Question 1

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

Accepted Answer

A)  is achieved when 21 units are produced. 
B)  is achieved by setting price equal to 21. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided. 
A)  is achieved when 21 units are produced. 
B)  is achieved by setting price equal to 21. 
C)  is achieved only by shutting down in the short run. 
D)  cannot be determined solely from the information provided.

Question 2

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Accepted Answer

First,solve for the competitive equilibr

Question 3

Government actions that create monopolies

Accepted Answer

A)  spur product innovation by the monopoly. 
B)  create deadweight loss. 
C)  result in lower average costs of production. 
D)  ensure that firms price at marginal cost. 
A)  spur product innovation by the monopoly. 
B)  create deadweight loss. 
C)  result in lower average costs of production. 
D)  ensure that firms price at marginal cost.

Question 4

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

Accepted Answer

A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q. 
A)  -2. 
B)  100 - 4Q. 
C)  200 - 4Q. 
D)  200 - 2Q.

Question 5

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

Accepted Answer

A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50. 
A)  $250. 
B)  $312.50. 
C)  $1,250. 
D)  $1,562.50.

Question 6

In the early 1900s,U.S.Steel acted as a dominant firm with over sixty percent (60%)of the market.Many,including the Supreme Court in 1920,viewed U.S.Steel as a "good" monopolist since competitive fringe firms prospered under this arrangement.Graph the market for steel as it might have existed at this time showing that being a member of the competitive fringe can be profitable.Assume a linear market demand and linear MC and AC that slope upward.

Accepted Answer

@#IMG-DLM& See the above figure.The competitive fr

Question 7

What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a monopoly?

Accepted Answer

When comparing an ad valorem t

Question 8

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

Accepted Answer

A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above. 
A)  a + b. 
B)  a + b + c. 
C)  a + b + c + d + e + f. 
D)  None of the above.

Question 9

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

Accepted Answer

A)  a shortage will exist. 
B)  a surplus will exist. 
C)  producer surplus is maximized. 
D)  consumer surplus is maximized. 
A)  a shortage will exist. 
B)  a surplus will exist. 
C)  producer surplus is maximized. 
D)  consumer surplus is maximized.

Question 10

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

Accepted Answer

A)  1. 
B)  1/3. 
C)  1.5. 
D)  3. 
A)  1. 
B)  1/3. 
C)  1.5. 
D)  3.

Question 11

-The above figure shows the demand and cost curves facing a monopoly.The deadweight loss of this monopoly is

Accepted Answer

A)  $100. 
B)  $250. 
C)  $1,250. 
D)  $2,500. 
A)  $100. 
B)  $250. 
C)  $1,250. 
D)  $2,500.

Question 12

For the following, please answer "True" or "False" and explain why.
-If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

Accepted Answer

A) True 
 B)False

Question 13

For the following, please answer "True" or "False" and explain why.
-The telephone is an example of a product with network externalities.

Accepted Answer

A) True 
 B)False

Question 14

The average cost for a typical electric-power-production firm is AC = 100 - 10Q + Q² where Q is measured in billion kilowatt hours per day.At the current regulated price,consumers demand 4 billion kilowatt hours per day.Is this market a natural monopoly? If demand increases to 10 billion kilowatt hours,is this market a natural monopoly? Explain.

Accepted Answer

The firm enjoys economies of scale up to

Question 15

A monopsonist purchaser of labor that could negotiate a different wage for each worker could

Accepted Answer

A)  purchase less labor than a regular monopsonist. 
B)  purchase more labor than a regular monopsonist. 
C)  rotate the marginal expenditure curve to the left. 
D)  shift the marginal expenditure curve to the left. 
A)  purchase less labor than a regular monopsonist. 
B)  purchase more labor than a regular monopsonist. 
C)  rotate the marginal expenditure curve to the left. 
D)  shift the marginal expenditure curve to the left.

Question 16

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

Accepted Answer

A)  $100. 
B)  $50. 
C)  $25. 
D)  $0. 
A)  $100. 
B)  $50. 
C)  $25. 
D)  $0.

Question 17

The introduction of satellite television systems would cause the Lerner Index for cable television to

Accepted Answer

A)  become smaller. 
B)  increase. 
C)  change in accordance to the increase in market power of cable TV providers. 
D)  be unchanged. 
A)  become smaller. 
B)  increase. 
C)  change in accordance to the increase in market power of cable TV providers. 
D)  be unchanged.

Question 18

A monopolist faces the inverse demand for its output:
p = 30 - Q
The monopolist also has a constant marginal and average cost of $4/unit.The government is seeking ways to collect tax revenue from the monopolist and faces two proposals:
i.Impose a specific tax of t on the monopolist.
ii.Impose an ad valorem tax of a on the monopolist.
a.Suppose the government imposes a 20% ad valorem tax on the monopolist.What price and quantity does the monopolist choose and how much revenue does the government generate from the tax?
b.Rather than an ad valorem tax,what is the government's revenue from a specific tax of t imposed on the monopolist? Your answer should be in terms of t.
c.Show that a specific tax of $3.70/unit generates the same revenue as a 20% ad valorem tax (approximately).
d.Which tax has a greater distortion on the monopoly output?

Accepted Answer

a.With a 10% ad valorem tax,the governme

Question 19

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

Accepted Answer

A)  greater than the wage. 
B)  equal to the wage plus the the increase in the wage resulting from hiring one more unit of labor hired. 
C)  greater than the wage because hiring more workers requires to pay all workers more. 
D)  All of the above. 
A)  greater than the wage. 
B)  equal to the wage plus the the increase in the wage resulting from hiring one more unit of labor hired. 
C)  greater than the wage because hiring more workers requires to pay all workers more. 
D)  All of the above.

Question 20

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

Accepted Answer

A)  h. 
B)  c. 
C)  c + f. 
D)  c + d + e + f. 
A)  h. 
B)  c. 
C)  c + f. 
D)  c + d + e + f.

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Government actions that create monopolies

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a monopoly?

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

-The above figure shows the demand and cost curves facing a monopoly.The deadweight loss of this monopoly is

For the following, please answer "True" or "False" and explain why. -If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

For the following, please answer "True" or "False" and explain why. -The telephone is an example of a product with network externalities.

A monopsonist purchaser of labor that could negotiate a different wage for each worker could

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

The introduction of satellite television systems would cause the Lerner Index for cable television to

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

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

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then profit maximization

Suppose that market demand for a good is Q = 480 - 2p.The marginal cost is MC = 2Q.Calculate the deadweight loss resulting from a monopoly in this market.

Government actions that create monopolies

If the inverse demand function for a monopoly's product is p = 100 - 2Q,then the firm's marginal revenue function is

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,the loss in welfare resulting from the tax is

What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a monopoly?

-The above figure shows the demand and marginal cost curves for a monopoly.Under monopoly,consumer surplus equals

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

-The above figure shows the demand and cost curves facing a monopoly.If the firm is a profit maximizer,its Lerner Index will equal

-The above figure shows the demand and cost curves facing a monopoly.The deadweight loss of this monopoly is

For the following, please answer "True" or "False" and explain why. -If the government's goal is to generate a certain amount of tax revenue,a specific tax and an ad valorem tax on a monopoly have the same impact on social welfare.

For the following, please answer "True" or "False" and explain why. -The telephone is an example of a product with network externalities.

A monopsonist purchaser of labor that could negotiate a different wage for each worker could

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by

The introduction of satellite television systems would cause the Lerner Index for cable television to

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

-The above figure shows the demand and marginal cost curves for a monopoly.The deadweight loss of this monopoly equals

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