
C) lose; gain 
D) gain; gain 
E) gain; do not gain or lose

Question 4

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

Accepted Answer

The single-price monopoly crea

Question 5

The theory that regulation helps producers to maximize profit is the

Accepted Answer

A) social interest theory. 
B) consumer surplus theory. 
C) antitrust theory. 
D) capture theory. 
E) oligopoly theory of regulatory bodies. 
A) social interest theory. 
B) consumer surplus theory. 
C) antitrust theory. 
D) capture theory. 
E) oligopoly theory of regulatory bodies.

Question 6

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.

Question 7

-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

Accepted Answer

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

Question 8

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

Accepted Answer

A) least cost pricing and average cost pricing. 
B) price discrimination and two-part tariff pricing. 
C) zero profit pricing. 
D) profit-maximizing pricing. 
E) None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss. 
A) least cost pricing and average cost pricing. 
B) price discrimination and two-part tariff pricing. 
C) zero profit pricing. 
D) profit-maximizing pricing. 
E) None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.

Question 9

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 10

When regulated using rate of return regulation, who benefits from the practice of some natural monopolies to count sumptuous offices, free baseball tickets, golf excursions, and limousines as costs of production?

Accepted Answer

A) stockholders 
B) managers of the monopoly 
C) customers of the monopoly 
D) regulators of the industry 
E) None of the above answers is correct. 
A) stockholders 
B) managers of the monopoly 
C) customers of the monopoly 
D) regulators of the industry 
E) None of the above answers is correct.

Question 11

When a rent-seeking equilibrium is reached, the

Accepted Answer

A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated. 
A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated.

Question 12

A barrier to entry is

Accepted Answer

A) the economic term for diseconomies of scale. 
B) illegal in most markets. 
C) anything that protects a firm from the arrival of new competitors. 
D) a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E) the same as rent seeking. 
A) the economic term for diseconomies of scale. 
B) illegal in most markets. 
C) anything that protects a firm from the arrival of new competitors. 
D) a factor that increases competition because firms must continue to operate in the market in which they were founded. 
E) the same as rent seeking.

Question 13

"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 14

Which of the following is an example of a natural monopoly?

Accepted Answer

A) the Pittsburgh Penguins hockey team, a National Hockey League team 
B) Ford Motors, the large automobile producing company 
C) Florida Power and Light, an electric utility in Florida 
D) Sony, the Japanese producer of the Playstation III 
E) JCPenney, the large department store chain 
A) the Pittsburgh Penguins hockey team, a National Hockey League team 
B) Ford Motors, the large automobile producing company 
C) Florida Power and Light, an electric utility in Florida 
D) Sony, the Japanese producer of the Playstation III 
E) JCPenney, the large department store chain

Question 15

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve. The amount of consumer surplus when the market has a monopoly producer is ________ and the amount of consumer surplus when the market is perfectly competitive is ________.

Accepted Answer

A) abf; ace 
B) abf; bcd 
C) ace; bcd 
D) ace; abf 
E) bcd; ace 
A) abf; ace 
B) abf; bcd 
C) ace; bcd 
D) ace; abf 
E) bcd; ace

Question 16

The above figure shows a market.
-The figure above shows that monopoly is ________ because it produces a level of output at which ________.

Accepted Answer

A) inefficient; marginal benefit equals marginal cost 
B) efficient; marginal benefit equals marginal cost 
C) efficient; marginal benefit exceeds marginal cost 
D) inefficient; marginal benefit exceeds marginal cost 
E) efficient; producer surplus is maximized 
A) inefficient; marginal benefit equals marginal cost 
B) efficient; marginal benefit equals marginal cost 
C) efficient; marginal benefit exceeds marginal cost 
D) inefficient; marginal benefit exceeds marginal cost 
E) efficient; producer surplus is maximized

Question 17

How can managers of natural monopolies exaggerate their costs?

Accepted Answer

By increasing on-the-job luxury items su

Question 18

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

Accepted Answer

A) The regulated firm ends up earning an economic profit. 
B) Consumers pay too much for the product of the monopoly. 
C) This policy is a two-part tariff, which creates inefficiency. 
D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. 
E) The regulated firm goes out of business if it is subsidized. 
A) The regulated firm ends up earning an economic profit. 
B) Consumers pay too much for the product of the monopoly. 
C) This policy is a two-part tariff, which creates inefficiency. 
D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. 
E) The regulated firm goes out of business if it is subsidized.

Question 19

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 20

A difference between a perfectly competitive industry and a monopoly is that

Accepted Answer

A) in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B) a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C) only monopolies have an incentive to maximize profit. 
D) perfectly competitive firms can have a public franchise. 
E) a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run. 
A) in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B) a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C) only monopolies have an incentive to maximize profit. 
D) perfectly competitive firms can have a public franchise. 
E) a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run.

Which of the following is a characteristic of monopoly?

If a single-price monopoly is making a large economic profit, what keeps other firms from competing away the profit?

In a monopoly, producers and consumers .

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

The theory that regulation helps producers to maximize profit is the

A firm that is a natural monopoly

-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

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

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

When regulated using rate of return regulation, who benefits from the practice of some natural monopolies to count sumptuous offices, free baseball tickets, golf excursions, and limousines as costs of production?

When a rent-seeking equilibrium is reached, the

A barrier to entry 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 is an example of a natural monopoly?

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve. The amount of consumer surplus when the market has a monopoly producer is and the amount of consumer surplus when the market is perfectly competitive is .

The above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .

How can managers of natural monopolies exaggerate their costs?

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

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

A difference between a perfectly competitive industry and a monopoly is that

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

Which of the following is a characteristic of monopoly?

If a single-price monopoly is making a large economic profit, what keeps other firms from competing away the profit?

In a monopoly, producers ________ and consumers ________.

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

The theory that regulation helps producers to maximize profit is the

A firm that is a natural monopoly

-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

Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in

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

When regulated using rate of return regulation, who benefits from the practice of some natural monopolies to count sumptuous offices, free baseball tickets, golf excursions, and limousines as costs of production?

When a rent-seeking equilibrium is reached, the

A barrier to entry 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 is an example of a natural monopoly?

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve. The amount of consumer surplus when the market has a monopoly producer is ________ and the amount of consumer surplus when the market is perfectly competitive is ________.

The above figure shows a market. -The figure above shows that monopoly is ________ because it produces a level of output at which ________.

How can managers of natural monopolies exaggerate their costs?

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

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

A difference between a perfectly competitive industry and a monopoly is that

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

In a monopoly, producers and consumers .

-The figure above shows the demand curve, marginal revenue curve, and marginal cost curve. The amount of consumer surplus when the market has a monopoly producer is and the amount of consumer surplus when the market is perfectly competitive is .

The above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .