Question 1

Arnie's Airlines decides to offer different fares to different customers for the same trip. Arnie's price discriminates because Arnie

Accepted Answer

A) wants to convert consumer surplus to deadweight loss. 
B) wants to help some buyers with lower fares. 
C) has different costs for the same flight. 
D) wants to convert consumer surplus to economic profit. 
E) wants to convert producer surplus to consumer surplus. 
A) wants to convert consumer surplus to deadweight loss. 
B) wants to help some buyers with lower fares. 
C) has different costs for the same flight. 
D) wants to convert consumer surplus to economic profit. 
E) wants to convert producer surplus to consumer surplus.

Question 2

Under the social interest theory of regulation, the goal of regulating natural monopolies is

Accepted Answer

A) to provide a larger, though not maximum, profit for the firms. 
B) to use average cost pricing. 
C) to provide an outcome similar to the competitive outcome. 
D) to provide a the maximum profit for the firms. 
E) None of the above answers is correct. 
A) to provide a larger, though not maximum, profit for the firms. 
B) to use average cost pricing. 
C) to provide an outcome similar to the competitive outcome. 
D) to provide a the maximum profit for the firms. 
E) None of the above answers is correct.

Question 3

The demand curve facing a single-price monopoly

Accepted Answer

A) lies below the marginal revenue curve. 
B) lies above the marginal revenue curve. 
C) is the same as only the marginal revenue curve. 
D) is the same as only the marginal cost curve. 
E) is the same as both the marginal revenue curve and the marginal cost curve. 
A) lies below the marginal revenue curve. 
B) lies above the marginal revenue curve. 
C) is the same as only the marginal revenue curve. 
D) is the same as only the marginal cost curve. 
E) is the same as both the marginal revenue curve and the marginal cost curve.

Question 4

When a monopoly price discriminates, it

Accepted Answer

A) increases the amount of consumer surplus. 
B) decreases its economic profit. 
C) converts consumer surplus into economic profit. 
D) converts economic profit into consumer surplus. 
E) has no effect on the deadweight loss in the market. 
A) increases the amount of consumer surplus. 
B) decreases its economic profit. 
C) converts consumer surplus into economic profit. 
D) converts economic profit into consumer surplus. 
E) has no effect on the deadweight loss in the market.

Question 5

Arnie's Airlines is a monopoly airline that is able to price discriminate. If Arnie's decides to price discriminate, then

Accepted Answer

A) Arnie's profit decreases. 
B) consumer surplus decreases. 
C) Arnie's revenues decrease. 
D) Arnie's sells fewer tickets. 
E) Arnie's will see all of his tickets at a single price. 
A) Arnie's profit decreases. 
B) consumer surplus decreases. 
C) Arnie's revenues decrease. 
D) Arnie's sells fewer tickets. 
E) Arnie's will see all of his tickets at a single price.

Question 6

A major characteristic of monopoly is that

Accepted Answer

A) no barriers to entry exist. 
B) the product is identical to that produced by other companies. 
C) a barrier to entry keeps out competitors. 
D) competition is intense. 
E) a few firms compete with each other. 
A) no barriers to entry exist. 
B) the product is identical to that produced by other companies. 
C) a barrier to entry keeps out competitors. 
D) competition is intense. 
E) a few firms compete with each other.

Question 7

Compared to a similar perfectly competitive industry, a single-price monopoly

Accepted Answer

A) creates a deadweight loss and decreases economic profit. 
B) produces more output. 
C) creates a deadweight loss and decreases consumer surplus. 
D) is more efficient because there is no wasteful competition. 
E) sets a lower price because there is less competition. 
A) creates a deadweight loss and decreases economic profit. 
B) produces more output. 
C) creates a deadweight loss and decreases consumer surplus. 
D) is more efficient because there is no wasteful competition. 
E) sets a lower price because there is less competition.

Question 8

Patents

Accepted Answer

A) are granted only to competitive firms and not monopolies. 
B) require that monopolies increase the amount they produce. 
C) increase the incentive to capture economies of scale. 
D) increase the incentive to innovate. 
E) grant the holder a monopoly that lasts forever. 
A) are granted only to competitive firms and not monopolies. 
B) require that monopolies increase the amount they produce. 
C) increase the incentive to capture economies of scale. 
D) increase the incentive to innovate. 
E) grant the holder a monopoly that lasts forever.

Question 9

Assume someone organizes all farms in the nation into a monopoly. As a result, consumer surplus will

Accepted Answer

A) not change. 
B) increase. 
C) decrease. 
D) either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly. 
A) not change. 
B) increase. 
C) decrease. 
D) either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.

Question 10

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.

Accepted Answer

A) $60; $60 
B) $60; $40 
C) $70; $60 
D) $70; $40 
E) $100; $40 
A) $60; $60 
B) $60; $40 
C) $70; $60 
D) $70; $40 
E) $100; $40

Question 11

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

Accepted Answer

A) exaggerate the firm's costs. 
B) underestimate the firm's costs. 
C) minimize the monopoly's deadweight loss. 
D) make zero economic profit. 
E) exaggerate the firm's profit. 
A) exaggerate the firm's costs. 
B) underestimate the firm's costs. 
C) minimize the monopoly's deadweight loss. 
D) make zero economic profit. 
E) exaggerate the firm's profit.

Question 12

Which of the following describes a barrier to entry?

Accepted Answer

A) something that establishes a barrier to expanding output 
B) anything that protects a firm from the arrival of new competitors 
C) a government regulation that bars a monopoly from earning an economic profit 
D) firms already in the market incurring economic losses so that no new firm wants to enter the market 
E) Firms are legally prohibited from exiting the market in order to enter another market. 
A) something that establishes a barrier to expanding output 
B) anything that protects a firm from the arrival of new competitors 
C) a government regulation that bars a monopoly from earning an economic profit 
D) firms already in the market incurring economic losses so that no new firm wants to enter the market 
E) Firms are legally prohibited from exiting the market in order to enter another market.

Question 13

A price-discriminating monopoly

Accepted Answer

A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly. 
A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly.

Question 14

What is a marginal cost pricing rule and an average cost pricing rule?
 What are the disadvantages and advantages of each?

Accepted Answer

Natural monopolies can be regulated usin

Question 15

Why do some firms price discriminate?
 Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

Accepted Answer

Price discrimination helps businesses ca

Question 16

With perfect price discrimination, a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

Accepted Answer

A) maximum; consumer 
B) minimum; producer 
C) maximum; producer 
D) minimum; consumer 
E) None of the above answers are correct. 
A) maximum; consumer 
B) minimum; producer 
C) maximum; producer 
D) minimum; consumer 
E) None of the above answers are correct.

Question 17

The key idea behind price discrimination is to convert consumer surplus into

Accepted Answer

A) a barrier to entry. 
B) economic profit. 
C) deadweight loss. 
D) monopoly power. 
E) total cost. 
A) a barrier to entry. 
B) economic profit. 
C) deadweight loss. 
D) monopoly power. 
E) total cost.

Question 18

Under which of the following is consumer surplus zero?

Accepted Answer

A) all types of monopoly 
B) only single-price monopoly 
C) only perfectly price-discriminating monopoly 
D) only price discrimination on the basis of the number of units purchased 
E) perfect competition 
A) all types of monopoly 
B) only single-price monopoly 
C) only perfectly price-discriminating monopoly 
D) only price discrimination on the basis of the number of units purchased 
E) perfect competition

Question 19

Natural barriers to entry arise when, over the relevant range of output, there

Accepted Answer

A) are diseconomies of scale. 
B) are constant returns to scale. 
C) are several firms who produce at the lowest average cost. 
D) are economies of scale. 
E) is one firm that owns a key natural resource. 
A) are diseconomies of scale. 
B) are constant returns to scale. 
C) are several firms who produce at the lowest average cost. 
D) are economies of scale. 
E) is one firm that owns a key natural resource.

Question 20

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

Accepted Answer

A) Breaking up firms that are 
B) Regulating 
C) Outlawing price discrimination by 
D) Refusing to grant patents to 
E) Giving incentives to firms to become 
A) Breaking up firms that are 
B) Regulating 
C) Outlawing price discrimination by 
D) Refusing to grant patents to 
E) Giving incentives to firms to become

Arnie's Airlines decides to offer different fares to different customers for the same trip. Arnie's price discriminates because Arnie

Under the social interest theory of regulation, the goal of regulating natural monopolies is

The demand curve facing a single-price monopoly

When a monopoly price discriminates, it

Arnie's Airlines is a monopoly airline that is able to price discriminate. If Arnie's decides to price discriminate, then

A major characteristic of monopoly is that

Compared to a similar perfectly competitive industry, a single-price monopoly

Patents

Assume someone organizes all farms in the nation into a monopoly. As a result, consumer surplus will

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is per pillow and the marginal cost is per pillow.

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

Which of the following describes a barrier to entry?

A price-discriminating monopoly

What is a marginal cost pricing rule and an average cost pricing rule? What are the disadvantages and advantages of each?

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

With perfect price discrimination, a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.

The key idea behind price discrimination is to convert consumer surplus into

Under which of the following is consumer surplus zero?

Natural barriers to entry arise when, over the relevant range of output, there

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

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

Arnie's Airlines decides to offer different fares to different customers for the same trip. Arnie's price discriminates because Arnie

Under the social interest theory of regulation, the goal of regulating natural monopolies is

The demand curve facing a single-price monopoly

When a monopoly price discriminates, it

Arnie's Airlines is a monopoly airline that is able to price discriminate. If Arnie's decides to price discriminate, then

A major characteristic of monopoly is that

Compared to a similar perfectly competitive industry, a single-price monopoly

Patents

Assume someone organizes all farms in the nation into a monopoly. As a result, consumer surplus will

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

Which of the following describes a barrier to entry?

A price-discriminating monopoly

What is a marginal cost pricing rule and an average cost pricing rule? What are the disadvantages and advantages of each?

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.

With perfect price discrimination, a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

The key idea behind price discrimination is to convert consumer surplus into

Under which of the following is consumer surplus zero?

Natural barriers to entry arise when, over the relevant range of output, there

________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

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

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is per pillow and the marginal cost is per pillow.

With perfect price discrimination, a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.