Question 1

-In the above figure, a single-price monopolist charges a price of ________, resulting in total revenue equal to area ________.

Accepted Answer

A)  $10; hbcd 
B)  $20; fjem 
C)  $10; fbcg 
D)  $30; fbcg 
A)  $10; hbcd 
B)  $20; fjem 
C)  $10; fbcg 
D)  $30; fbcg

Question 2

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce ________ and sell at a price of ________.

Accepted Answer

A)  200 kwh; 10¢ per kwh 
B)  200 kwh; 30¢ per kwh 
C)  300 kwh; 20¢ per kwh 
D)  400 kwh; 10¢ per kwh 
A)  200 kwh; 10¢ per kwh 
B)  200 kwh; 30¢ per kwh 
C)  300 kwh; 20¢ per kwh 
D)  400 kwh; 10¢ per kwh

Question 3

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce ________ and sell at a price of ________.

Accepted Answer

A)  200 kwh; 10¢ per kwh 
B)  300 kwh; 20¢ per kwh 
C)  300 kwh; 10¢ per kwh 
D)  400 kwh; 10¢ per kwh 
A)  200 kwh; 10¢ per kwh 
B)  300 kwh; 20¢ per kwh 
C)  300 kwh; 10¢ per kwh 
D)  400 kwh; 10¢ per kwh

Question 4

-If the firm in the figure above is unregulated, the deadweight loss will be

Accepted Answer

A)  zero. 
B)  $100. 
C)  $200. 
D)  $400. 
A)  zero. 
B)  $100. 
C)  $200. 
D)  $400.

Question 5

Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand curve, as the quantity increases the long-run average costs

Accepted Answer

A)  increase. 
B)  decrease. 
C)  decrease and then increase. 
D)  increase and then decrease. 
A)  increase. 
B)  decrease. 
C)  decrease and then increase. 
D)  increase and then decrease.

Question 6

Price discrimination by a monopoly

Accepted Answer

A)  increases consumer surplus. 
B)  decreases consumer surplus. 
C)  increases the firm's profit. 
D)  Both answers B and C are correct. 
A)  increases consumer surplus. 
B)  decreases consumer surplus. 
C)  increases the firm's profit. 
D)  Both answers B and C are correct.

Question 7

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on:
a) efficiency.
b) consumer surplus.
c) economic profit in the long run.

Accepted Answer

a) Both perfect competition and perfect

Question 8

What condition must exist for a monopolist to effectively price discriminate?

Accepted Answer

A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible. 
A)  The monopolist must face consumers with identical willingness to pay. 
B)  The monopolist must produce a good or service that can be resold. 
C)  The monopolist must produce a good that cannot be resold. 
D)  The monopolist must charge the highest price possible.

Question 9

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

Accepted Answer

A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day. 
A)  $8.00 per day. 
B)  $16.00 per day. 
C)  $32.00 per day. 
D)  $40.00 per day.

Question 10

Efforts by a firm to obtain a monopoly

Accepted Answer

A)  are called price discrimination. 
B)  increase consumer surplus. 
C)  are called rent seeking. 
D)  are called price taking. 
A)  are called price discrimination. 
B)  increase consumer surplus. 
C)  are called rent seeking. 
D)  are called price taking.

Question 11

Which of the following firms is most likely to be a monopoly?

Accepted Answer

A)  a local restaurant 
B)  the local water company 
C)  a local drug store 
D)  a clothing store 
A)  a local restaurant 
B)  the local water company 
C)  a local drug store 
D)  a clothing store

Question 12

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

Accepted Answer

A)  0 per week 
B)  10 per week 
C)  20 per week 
D)  30 per week 
A)  0 per week 
B)  10 per week 
C)  20 per week 
D)  30 per week

Question 13

-Pinesboro Herald is the only local newspaper in the city of Pinesboro. The publisher faces the demand schedule shown in the first table above and has the cost schedule shown in the second table above.
a) Calculate the marginal revenue schedule. In a figure, draw the demand curve and the marginal revenue curve.
b) Calculate the publisher's marginal cost and average total cost schedules. In the same figure that you drew the demand and marginal revenue curves, draw the marginal and the average total cost curves.
c) What are the publisher's profit-maximizing output and price? What is the publisher's economic profit per day?
d) At the price charged, is the demand for newspapers elastic or inelastic? Explain your answer.
e) Does the publisher use resources efficiently? What is the deadweight loss? Explain your answer.
f) Will the publisher try to price discriminate? Why or why not?

Accepted Answer

@#IMG-DLM& a) The publisher's marginal revenue sch

Question 14

Of the following, consumer surplus is largest for

Accepted Answer

A)  a perfectly competitive industry. 
B)  a single-price monopoly. 
C)  any price-discriminating monopoly. 
D)  a perfectly price-discriminating monopoly. 
A)  a perfectly competitive industry. 
B)  a single-price monopoly. 
C)  any price-discriminating monopoly. 
D)  a perfectly price-discriminating monopoly.

Question 15

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

Accepted Answer

Rent seeking is the act of obtaining spe

Question 16

Which of the following is LEAST likely to be a monopoly?

Accepted Answer

A)  the holder of a public franchise 
B)  a pharmaceutical company with a patent on a drug 
C)  a store in a large shopping mall 
D)  an artist who owns a copyright for a painting 
A)  the holder of a public franchise 
B)  a pharmaceutical company with a patent on a drug 
C)  a store in a large shopping mall 
D)  an artist who owns a copyright for a painting

Question 17

Monopolists can make an economic profit in the long-run because of barriers to entry.

Accepted Answer

A) True 
 B)False

Question 18

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow a marginal cost pricing rule?

Accepted Answer

A)  -$40 
B)  -$20 
C)  $0 
D)  $30 
A)  -$40 
B)  -$20 
C)  $0 
D)  $30

Question 19

-If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

Accepted Answer

A)  incur an economic loss. 
B)  make zero economic profit, that is, its owners make a normal profit. 
C)  make an economic profit of $4 million. 
D)  make an economic profit of $9 million. 
A)  incur an economic loss. 
B)  make zero economic profit, that is, its owners make a normal profit. 
C)  make an economic profit of $4 million. 
D)  make an economic profit of $9 million.

Question 20

If the demand for its product is elastic, a monopoly's

Accepted Answer

A)  total revenue is unchanged when the firm lowers its price. 
B)  total revenue decreases when the firm lowers its price. 
C)  marginal revenue is positive. 
D)  marginal revenue is zero. 
A)  total revenue is unchanged when the firm lowers its price. 
B)  total revenue decreases when the firm lowers its price. 
C)  marginal revenue is positive. 
D)  marginal revenue is zero.

-In the above figure, a single-price monopolist charges a price of , resulting in total revenue equal to area .

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce and sell at a price of .

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce and sell at a price of .

-If the firm in the figure above is unregulated, the deadweight loss will be

Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand curve, as the quantity increases the long-run average costs

Price discrimination by a monopoly

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on: a) efficiency. b) consumer surplus. c) economic profit in the long run.

What condition must exist for a monopolist to effectively price discriminate?

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

Efforts by a firm to obtain a monopoly

Which of the following firms is most likely to be a monopoly?

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

Of the following, consumer surplus is largest for

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

Which of the following is LEAST likely to be a monopoly?

Monopolists can make an economic profit in the long-run because of barriers to entry.

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow a marginal cost pricing rule?

-If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

If the demand for its product is elastic, a monopoly's

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 13: Monopoly

-In the above figure, a single-price monopolist charges a price of ________, resulting in total revenue equal to area ________.

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce ________ and sell at a price of ________.

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce ________ and sell at a price of ________.

-If the firm in the figure above is unregulated, the deadweight loss will be

Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand curve, as the quantity increases the long-run average costs

Price discrimination by a monopoly

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on: a) efficiency. b) consumer surplus. c) economic profit in the long run.

What condition must exist for a monopolist to effectively price discriminate?

-The unregulated, single-price monopolist illustrated in the figure above has a total cost of

Efforts by a firm to obtain a monopoly

Which of the following firms is most likely to be a monopoly?

-Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?

Of the following, consumer surplus is largest for

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

Which of the following is LEAST likely to be a monopoly?

Monopolists can make an economic profit in the long-run because of barriers to entry.

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow a marginal cost pricing rule?

-If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will

If the demand for its product is elastic, a monopoly's

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-In the above figure, a single-price monopolist charges a price of , resulting in total revenue equal to area .

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is unregulated, it will produce and sell at a price of .

-The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated and must follow a marginal cost pricing rule, it will produce and sell at a price of .