Question 1

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Accepted Answer

A) The producer benefits, but consumers and society are harmed. 
B) The producer and society are harmed, but consumers benefit. 
C) The producer and society benefit, but consumers are harmed. 
D) The producer is harmed, but consumers and society benefit. 
E) The producer, consumers, and society all benefit. 
A) The producer benefits, but consumers and society are harmed. 
B) The producer and society are harmed, but consumers benefit. 
C) The producer and society benefit, but consumers are harmed. 
D) The producer is harmed, but consumers and society benefit. 
E) The producer, consumers, and society all benefit.

Question 2

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 3

A natural monopoly

Accepted Answer

A) sells to a single buyer. 
B) sets price equal to marginal revenue. 
C) is a firm than can supply the market at lower average total cost than two or more firms. 
D) produces a natural resource. 
E) faces a horizontal demand curve. 
A) sells to a single buyer. 
B) sets price equal to marginal revenue. 
C) is a firm than can supply the market at lower average total cost than two or more firms. 
D) produces a natural resource. 
E) faces a horizontal demand curve.

Question 4

Ownership of a necessary input creates what type of barrier to entry?

Accepted Answer

A) legal barrier to entry 
B) natural barrier to entry 
C) a public franchise 
D) a government license 
E) ownership barrier to entry 
A) legal barrier to entry 
B) natural barrier to entry 
C) a public franchise 
D) a government license 
E) ownership barrier to entry

Question 5

For a single-price monopoly,

Accepted Answer

A) if marginal cost exceeds marginal revenue, profits will increase if output decreases. 
B) if marginal revenue exceeds marginal cost, profits will increase if output decreases. 
C) there are several different price and output combinations that maximize profit. 
D) marginal revenue will be greater than price if demand is elastic. 
E) marginal revenue will be greater than price if demand is inelastic. 
A) if marginal cost exceeds marginal revenue, profits will increase if output decreases. 
B) if marginal revenue exceeds marginal cost, profits will increase if output decreases. 
C) there are several different price and output combinations that maximize profit. 
D) marginal revenue will be greater than price if demand is elastic. 
E) marginal revenue will be greater than price if demand is inelastic.

Question 6

-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 operated under a marginal cost pricing rule, what is the price of cable television in Oakland?

Accepted Answer

A) $40 
B) $30 
C) $20 
D) $10 
E) $0 
A) $40 
B) $30 
C) $20 
D) $10 
E) $0

Question 7

Patents i. encourage the invention of new products and production methods.
Ii. generally discourage innovation
Iii. are exclusive rights granted to the inventor of a product or service.

Accepted Answer

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

Question 8

A monopoly can arise when

Accepted Answer

A) there are diseconomies of scale. 
B) there are barriers to entry and no close substitutes for the good being produced. 
C) a firm cannot price discriminate. 
D) firms engage in rent seeking. 
E) a firm must set MR equal to MC in order to maximize its profit. 
A) there are diseconomies of scale. 
B) there are barriers to entry and no close substitutes for the good being produced. 
C) a firm cannot price discriminate. 
D) firms engage in rent seeking. 
E) a firm must set MR equal to MC in order to maximize its profit.

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. If TWC operated under a marginal cost pricing rule, how many households in Oakland are served?

Accepted Answer

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

Question 10

The Seattle Mariners baseball team has a monopoly on major league baseball in the Northwest. If the Mariners could be purchased by anyone with enough money, we could argue that this purchase is fair according to the

Accepted Answer

A) fair rules test. 
B) fair results test. 
C) fair price test. 
D) fair output test. 
E) allocative fairness test. 
A) fair rules test. 
B) fair results test. 
C) fair price test. 
D) fair output test. 
E) allocative fairness test.

Question 11

Once a monopoly has determined how much it produces, it will charge a price that

Accepted Answer

A) is determined by the intersection of the marginal cost and average total cost curves. 
B) minimizes marginal cost. 
C) is determined by its demand curve. 
D) is independent of the amount produced. 
E) is equal to its average total cost. 
A) is determined by the intersection of the marginal cost and average total cost curves. 
B) minimizes marginal cost. 
C) is determined by its demand curve. 
D) is independent of the amount produced. 
E) is equal to its average total cost.

Question 12

Which of the following statements is correct?

Accepted Answer

A) Any firm can price discriminate. 
B) Only firms that sell high-priced products can price discriminate. 
C) In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D) In order to price discriminate, the firms must sell a low-priced product. 
E) Price discrimination is always illegal. 
A) Any firm can price discriminate. 
B) Only firms that sell high-priced products can price discriminate. 
C) In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D) In order to price discriminate, the firms must sell a low-priced product. 
E) Price discrimination is always illegal.

Question 13

Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What price is being charged for 4 units?

Accepted Answer

A) $52 each 
B) $18 each 
C) $60 each 
D) $12 each 
E) $20 each 
A) $52 each 
B) $18 each 
C) $60 each 
D) $12 each 
E) $20 each

Question 14

A gas station in the mountains of Oregon has a monopoly over the retail gas market within a 50-mile radius. The station decides not to price discriminate. As a result, all consumers will pay

Accepted Answer

A) the highest price each consumer is willing to pay. 
B) the lowest price possible. 
C) a single price. 
D) multiple prices. 
E) a price that depends on their willingness to pay. 
A) the highest price each consumer is willing to pay. 
B) the lowest price possible. 
C) a single price. 
D) multiple prices. 
E) a price that depends on their willingness to pay.

Question 15

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

Accepted Answer

A) equal to; efficient 
B) above; inefficient 
C) below; efficient 
D) equal to; inefficient 
E) above; efficient 
A) equal to; efficient 
B) above; inefficient 
C) below; efficient 
D) equal to; inefficient 
E) above; efficient

Question 16

A ________ monopoly sells different units of its good or service for ________.

Accepted Answer

A) price-discriminating; different prices 
B) price-discriminating; the same price 
C) single-price; the same price 
D) single-price; different prices 
E) Both Answers A and C are correct. 
A) price-discriminating; different prices 
B) price-discriminating; the same price 
C) single-price; the same price 
D) single-price; different prices 
E) Both Answers A and C are correct.

Question 17

-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 a monopoly, the price of a pound of steak is

Accepted Answer

A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2. 
A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2.

Question 18

If total revenue falls when output increases, marginal revenue is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) greater than total revenue. 
E) elastic. 
A) positive. 
B) negative. 
C) zero. 
D) greater than total revenue. 
E) elastic.

Question 19

How should a natural monopoly be regulated under the social interest theory of regulation?

Accepted Answer

A) by setting price equal to the average cost of production 
B) by allowing a price that maximizes the profit of the natural monopoly 
C) by using a marginal cost pricing rule 
D) by subsidizing other producers to compete with the monopoly 
E) by using rate of return regulation 
A) by setting price equal to the average cost of production 
B) by allowing a price that maximizes the profit of the natural monopoly 
C) by using a marginal cost pricing rule 
D) by subsidizing other producers to compete with the monopoly 
E) by using rate of return regulation

Question 20

-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 price of a pound of steak is

Accepted Answer

A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2. 
A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2.

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Why are water companies considered a natural monopoly?

A natural monopoly

Ownership of a necessary input creates what type of barrier to entry?

For a single-price monopoly,

Patents i. encourage the invention of new products and production methods. Ii. generally discourage innovation Iii. are exclusive rights granted to the inventor of a product or service.

A monopoly can arise when

The Seattle Mariners baseball team has a monopoly on major league baseball in the Northwest. If the Mariners could be purchased by anyone with enough money, we could argue that this purchase is fair according to the

Once a monopoly has determined how much it produces, it will charge a price that

Which of the following statements is correct?

Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What price is being charged for 4 units?

A gas station in the mountains of Oregon has a monopoly over the retail gas market within a 50-mile radius. The station decides not to price discriminate. As a result, all consumers will pay

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.

A monopoly sells different units of its good or service for .

-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 a monopoly, the price of a pound of steak is

If total revenue falls when output increases, marginal revenue is

How should a natural monopoly be regulated under the social interest theory of regulation?

-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 price of a pound of steak is

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The Us and Global Economies

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Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

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Perfect Competition

Monopolistic Competition and Oligopoly

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Exam 12: Monopoly

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

Why are water companies considered a natural monopoly?

A natural monopoly

Ownership of a necessary input creates what type of barrier to entry?

For a single-price monopoly,

Patents i. encourage the invention of new products and production methods. Ii. generally discourage innovation Iii. are exclusive rights granted to the inventor of a product or service.

A monopoly can arise when

The Seattle Mariners baseball team has a monopoly on major league baseball in the Northwest. If the Mariners could be purchased by anyone with enough money, we could argue that this purchase is fair according to the

Once a monopoly has determined how much it produces, it will charge a price that

Which of the following statements is correct?

Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What price is being charged for 4 units?

A gas station in the mountains of Oregon has a monopoly over the retail gas market within a 50-mile radius. The station decides not to price discriminate. As a result, all consumers will pay

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output.

A ________ monopoly sells different units of its good or service for ________.

-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 a monopoly, the price of a pound of steak is

If total revenue falls when output increases, marginal revenue is

How should a natural monopoly be regulated under the social interest theory of regulation?

-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 price of a pound of steak is

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

For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price marginal cost and achieves an amount of output.

A monopoly sells different units of its good or service for .