Question 1

Comparing single-price monopoly to perfect competition, monopoly

Accepted Answer

A) increases the amount of consumer surplus. 
B) has the same amount of consumer surplus. 
C) has no consumer surplus. 
D) decreases the amount of consumer surplus. 
E) decreases the amount of economic profit. 
A) increases the amount of consumer surplus. 
B) has the same amount of consumer surplus. 
C) has no consumer surplus. 
D) decreases the amount of consumer surplus. 
E) decreases the amount of economic profit.

Question 2

What potential problem is there with rate of return pricing?

Accepted Answer

The monopolist might exaggerate its cost

Question 3

A marginal cost pricing rule sets marginal cost equal to

Accepted Answer

A) minimum average variable cost. 
B) price. 
C) average cost. 
D) marginal revenue. 
E) the smaller of price or marginal revenue. 
A) minimum average variable cost. 
B) price. 
C) average cost. 
D) marginal revenue. 
E) the smaller of price or marginal revenue.

Question 4

The figure above shows a natural monopoly.
-In the figure above, if the firm is regulated using a marginal cost pricing rule, the deadweight 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 deadweight loss created. 
A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no deadweight loss created.

Question 5

A natural monopoly's output is less if it is regulated with

Accepted Answer

A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces. 
A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces.

Question 6

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly, the producer surplus is the area ________.

Accepted Answer

A) ABH 
B) BFGH 
C) ACG 
D) BDEH 
E) ACE 
A) ABH 
B) BFGH 
C) ACG 
D) BDEH 
E) ACE

Question 7

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What quantity will the Busy Bee produce to maximize its profit?

Accepted Answer

A) 20 hamburgers per hour 
B) 30 hamburgers per hour 
C) 50 hamburgers per hour 
D) 0 hamburgers per hour 
E) 10 hamburgers per hour 
A) 20 hamburgers per hour 
B) 30 hamburgers per hour 
C) 50 hamburgers per hour 
D) 0 hamburgers per hour 
E) 10 hamburgers per hour

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) total revenue is at its maximum when 100 units are produced. 
B) marginal revenue is positive at 100 units. 
C) marginal revenue is negative at 100 units. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) total revenue is at its maximum when 100 units are produced. 
B) marginal revenue is positive at 100 units. 
C) marginal revenue is negative at 100 units. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 9

-The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly.
a. What was the competitive price and quantity?
b. What is the monopoly price and quantity?
c. What area represents consumer surplus under perfect competition?
d. What area represents consumer surplus under monopoly?
e. What area represents the deadweight loss of monopoly?

Accepted Answer

a. The competitive price was P₂ and the

Question 10

-The above figure represents the demand and marginal revenue curves for Sue's Seafood, a seller of fresh fish.
a. Over what range of output is demand elastic?
b. Over what range of output is demand inelastic?
c. What price maximizes total revenue?
d. What is the price elasticity of demand at the revenue maximizing price?

Accepted Answer

a. Demand is elastic from 0 to 20 pounds

Question 11

The U.S. Postal Service's monopoly on first-class mail service is the result of

Accepted Answer

A) a natural monopoly. 
B) a patent. 
C) a public franchise. 
D) a government license. 
E) an ownership barrier to entry. 
A) a natural monopoly. 
B) a patent. 
C) a public franchise. 
D) a government license. 
E) an ownership barrier to entry.

Question 12

Which of the following best describes the capture theory of regulation?
I. Regulation seeks an efficient use of resources.
Ii. Regulation is aimed at keeping prices as low as possible.
Iii. Regulation helps firms maximize economic profit.

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 13

Which of the following statements is correct?

Accepted Answer

A) Monopolies are guaranteed to earn an economic profit. 
B) The market demand and the firm's demand are the same for a monopoly. 
C) Monopolies have perfectly inelastic demand for the product sold. 
D) Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E) Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve. 
A) Monopolies are guaranteed to earn an economic profit. 
B) The market demand and the firm's demand are the same for a monopoly. 
C) Monopolies have perfectly inelastic demand for the product sold. 
D) Because a monopoly is the only firm in the market, its supply curve is the same as the market demand curve. 
E) Because a monopoly is the only firm in the market, its marginal revenue curve must be the same as the market demand curve.

Question 14

The deadweight loss with perfect price discrimination is

Accepted Answer

A) equal to the deadweight loss of a single-price monopoly. 
B) sometimes less than and sometimes more than the deadweight loss of a single-price monopoly. 
C) more than the deadweight loss of a single-price monopoly. 
D) zero. 
E) larger than the deadweight loss with perfect competition. 
A) equal to the deadweight loss of a single-price monopoly. 
B) sometimes less than and sometimes more than the deadweight loss of a single-price monopoly. 
C) more than the deadweight loss of a single-price monopoly. 
D) zero. 
E) larger than the deadweight loss with perfect competition.

Question 15

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly, the deadweight loss is the area ________.

Accepted Answer

A) ABH 
B) BFGH 
C) ACG 
D) BCD 
E) ACE 
A) ABH 
B) BFGH 
C) ACG 
D) BCD 
E) ACE

Question 16

The theory that regulation seeks an efficient use of resources is the

Accepted Answer

A) social interest theory. 
B) producer surplus theory. 
C) consumer surplus theory. 
D) capture theory. 
E) deadweight loss theory. 
A) social interest theory. 
B) producer surplus theory. 
C) consumer surplus theory. 
D) capture theory. 
E) deadweight loss theory.

Question 17

A price-discriminating monopoly charges

Accepted Answer

A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product, even though there are no differences in costs. 
C) a different price to different buyers, because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer. 
A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product, even though there are no differences in costs. 
C) a different price to different buyers, because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer.

Question 18

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above, which of the following statements are correct?
I. MR = MC = $42 when 3 haircuts are produced.
Ii. If the firm charges each customer the same price for a haircut, the price of a haircut is $14.
Iii. The firm's economic profit is $12.

Accepted Answer

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

Question 19

If a monopoly can perfectly price discriminate,

Accepted Answer

A) all the demanders pay one price. 
B) it minimizes its profit. 
C) it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D) it produces less output than would be produced if the market was a perfectly competitive industry. 
E) it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry. 
A) all the demanders pay one price. 
B) it minimizes its profit. 
C) it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D) it produces less output than would be produced if the market was a perfectly competitive industry. 
E) it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry.

Question 20

Price discrimination occurs when a firm

Accepted Answer

A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal. 
A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal.

Comparing single-price monopoly to perfect competition, monopoly

What potential problem is there with rate of return pricing?

A marginal cost pricing rule sets marginal cost equal to

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using a marginal cost pricing rule, the deadweight loss created is equal to the area of

A natural monopoly's output is less if it is regulated with

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, the producer surplus is the area ________.

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What quantity will the Busy Bee produce to maximize its profit?

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

The U.S. Postal Service's monopoly on first-class mail service is the result of

Which of the following best describes the capture theory of regulation? I. Regulation seeks an efficient use of resources. Ii. Regulation is aimed at keeping prices as low as possible. Iii. Regulation helps firms maximize economic profit.

Which of the following statements is correct?

The deadweight loss with perfect price discrimination is

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, the deadweight loss is the area ________.

The theory that regulation seeks an efficient use of resources is the

A price-discriminating monopoly charges

If a monopoly can perfectly price discriminate,

Price discrimination occurs when a firm

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

Comparing single-price monopoly to perfect competition, monopoly

What potential problem is there with rate of return pricing?

A marginal cost pricing rule sets marginal cost equal to

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using a marginal cost pricing rule, the deadweight loss created is equal to the area of

A natural monopoly's output is less if it is regulated with

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, the producer surplus is the area ________.

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What quantity will the Busy Bee produce to maximize its profit?

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

The U.S. Postal Service's monopoly on first-class mail service is the result of

Which of the following best describes the capture theory of regulation? I. Regulation seeks an efficient use of resources. Ii. Regulation is aimed at keeping prices as low as possible. Iii. Regulation helps firms maximize economic profit.

Which of the following statements is correct?

The deadweight loss with perfect price discrimination is

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, the deadweight loss is the area ________.

The theory that regulation seeks an efficient use of resources is the

A price-discriminating monopoly charges

If a monopoly can perfectly price discriminate,

Price discrimination occurs when a firm

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