Question 1

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

Accepted Answer

A) all types of monopoly 
B) only single-price monopoly 
C) only perfect price discrimination 
D) only price discrimination on the basis of the number of units purchased 
E) any monopoly that price discriminates 
A) all types of monopoly 
B) only single-price monopoly 
C) only perfect price discrimination 
D) only price discrimination on the basis of the number of units purchased 
E) any monopoly that price discriminates

Question 2

Pizza producers charge one price for a single pizza and almost give away a second one. This is an example of

Accepted Answer

A) monopoly. 
B) a barrier to entry. 
C) behavior that is not profit-maximizing. 
D) price discrimination. 
E) rent seeking. 
A) monopoly. 
B) a barrier to entry. 
C) behavior that is not profit-maximizing. 
D) price discrimination. 
E) rent seeking.

Question 3

Monopolies arise when there are

Accepted Answer

A) many substitutes but there are no barriers to entry. 
B) no close substitutes and there are no barriers to entry. 
C) no close substitutes and there are barriers to entry. 
D) many substitutes and there barriers to entry. 
E) None of the above answers are correct because the existence of a monopoly has nothing to do with the presence or absence of barriers to entry. 
A) many substitutes but there are no barriers to entry. 
B) no close substitutes and there are no barriers to entry. 
C) no close substitutes and there are barriers to entry. 
D) many substitutes and there barriers to entry. 
E) None of the above answers are correct because the existence of a monopoly has nothing to do with the presence or absence of barriers to entry.

Question 4

A natural monopoly that is regulated to set price equal to marginal cost

Accepted Answer

A) makes an economic profit. 
B) makes zero economic profit. 
C) incurs an economic loss. 
D) could make an economic loss, an economic profit, or zero economic profit. 
E) makes zero normal profit. 
A) makes an economic profit. 
B) makes zero economic profit. 
C) incurs an economic loss. 
D) could make an economic loss, an economic profit, or zero economic profit. 
E) makes zero normal profit.

Question 5

The capture theory of regulation predicts that

Accepted Answer

A) regulation helps producers to maximize profits. 
B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus. 
C) regulators eliminate the deadweight loss a monopoly can create. 
D) resources are used efficiently. 
E) regulators capture the firm's economic profit and transfer it to themselves. 
A) regulation helps producers to maximize profits. 
B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus. 
C) regulators eliminate the deadweight loss a monopoly can create. 
D) resources are used efficiently. 
E) regulators capture the firm's economic profit and transfer it to themselves.

Question 6

-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. In order to maximize profit, the Busy Bee produces ________ hamburgers per hour and sets a price of ________ per hamburger.

Accepted Answer

A) 20; $3.00 
B) 20; $1.00 
C) 30; $2.00 
D) 30; $4.00 
E) 50; $5.00 
A) 20; $3.00 
B) 20; $1.00 
C) 30; $2.00 
D) 30; $4.00 
E) 50; $5.00

Question 7

The long-run average cost curve of a natural monopoly

Accepted Answer

A) is positively sloped until it crosses the demand curve. 
B) intersects the demand curve while it is negative sloped. 
C) intersects the demand curve while it is positively sloped. 
D) is the natural monopoly's supply curve. 
E) is the same as the natural monopoly's demand curve. 
A) is positively sloped until it crosses the demand curve. 
B) intersects the demand curve while it is negative sloped. 
C) intersects the demand curve while it is positively sloped. 
D) is the natural monopoly's supply curve. 
E) is the same as the natural monopoly's demand curve.

Question 8

Fixed costs are ________ in a natural monopoly, so average total cost ________ as output increases.

Accepted Answer

A) large; increases 
B) large; decreases 
C) small; increases 
D) small; decreases 
E) nonexistent; decreases 
A) large; increases 
B) large; decreases 
C) small; increases 
D) small; decreases 
E) nonexistent; decreases

Question 9

For a monopoly, marginal revenue is equal to

Accepted Answer

A) the amount people buy at a given price. 
B) the amount people buy between two prices. 
C) the change in total revenue brought about by a one-unit increase in quantity sold. 
D) the price multiplied by the quantity sold. 
E) the price of the product. 
A) the amount people buy at a given price. 
B) the amount people buy between two prices. 
C) the change in total revenue brought about by a one-unit increase in quantity sold. 
D) the price multiplied by the quantity sold. 
E) the price of the product.

Question 10

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above, an

Accepted Answer

A) efficient output results, but the firm incurs a loss per household which must be subsidized in some way. 
B) inefficient output results, though the firm covers its costs. 
C) an efficient output results, though marginal costs exceed average total costs. 
D) an inefficient output results, because the firm cannot cover its costs. 
E) an efficient output results, because consumer surplus is maximized. 
A) efficient output results, but the firm incurs a loss per household which must be subsidized in some way. 
B) inefficient output results, though the firm covers its costs. 
C) an efficient output results, though marginal costs exceed average total costs. 
D) an inefficient output results, because the firm cannot cover its costs. 
E) an efficient output results, because consumer surplus is maximized.

Question 11

Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the amount of food produced

Accepted Answer

A) remains constant. 
B) decreases. 
C) increases. 
D) might increase or decrease depending on whether the demand for food is elastic or inelastic. 
E) might increase or decrease depending on whether the monopoly's marginal revenue curve lies below or above its demand curve. 
A) remains constant. 
B) decreases. 
C) increases. 
D) might increase or decrease depending on whether the demand for food is elastic or inelastic. 
E) might increase or decrease depending on whether the monopoly's marginal revenue curve lies below or above its demand curve.

Question 12

Earning-sharing regulation involves

Accepted Answer

A) setting the monopoly's price equal to its average total cost. 
B) requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C) setting a maximum price the monopoly may charge and maintaining it for many years. 
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) requiring that the monopoly share its profits with its customers if the profits rise above a certain level. 
C) setting a maximum price the monopoly may charge and maintaining it for many years. 
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 13

-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 difference between marginal cost and price

Accepted Answer

A) $0. 
B) $40. 
C) $60. 
D) $30. 
E) $20. 
A) $0. 
B) $40. 
C) $60. 
D) $30. 
E) $20.

Question 14

Who receives benefits if regulation works according to social interest theory?

Accepted Answer

A) the entire economy 
B) cohesive interest groups 
C) everyone not in the cohesive interest group 
D) the regulators 
E) It is impossible to determine who benefits. 
A) the entire economy 
B) cohesive interest groups 
C) everyone not in the cohesive interest group 
D) the regulators 
E) It is impossible to determine who benefits.

Question 15

-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 ________ and when it is a monopoly, the price of a pound of steak is ________.

Accepted Answer

A) $4; $20 
B) $8; $4 
C) $8; $12 
D) $4; $8 
E) $4; $12 
A) $4; $20 
B) $8; $4 
C) $8; $12 
D) $4; $8 
E) $4; $12

Question 16

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopoly?

Accepted Answer

For a single-price monopoly, p

Question 17

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic, then the Red Sox's marginal revenue is

Accepted Answer

A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined. 
A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined.

Question 18

Which of the following is the best example of a natural monopoly?

Accepted Answer

A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug 
A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug

Question 19

-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 price will the Busy Bee charge to maximize its profit?

Accepted Answer

A) $5.00 for a hamburger 
B) $3.00 for a hamburger 
C) $2.00 for a hamburger 
D) $1.00 for a hamburger 
E) $4.00 for a hamburger 
A) $5.00 for a hamburger 
B) $3.00 for a hamburger 
C) $2.00 for a hamburger 
D) $1.00 for a hamburger 
E) $4.00 for a hamburger

Question 20

-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, he produces ________ pillows per hour.

Accepted Answer

A) 1,000 
B) 3,000 
C) 4,000 
D) 0 
E) 2,000 
A) 1,000 
B) 3,000 
C) 4,000 
D) 0 
E) 2,000

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

Pizza producers charge one price for a single pizza and almost give away a second one. This is an example of

Monopolies arise when there are

A natural monopoly that is regulated to set price equal to marginal cost

The capture theory of regulation predicts that

-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. In order to maximize profit, the Busy Bee produces hamburgers per hour and sets a price of per hamburger.

The long-run average cost curve of a natural monopoly

Fixed costs are in a natural monopoly, so average total cost as output increases.

For a monopoly, marginal revenue is equal to

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, an

Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the amount of food produced

Earning-sharing regulation involves

-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 difference between marginal cost and price

Who receives benefits if regulation works according to social interest theory?

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopoly?

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic, then the Red Sox's marginal revenue is

Which of the following is the best example of a natural monopoly?

-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 price will the Busy Bee charge to maximize its profit?

-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, he produces ________ pillows per hour.

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

Under which of the following does a monopoly's demand curve become its marginal revenue curve?

Pizza producers charge one price for a single pizza and almost give away a second one. This is an example of

Monopolies arise when there are

A natural monopoly that is regulated to set price equal to marginal cost

The capture theory of regulation predicts that

The long-run average cost curve of a natural monopoly

Fixed costs are ________ in a natural monopoly, so average total cost ________ as output increases.

For a monopoly, marginal revenue is equal to

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above, an

Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the amount of food produced

Earning-sharing regulation involves

-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 difference between marginal cost and price

Who receives benefits if regulation works according to social interest theory?

What is the relationship between the marginal revenue curve and the demand curve for a single-price monopoly?

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic, then the Red Sox's marginal revenue is

Which of the following is the best example of a natural monopoly?

-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 price will the Busy Bee charge to maximize its profit?

-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, he produces ________ pillows per hour.

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

Fixed costs are in a natural monopoly, so average total cost as output increases.