Question 1

An airline company

Accepted Answer

A) cannot price discriminate because it is against the law. 
B) price discriminates by charging higher prices to business travelers. 
C) price discriminates by charging lower prices to business travelers. 
D) price discriminates even though its profits are lower because competition forces it to do so. 
E) has fewer customers because it price discriminates than it would have if it did not price discriminate. 
A) cannot price discriminate because it is against the law. 
B) price discriminates by charging higher prices to business travelers. 
C) price discriminates by charging lower prices to business travelers. 
D) price discriminates even though its profits are lower because competition forces it to do so. 
E) has fewer customers because it price discriminates than it would have if it did not price discriminate.

Question 2

For a single-price monopolist, why is marginal revenue less than price?

Accepted Answer

A) Because the firm is a price taker. 
B) To sell another unit, the price must be lowered. 
C) Demand is elastic when another unit is sold. 
D) Demand is inelastic when another unit is sold. 
E) The question is false because marginal revenue is always equal to price. 
A) Because the firm is a price taker. 
B) To sell another unit, the price must be lowered. 
C) Demand is elastic when another unit is sold. 
D) Demand is inelastic when another unit is sold. 
E) The question is false because marginal revenue is always equal to price.

Question 3

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 22 & 20 & 6 \
2 & 20 & 16 & 8 \
3 & 18 & 12 & 12 \
4 & 16 & 8 & 18 \
5 & 14 & 4 & 28 \
6 & 12 & 0 & 40 \
7 & 10 & - 4 & 54 \
8 & 8 & - 8 & 70
\end{array}$$
-A single-price monopoly has the demand and marginal cost schedules given in the above table. What is the profit-maximizing level of output and price?

Accepted Answer

The profit-maximizing output i

Question 4

A natural monopoly is one that arises from

Accepted Answer

A) patent law. 
B) copyright law. 
C) a firm buying all of a natural resource. 
D) economies of scale. 
E) ownership of a natural resource. 
A) patent law. 
B) copyright law. 
C) a firm buying all of a natural resource. 
D) economies of scale. 
E) ownership of a natural resource.

Question 5

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the deadweight loss

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) becomes infinite. 
E) probably changes, but more information is needed to determine if it increases, decreases, or remains constant. 
A) increases. 
B) decreases. 
C) remains the same. 
D) becomes infinite. 
E) probably changes, but more information is needed to determine if it increases, decreases, or remains constant.

Question 6

One way a monopoly can convert additional consumer surplus into economic profit is to

Accepted Answer

A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost. 
A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost.

Question 7

Price cap regulation

Accepted Answer

A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct. 
A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct.

Question 8

To be able to price discriminate, a firm must

Accepted Answer

A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct. 
A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct.

Question 9

-The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community. Compared to a marginal cost pricing rule, under an average cost pricing rule, TWC ________ output by ________ households.

Accepted Answer

A) increases; 20,000 
B) decreases; 10,000 
C) increases; 30,000 
D) decreases; 50,000 
E) decreases; 40,000 
A) increases; 20,000 
B) decreases; 10,000 
C) increases; 30,000 
D) decreases; 50,000 
E) decreases; 40,000

Question 10

Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's average total cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4. If Gene is regulated using an average cost pricing rule, the price he is allowed to charge to wash 100 cars is

Accepted Answer

A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400. 
A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400.

Question 11

-In the figure above, complete the graph of the electric utility company by adding the marginal revenue and marginal cost curves. Assume the marginal cost is constant at 4¢ per kilowatt-hour. Now discuss the marginal cost pricing rule and the average cost pricing rule regulators might use to regulate the firm. Be sure to state the price and quantity that are selected for each option. Also, what price and quantity does the firm select if it is not regulated?

Accepted Answer

@#IMG-DLM& The completed figure is above. Two meth

Question 12

Which of the following industries is most likely closest to achieving perfect price discrimination?

Accepted Answer

A) the airline industry 
B) the wheat industry 
C) the textbook industry 
D) the toilet paper industry 
E) the soft drink industry 
A) the airline industry 
B) the wheat industry 
C) the textbook industry 
D) the toilet paper industry 
E) the soft drink industry

Question 13

What is an average cost pricing rule?
 Why do regulatory agencies use it for natural monopolies?

Accepted Answer

Average cost pricing means that the firm

Question 14

-The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community. If TWC is left unregulated, what is the price of cable television in Oakland?

Accepted Answer

A) $40 
B) $30 
C) $20 
D) $10 
E) $50 
A) $40 
B) $30 
C) $20 
D) $10 
E) $50

Question 15

Explain how a single-price monopoly determines its output and price. Compare this process to how a perfectly competitive firm determines its output and price.

Accepted Answer

Single-price monopolies follow the same

Question 16

If a producer wants a monopoly with a legal barrier to entry, how can this be done?
I. The producer can spend funds lobbying to attain passage of the legal barrier to entry.
Ii. The producer can purchase an existing monopoly.
Iii. The producer can make rent seeking expenditures.

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) None of the above are ways to acquire a monopoly with a legal barrier to entry. 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) None of the above are ways to acquire a monopoly with a legal barrier to entry.

Question 17

Today, you might be buying from a regulated natural monopoly when you purchase

Accepted Answer

A) a car, a truck, or a bicycle. 
B) a computer, a phone, or a camera. 
C) natural gas or electricity. 
D) a house, a condominium, or a plot of land. 
E) food in a grocery store or in a restaurant. 
A) a car, a truck, or a bicycle. 
B) a computer, a phone, or a camera. 
C) natural gas or electricity. 
D) a house, a condominium, or a plot of land. 
E) food in a grocery store or in a restaurant.

Question 18

Price cap regulation is regulation that

Accepted Answer

A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated. 
A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated.

Question 19

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

Accepted Answer

A) 6 and 5 
B) 5 and 4 
C) 4 and 3 
D) 3 and 2 
A) 6 and 5 
B) 5 and 4 
C) 4 and 3 
D) 3 and 2

Question 20

If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells

Accepted Answer

A) the same quantity at a higher price. 
B) a smaller quantity at a higher price. 
C) a larger quantity at a lower price. 
D) a larger quantity at a higher price. 
E) a smaller quantity at the same price. 
A) the same quantity at a higher price. 
B) a smaller quantity at a higher price. 
C) a larger quantity at a lower price. 
D) a larger quantity at a higher price. 
E) a smaller quantity at the same price.

An airline company

For a single-price monopolist, why is marginal revenue less than price?

A natural monopoly is one that arises from

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the deadweight loss

One way a monopoly can convert additional consumer surplus into economic profit is to

Price cap regulation

To be able to price discriminate, a firm must

Which of the following industries is most likely closest to achieving perfect price discrimination?

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

-The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community. If TWC is left unregulated, what is the price of cable television in Oakland?

Explain how a single-price monopoly determines its output and price. Compare this process to how a perfectly competitive firm determines its output and price.

If a producer wants a monopoly with a legal barrier to entry, how can this be done? I. The producer can spend funds lobbying to attain passage of the legal barrier to entry. Ii. The producer can purchase an existing monopoly. Iii. The producer can make rent seeking expenditures.

Today, you might be buying from a regulated natural monopoly when you purchase

Price cap regulation is regulation that

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 demand elastic?

If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells

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

An airline company

For a single-price monopolist, why is marginal revenue less than price?

A natural monopoly is one that arises from

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the deadweight loss

One way a monopoly can convert additional consumer surplus into economic profit is to

Price cap regulation

To be able to price discriminate, a firm must

Which of the following industries is most likely closest to achieving perfect price discrimination?

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

-The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community. If TWC is left unregulated, what is the price of cable television in Oakland?

Explain how a single-price monopoly determines its output and price. Compare this process to how a perfectly competitive firm determines its output and price.

If a producer wants a monopoly with a legal barrier to entry, how can this be done? I. The producer can spend funds lobbying to attain passage of the legal barrier to entry. Ii. The producer can purchase an existing monopoly. Iii. The producer can make rent seeking expenditures.

Today, you might be buying from a regulated natural monopoly when you purchase

Price cap regulation is regulation that

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 demand elastic?

If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells

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