Question 1

The figure above shows a natural monopoly.
-In the figure above, if the firm is regulated using an average cost pricing rule, the firm

Accepted Answer

A) avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss. 
B) incurs an economic loss, but produces the efficient quantity and creates a deadweight loss. 
C) avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss. 
D) avoids an economic loss, produces the efficient quantity, and creates a deadweight loss. 
E) incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss. 
A) avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss. 
B) incurs an economic loss, but produces the efficient quantity and creates a deadweight loss. 
C) avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss. 
D) avoids an economic loss, produces the efficient quantity, and creates a deadweight loss. 
E) incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss.

Question 2

Price cap regulation involves

Accepted Answer

A) setting the monopoly's price equal to its average total cost. 
B) setting the monopoly's price equal to its profit-maximizing price. 
C) setting a maximum price the monopoly may charge. 
D) assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E) setting the monopoly's price equal to its marginal cost. 
A) setting the monopoly's price equal to its average total cost. 
B) setting the monopoly's price equal to its profit-maximizing price. 
C) setting a maximum price the monopoly may charge. 
D) assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E) setting the monopoly's price equal to its marginal cost.

Question 3

What does the marginal revenue equal when a monopoly's total revenue is maximized?
 What is the elasticity of demand when the total revenue is maximized?

Accepted Answer

When the total revenue is at i

Question 4

One of the requirements for a monopoly is that

Accepted Answer

A) products are high priced. 
B) there are several close substitutes for the product. 
C) there is a product with no close substitutes. 
D) the product cannot be produced by small firms. 
E) there is no barrier to entry. 
A) products are high priced. 
B) there are several close substitutes for the product. 
C) there is a product with no close substitutes. 
D) the product cannot be produced by small firms. 
E) there is no barrier to entry.

Question 5

Which of the following is NOT correct about patents?

Accepted Answer

A) Patents encourage invention of new products. 
B) Patents stimulate innovation. 
C) A patent is a barrier to entry. 
D) Patents enable a firm to be a permanent monopoly. 
E) Patents are granted to the inventor of a product or service. 
A) Patents encourage invention of new products. 
B) Patents stimulate innovation. 
C) A patent is a barrier to entry. 
D) Patents enable a firm to be a permanent monopoly. 
E) Patents are granted to the inventor of a product or service.

Question 6

The above figure shows a market.
-If the market in the figure above is perfectly competitive, consumer surplus 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 7

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer. Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

Accepted Answer

Because the monopoly does control the ma

Question 8

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

Accepted Answer

A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) cQ₂0P₂. 
A) abP₁. 
B) acP₂. 
C) bce. 
D) bed. 
E) cQ₂0P₂.

Question 9

Which of the following statements is FALSE?

Accepted Answer

A) A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B) A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C) In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D) The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E) In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm. 
A) A perfectly competitive market produces more output and charges a lower price than a monopoly. 
B) A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC. 
C) In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost. 
D) The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market. 
E) In the long run, a monopoly can earn a larger economic profit than can a perfectly competitive firm.

Question 10

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

Accepted Answer

A) legal; illegal 
B) natural; legal 
C) natural; illegal 
D) natural; rent seeking 
E) ownership; rent seeking 
A) legal; illegal 
B) natural; legal 
C) natural; illegal 
D) natural; rent seeking 
E) ownership; rent seeking

Question 11

What is a legal barrier to entry?

Accepted Answer

A legal barrier to entry arise

Question 12

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Accepted Answer

The monopoly practicing perfec

Question 13

Which of the following is an example of a two-part tariff?

Accepted Answer

A) price discrimination based on the buyers' willingness to pay 
B) charging a hookup fee plus a monthly charge equal to marginal cost 
C) higher sales tax on specific products 
D) different prices based on the cost of production and quantity bought 
E) A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers. 
A) price discrimination based on the buyers' willingness to pay 
B) charging a hookup fee plus a monthly charge equal to marginal cost 
C) higher sales tax on specific products 
D) different prices based on the cost of production and quantity bought 
E) A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers.

Question 14

The figure above shows a natural monopoly.
-In the figure above, if the firm is regulated using an average 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 15

"Under the social interest theory of regulation, regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. The social i

Question 16

We define a monopoly as a market with

Accepted Answer

A) one supplier and no barriers to entry. 
B) one supplier with barriers to entry. 
C) many suppliers with no barriers to entry. 
D) many suppliers with barriers to entry. 
E) a few suppliers and barriers to entry. 
A) one supplier and no barriers to entry. 
B) one supplier with barriers to entry. 
C) many suppliers with no barriers to entry. 
D) many suppliers with barriers to entry. 
E) a few suppliers and barriers to entry.

Question 17

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

Question 18

If a monopoly wants to sell a larger quantity, it must

Accepted Answer

A) set a higher price. 
B) maintain the current price. 
C) set a lower price. 
D) implement new technology. 
E) increase the barrier to entry that protects it. 
A) set a higher price. 
B) maintain the current price. 
C) set a lower price. 
D) implement new technology. 
E) increase the barrier to entry that protects it.

Question 19

The capture theory of regulation is defined as

Accepted Answer

A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests. 
A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests.

Question 20

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

Accepted Answer

A) is less than the price. 
B) is greater than the price. 
C) is equal to the price. 
D) might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E) might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude. 
A) is less than the price. 
B) is greater than the price. 
C) is equal to the price. 
D) might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E) might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude.

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the firm

Price cap regulation involves

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

One of the requirements for a monopoly is that

Which of the following is NOT correct about patents?

The above figure shows a market. -If the market in the figure above is perfectly competitive, consumer surplus is the area ________.

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer. Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

Which of the following statements is FALSE?

Two types of barriers to entry are called barriers to entry and barriers to entry.

What is a legal barrier to entry?

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Which of the following is an example of a two-part tariff?

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

"Under the social interest theory of regulation, regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

We define a monopoly as a market with

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the consumer surplus created is equal to the area of

If a monopoly wants to sell a larger quantity, it must

The capture theory of regulation is defined as

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

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

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the firm

Price cap regulation involves

What does the marginal revenue equal when a monopoly's total revenue is maximized? What is the elasticity of demand when the total revenue is maximized?

One of the requirements for a monopoly is that

Which of the following is NOT correct about patents?

The above figure shows a market. -If the market in the figure above is perfectly competitive, consumer surplus is the area ________.

A monopoly, unlike a perfect competitor, has total control in its market because it is the single producer. Why, then, must a single-price monopoly decrease its price if it wants to increase its output?

-In the above figure, for a single-price monopoly the consumer surplus is equal to the area

Which of the following statements is FALSE?

Two types of barriers to entry are called ________ barriers to entry and ________ barriers to entry.

What is a legal barrier to entry?

Which produces more output: a perfectly price discriminating monopoly or a single-price monopoly?

Which of the following is an example of a two-part tariff?

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

"Under the social interest theory of regulation, regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

We define a monopoly as a market with

The figure above shows a natural monopoly. -In the figure above, if the firm is regulated using an average cost pricing rule, the consumer surplus created is equal to the area of

If a monopoly wants to sell a larger quantity, it must

The capture theory of regulation is defined as

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

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

Two types of barriers to entry are called barriers to entry and barriers to entry.