Question 1

A natural monopoly

Accepted Answer

A) arises as a result of legal barriers to entry. 
B) occurs when one firm controls a natural resource. 
C) arises when one firm can meet the entire market demand at a lower average total cost than two or more firms. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) arises as a result of legal barriers to entry. 
B) occurs when one firm controls a natural resource. 
C) arises when one firm can meet the entire market demand at a lower average total cost than two or more firms. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 2

Comparing a perfectly competitive market to a single-price monopoly with the same costs, we see that

Accepted Answer

A) both markets are equally efficient in their use of resources. 
B) the monopoly market always is more efficient in the use of resources. 
C) the perfectly competitive market achieves efficiency in resource use while the monopoly market does not. 
D) the monopoly market achieves efficiency in resource use while perfectly competitive market does not. 
E) None of the above answers is correct because comparing a perfectly competitive market to a monopoly is impossible. 
A) both markets are equally efficient in their use of resources. 
B) the monopoly market always is more efficient in the use of resources. 
C) the perfectly competitive market achieves efficiency in resource use while the monopoly market does not. 
D) the monopoly market achieves efficiency in resource use while perfectly competitive market does not. 
E) None of the above answers is correct because comparing a perfectly competitive market to a monopoly is impossible.

Question 3

What is the social interest theory of regulation?
 How does it differ from the capture theory of regulation?

Accepted Answer

The social interest theory of regulation

Question 4

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars per } \
\text { haircut) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (haircuts per day) }
\end{array} \
\hline 5 & 50 \
\hline 10 & 40 \
\hline 15 & 30 \
\hline 20 & 20 \
\hline 25 & 10 \
\hline 30 & 0 \
\hline
\end{array}$$
-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut?

Accepted Answer

A) zero 
B) -$5.00 
C) $5.00 
D) $12.50 
A) zero 
B) -$5.00 
C) $5.00 
D) $12.50

Question 5

In order to maximize its profit, a single-price monopoly produces the amount of output so that

Accepted Answer

A) P = MC. 
B) MR = MC. 
C) P = MC - MR. 
D) P = MR. 
E) P = ATC. 
A) P = MC. 
B) MR = MC. 
C) P = MC - MR. 
D) P = MR. 
E) P = ATC.

Question 6

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule?
 When would its price be lowest?

Accepted Answer

The price would be highest if

Question 7

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars per unit) }
\end{array} \
\hline 1 & 8 \
\hline 2 & 7 \
\hline 3 & 6 \
\hline 4 & 5 \
\hline 5 & 4 \
\hline 6 & 3 \
\hline
\end{array}$$
-The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

Accepted Answer

A) 4 and 5 
B) 3 and 4 
C) 2 and 3 
D) 1 and 2 
A) 4 and 5 
B) 3 and 4 
C) 2 and 3 
D) 1 and 2

Question 8

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

Accepted Answer

A) $21 
B) $20 
C) $18 
D) $6 
A) $21 
B) $20 
C) $18 
D) $6

Question 9

With perfect price discrimination, the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

Accepted Answer

A) greater than but not equal to 
B) less than 
C) equal to but not greater than 
D) not comparable to 
E) either greater than or equal to 
A) greater than but not equal to 
B) less than 
C) equal to but not greater than 
D) not comparable to 
E) either greater than or equal to

Question 10

The good produced by a monopoly

Accepted Answer

A) has perfect substitutes. 
B) has no substitutes at all. 
C) has no close substitutes. 
D) can be easily duplicated. 
E) must be unable to be resold. 
A) has perfect substitutes. 
B) has no substitutes at all. 
C) has no close substitutes. 
D) can be easily duplicated. 
E) must be unable to be resold.

Question 11

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

Accepted Answer

A) patent 
B) copyright 
C) public franchise 
D) government license 
E) natural barrier 
A) patent 
B) copyright 
C) public franchise 
D) government license 
E) natural barrier

Question 12

What is rent seeking?
 How does rent seeking affect the deadweight loss from monopoly?

Accepted Answer

Rent seeking is the act of obtaining spe

Question 13

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule, we see that output is

Accepted Answer

A) greater with marginal cost pricing but average cost pricing allows for costs to be covered. 
B) the same under both cases but the profit is greater with average cost pricing. 
C) greater under average cost pricing but profits are greater with marginal cost pricing. 
D) the same but profits are greater with marginal cost pricing. 
E) greater with marginal cost pricing and the firm's profit is larger with marginal cost pricing. 
A) greater with marginal cost pricing but average cost pricing allows for costs to be covered. 
B) the same under both cases but the profit is greater with average cost pricing. 
C) greater under average cost pricing but profits are greater with marginal cost pricing. 
D) the same but profits are greater with marginal cost pricing. 
E) greater with marginal cost pricing and the firm's profit is larger with marginal cost pricing.

Question 14

Which of the following goods is the best example of a natural monopoly?

Accepted Answer

A) distribution of electricity 
B) diamonds 
C) first-class mail 
D) a patented good 
E) blouses 
A) distribution of electricity 
B) diamonds 
C) first-class mail 
D) a patented good 
E) blouses

Question 15

"When electric utilities are regulated using an average cost pricing rule, they will earn zero economic profit." Is the previous statement correct or incorrect?
 Why?

Accepted Answer

The statement is correct. An a

Question 16

In contrast to competitive firms, single-price monopolies

Accepted Answer

A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply. 
A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply.

Question 17

Which of the following must a firm be able to do to successfully price discriminate?
I. divide buyers into different groups according to their willingness to pay
Ii. prevent resale of the good or service
Iii. identify into which group (high willingness to pay or low willingness to pay)a buyer falls

Accepted Answer

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

Question 18

In the figure below, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

Accepted Answer

@#IMG-DLM& The compl

Question 19

What kind of profit can a monopoly make in the short run?
 In the long run?
 Explain your answers.

Accepted Answer

In the short run, a monopoly can make an

Question 20

With perfect price discrimination, the level of output

Accepted Answer

A) exceeds the efficient quantity. 
B) is the same as the amount produced by any monopoly that price discriminates. 
C) is the same as the amount produced in a perfectly competitive market. 
D) equals the amount produced by a single-price monopoly. 
E) is unknown. 
A) exceeds the efficient quantity. 
B) is the same as the amount produced by any monopoly that price discriminates. 
C) is the same as the amount produced in a perfectly competitive market. 
D) equals the amount produced by a single-price monopoly. 
E) is unknown.

A natural monopoly

Comparing a perfectly competitive market to a single-price monopoly with the same costs, we see that

What is the social interest theory of regulation? How does it differ from the capture theory of regulation?

Price (dollars per haircut) Quantity demanded (haircuts per day) 5 50 10 40 15 30 20 20 25 10 30 0 -Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut?

In order to maximize its profit, a single-price monopoly produces the amount of output so that

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

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. Between which two quantities is marginal revenue equal to 0?

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 total revenue in when 3 units of output are produced?

With perfect price discrimination, the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

The good produced by a monopoly

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule, we see that output is

Which of the following goods is the best example of a natural monopoly?

"When electric utilities are regulated using an average cost pricing rule, they will earn zero economic profit." Is the previous statement correct or incorrect? Why?

In contrast to competitive firms, single-price monopolies

Which of the following must a firm be able to do to successfully price discriminate? I. divide buyers into different groups according to their willingness to pay Ii. prevent resale of the good or service Iii. identify into which group (high willingness to pay or low willingness to pay)a buyer falls

In the figure below, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

With perfect price discrimination, the level of output

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

Comparing a perfectly competitive market to a single-price monopoly with the same costs, we see that

What is the social interest theory of regulation? How does it differ from the capture theory of regulation?

Price (dollars per haircut) Quantity demanded (haircuts per day) 5 50 10 40 15 30 20 20 25 10 30 0 -Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut?

In order to maximize its profit, a single-price monopoly produces the amount of output so that

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

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. Between which two quantities is marginal revenue equal to 0?

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 total revenue in when 3 units of output are produced?

With perfect price discrimination, the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

The good produced by a monopoly

Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule, we see that output is

Which of the following goods is the best example of a natural monopoly?

"When electric utilities are regulated using an average cost pricing rule, they will earn zero economic profit." Is the previous statement correct or incorrect? Why?

In contrast to competitive firms, single-price monopolies

Which of the following must a firm be able to do to successfully price discriminate? I. divide buyers into different groups according to their willingness to pay Ii. prevent resale of the good or service Iii. identify into which group (high willingness to pay or low willingness to pay)a buyer falls

In the figure below, draw and label the demand and cost curves of a monopoly. Identify the quantity a single-price monopoly will produce by labeling it Qm and identify the price by labeling it Pm.

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

With perfect price discrimination, the level of output

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