Question 1

Optimal price regulation sets price equal to

Accepted Answer

A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost. 
A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost. A

Question 2

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

Accepted Answer

A)  can exceed 100%. 
B)  will always be between 0-100%. 
C)  may be negative. 
D)  will be the same as when the tax is imposed on a perfectly competitive firm. 
A)  can exceed 100%. 
B)  will always be between 0-100%. 
C)  may be negative. 
D)  will be the same as when the tax is imposed on a perfectly competitive firm. A

Question 3

Marginal Revenue is

Accepted Answer

A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1 + 1/e). 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above. 
A)  the increase in total revenue from selling one more unit of output. 
B)  equal to P(1 + 1/e). 
C)  equal to P when the price elasticity of demand is infinite. 
D)  All of the above. D

Question 4

If the demand shifts,then for a profit maximizing monopolist,

Accepted Answer

A)  price will change while quantity will remain constant. 
B)  price will change and quantity will change. 
C)  Both A and B. 
D)  Neither A nor B. 
A)  price will change while quantity will remain constant. 
B)  price will change and quantity will change. 
C)  Both A and B. 
D)  Neither A nor B.

Question 5

Which of the following total cost functions suggests the presence of a natural monopoly?

Accepted Answer

A)  TC = 2Q 
B)  TC = 100 + 2Q 
C)  TC = 100 + 2Q² 
D)  All of the above. 
A)  TC = 2Q 
B)  TC = 100 + 2Q 
C)  TC = 100 + 2Q² 
D)  All of the above.

Question 6

For the following, please answer "True" or "False" and explain why.
-The deadweight loss represent the sum of added consumer and producer surplus if the firm would produce the quantity where P = MC.

Accepted Answer

A) True 
 B)False

Question 7

A dominant-firm's residual demand curve is

Accepted Answer

A)  the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B)  the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C)  the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D)  None of the above. 
A)  the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B)  the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C)  the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D)  None of the above.

Question 8

The situation in which a person places greater value on a good as more and more people possess it is called

Accepted Answer

A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect. 
A)  Bandwagon Effect. 
B)  Greater Value Effect. 
C)  Snob Effect. 
D)  Behavioral Effect.

Question 9

For a profit maximizing monopolist,if the MC = 10 and price is set to be 20,then the elasticity at this price is

Accepted Answer

A)  -2. 
B)  -1. 
C)  -0.5. 
D)  0. 
A)  -2. 
B)  -1. 
C)  -0.5. 
D)  0.

Question 10

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Accepted Answer

A)  -3. 
B)  -1. 
C)  -1/3. 
D)  None of the above-the price elasticity does not matter. 
A)  -3. 
B)  -1. 
C)  -1/3. 
D)  None of the above-the price elasticity does not matter.

Question 11

For profit-maximizing monopolies,explain why the boundaries on the Lerner Index are 0 and 1.

Accepted Answer

The Lerner Index equals (p - MC)/p.Becau

Question 12

Patents

Accepted Answer

A)  will create a profit incentive to do research. 
B)  might be welfare reducing if granted for too long a period. 
C)  serve as a barrier to entry. 
D)  All of the above. 
A)  will create a profit incentive to do research. 
B)  might be welfare reducing if granted for too long a period. 
C)  serve as a barrier to entry. 
D)  All of the above.

Question 13

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

Accepted Answer

A monopolist facing demand p = a - bQ an

Question 14

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

Accepted Answer

A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper. 
A)  the number of nearby hospitals increases. 
B)  the number of nearby hospitals decreases. 
C)  the demand curve for hospital services shifts rightward. 
D)  the demand curve for hospital services becomes steeper.

Question 15

When attempting price regulation,a government faces what problem(s)?

Accepted Answer

A)  limited information 
B)  bribes 
C)  uncooperative firms 
D)  All of the above 
A)  limited information 
B)  bribes 
C)  uncooperative firms 
D)  All of the above

Question 16

Draw a graph that shows a shift in the demand curve that causes the optimal monopoly price to change,while the quantity remains the same.

Accepted Answer

@#IMG-DLM& See the a

Question 17

The existence of a deadweight loss associated with a monopoly can be seen because

Accepted Answer

A)  consumers are willing to pay more for the last unit of output than it cost to produce. 
B)  the cost of the last unit produced is more than consumers are willing to pay for it. 
C)  the producer surplus is larger than in a competitive market. 
D)  None of the above. 
A)  consumers are willing to pay more for the last unit of output than it cost to produce. 
B)  the cost of the last unit produced is more than consumers are willing to pay for it. 
C)  the producer surplus is larger than in a competitive market. 
D)  None of the above.

Question 18

For the following, please answer "True" or "False" and explain why.
-The Lerner Index is derived from the profit-maximizing condition of a firm.

Accepted Answer

A) True 
 B)False

Question 19

Suppose a monopolist has TC = 100 + 10Q + 2Q²,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

Accepted Answer

First,determine MR = 90 - 4Q.Second,MC =

Question 20

As other firms enter a monopoly's market,the monopoly's market power

Accepted Answer

A)  is unaffected. 
B)  declines. 
C)  increases. 
D)  increases according to the Lerner Index but decreases according to the price/marginal cost ratio. 
A)  is unaffected. 
B)  declines. 
C)  increases. 
D)  increases according to the Lerner Index but decreases according to the price/marginal cost ratio.

Optimal price regulation sets price equal to

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

Marginal Revenue is

If the demand shifts,then for a profit maximizing monopolist,

Which of the following total cost functions suggests the presence of a natural monopoly?

For the following, please answer "True" or "False" and explain why. -The deadweight loss represent the sum of added consumer and producer surplus if the firm would produce the quantity where P = MC.

A dominant-firm's residual demand curve is

The situation in which a person places greater value on a good as more and more people possess it is called

For a profit maximizing monopolist,if the MC = 10 and price is set to be 20,then the elasticity at this price is

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

For profit-maximizing monopolies,explain why the boundaries on the Lerner Index are 0 and 1.

Patents

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

When attempting price regulation,a government faces what problem(s)?

Draw a graph that shows a shift in the demand curve that causes the optimal monopoly price to change,while the quantity remains the same.

The existence of a deadweight loss associated with a monopoly can be seen because

For the following, please answer "True" or "False" and explain why. -The Lerner Index is derived from the profit-maximizing condition of a firm.

Suppose a monopolist has TC = 100 + 10Q + 2Q²,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

As other firms enter a monopoly's market,the monopoly's market power

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly and Monopsony

Optimal price regulation sets price equal to

If the government imposes a specific tax on a monopoly,the consumer's tax incidence

Marginal Revenue is

If the demand shifts,then for a profit maximizing monopolist,

Which of the following total cost functions suggests the presence of a natural monopoly?

For the following, please answer "True" or "False" and explain why. -The deadweight loss represent the sum of added consumer and producer surplus if the firm would produce the quantity where P = MC.

A dominant-firm's residual demand curve is

The situation in which a person places greater value on a good as more and more people possess it is called

For a profit maximizing monopolist,if the MC = 10 and price is set to be 20,then the elasticity at this price is

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

For profit-maximizing monopolies,explain why the boundaries on the Lerner Index are 0 and 1.

Patents

Show that for a monopolist with a constant marginal cost and facing a linear demand curve,if a specific tax is imposed on the monopolist,the tax burden is shared equally between the monopolist and the consumers.

Humana Hospital's price/marginal cost ratio of 2.3 is most likely to decline if

When attempting price regulation,a government faces what problem(s)?

Draw a graph that shows a shift in the demand curve that causes the optimal monopoly price to change,while the quantity remains the same.

The existence of a deadweight loss associated with a monopoly can be seen because

For the following, please answer "True" or "False" and explain why. -The Lerner Index is derived from the profit-maximizing condition of a firm.

Suppose a monopolist has TC = 100 + 10Q + 2Q²,and the demand curve it faces is p = 90 - 2Q.What will be the price,quantity,and profit for this firm?

As other firms enter a monopoly's market,the monopoly's market power

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters