Question 1

Rent seeking

Accepted Answer

A)  increases the social cost of monopoly. 
B)  frees scarce resources that could otherwise have been employed in the production of goods and services. 
C)  cannot take the form of lobbying for government imposed import restrictions. 
D)  None of the above answers are correct. 
A)  increases the social cost of monopoly. 
B)  frees scarce resources that could otherwise have been employed in the production of goods and services. 
C)  cannot take the form of lobbying for government imposed import restrictions. 
D)  None of the above answers are correct.

Question 2

A monopoly's marginal revenue is equal to the market price of its product.

Accepted Answer

A) True 
 B)False

Question 3

A single-price monopolist will maximize profit by producing so that marginal revenue

Accepted Answer

A)  exceeds marginal cost. 
B)  is less than marginal cost. 
C)  equals marginal cost. 
D)  equals price. 
A)  exceeds marginal cost. 
B)  is less than marginal cost. 
C)  equals marginal cost. 
D)  equals price.

Question 4

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then the lowest ticket price would be

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $3.00. 
D)  $3.50. 
A)  $1.00. 
B)  $2.00. 
C)  $3.00. 
D)  $3.50.

Question 5

Firms that can price discriminate between customers do so to ________.

Accepted Answer

A)  increase consumer surplus 
B)  increase employment 
C)  increase their profit 
D)  decrease the quantity they produce 
A)  increase consumer surplus 
B)  increase employment 
C)  increase their profit 
D)  decrease the quantity they produce

Question 6

-The monopoly illustrated in the figure above is unregulated and charges a single price. The deadweight loss created by the monopoly is

Accepted Answer

A)  $0. 
B)  $22.50. 
C)  $45.00. 
D)  $90.00. 
A)  $0. 
B)  $22.50. 
C)  $45.00. 
D)  $90.00.

Question 7

-The table above shows the demand and costs for a single-price monopolist. When it maximizes its profit, the firm makes an economic profit of

Accepted Answer

A)  $15. 
B)  $25. 
C)  $40. 
D)  $45. 
A)  $15. 
B)  $25. 
C)  $40. 
D)  $45.

Question 8

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Accepted Answer

The price would be highest if

Question 9

While smoking is on the decline in the United States, China is still puffing away madly. That's not because the government is eager to protect its citizens from the hazards of smoking. It's because China is eager to protect its own tobacco industry which is a state monopoly. Why did China announce in 2009 that it won't allow foreign companies to build new cigarette factories or enter joint ventures?

Accepted Answer

A)  because China is concerned about the negative effects of smoking 
B)  because China wants to protect the economic profits its state monopoly makes 
C)  because China wants to protect jobs 
D)  because China regulates the tobacco industry 
A)  because China is concerned about the negative effects of smoking 
B)  because China wants to protect the economic profits its state monopoly makes 
C)  because China wants to protect jobs 
D)  because China regulates the tobacco industry

Question 10

A single-price monopolist determines

Accepted Answer

A)  its output but not its price. 
B)  its price but not its output. 
C)  both its output and its price. 
D)  neither its output nor its price. 
A)  its output but not its price. 
B)  its price but not its output. 
C)  both its output and its price. 
D)  neither its output nor its price.

Question 11

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

Accepted Answer

A)  h. 
B)  j. 
C)  k. 
D)  none of the above. 
A)  h. 
B)  j. 
C)  k. 
D)  none of the above.

Question 12

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

Accepted Answer

Efficiency has nothing to do with who ge

Question 13

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. You can ride B. Max for $40 for the first hour, $33 for the second hour, and $26 for the third hour. Why would WaveHouse charge different prices for each subsequent hour of riding?

Accepted Answer

A)  to capture consumer surplus among groups of buyers 
B)  to capture consumer surplus among units of a good 
C)  to create customer loyalty 
D)  to encourage skill development 
A)  to capture consumer surplus among groups of buyers 
B)  to capture consumer surplus among units of a good 
C)  to create customer loyalty 
D)  to encourage skill development

Question 14

Monopolists

Accepted Answer

A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers. 
A)  maximize revenue, not profits. 
B)  have no short-run fixed costs. 
C)  face downward sloping demand curves. 
D)  are price takers.

Question 15

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

Accepted Answer

For a single-price monopolist,

Question 16

Which of the following statements regarding perfect price discrimination is FALSE?

Accepted Answer

A)  Only part of consumer surplus is captured by the firm as producer surplus. 
B)  For the firm, the market demand curve becomes the firm's marginal revenue curve. 
C)  The monopoly produces the output at which the marginal revenue equals the marginal cost. 
D)  No deadweight loss is created. 
A)  Only part of consumer surplus is captured by the firm as producer surplus. 
B)  For the firm, the market demand curve becomes the firm's marginal revenue curve. 
C)  The monopoly produces the output at which the marginal revenue equals the marginal cost. 
D)  No deadweight loss is created.

Question 17

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace, Inc. is definitely

Accepted Answer

A)  a perfectly competitive firm. 
B)  not a perfectly competitive firm. 
C)  a natural monopoly. 
D)  None of the above answers is correct. 
A)  a perfectly competitive firm. 
B)  not a perfectly competitive firm. 
C)  a natural monopoly. 
D)  None of the above answers is correct.

Question 18

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is ________ because when this quantity is produced, ________.

Accepted Answer

A)  efficient; marginal social benefit exceeds marginal social cost 
B)  efficient; marginal social benefit equals marginal social cost 
C)  not efficient; marginal social benefit exceeds marginal social cost 
D)  not efficient; marginal social benefit equals marginal social cost 
A)  efficient; marginal social benefit exceeds marginal social cost 
B)  efficient; marginal social benefit equals marginal social cost 
C)  not efficient; marginal social benefit exceeds marginal social cost 
D)  not efficient; marginal social benefit equals marginal social cost

Question 19

If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is

Accepted Answer

A)  left unregulated. 
B)  regulated according to an average cost pricing rule. 
C)  regulated according to a marginal cost pricing rule. 
D)  regulated to maximize total surplus. 
A)  left unregulated. 
B)  regulated according to an average cost pricing rule. 
C)  regulated according to a marginal cost pricing rule. 
D)  regulated to maximize total surplus.

Question 20

Price discrimination, where different units of a good are sold for different prices

Accepted Answer

A)  is impossible because there can only be one market price. 
B)  can be effectively practiced by all monopolists. 
C)  maximizes consumer welfare because each consumer pays only the price he or she is willing to pay. 
D)  is possible if the good cannot be resold. 
A)  is impossible because there can only be one market price. 
B)  can be effectively practiced by all monopolists. 
C)  maximizes consumer welfare because each consumer pays only the price he or she is willing to pay. 
D)  is possible if the good cannot be resold.

Rent seeking

A monopoly's marginal revenue is equal to the market price of its product.

A single-price monopolist will maximize profit by producing so that marginal revenue

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then the lowest ticket price would be

Firms that can price discriminate between customers do so to ________.

-The monopoly illustrated in the figure above is unregulated and charges a single price. The deadweight loss created by the monopoly is

-The table above shows the demand and costs for a single-price monopolist. When it maximizes its profit, the firm makes an economic profit of

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

A single-price monopolist determines

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

Monopolists

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

Which of the following statements regarding perfect price discrimination is FALSE?

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace, Inc. is definitely

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is because when this quantity is produced, .

If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is

Price discrimination, where different units of a good are sold for different prices

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

Rent seeking

A monopoly's marginal revenue is equal to the market price of its product.

A single-price monopolist will maximize profit by producing so that marginal revenue

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, then the lowest ticket price would be

Firms that can price discriminate between customers do so to ________.

-The monopoly illustrated in the figure above is unregulated and charges a single price. The deadweight loss created by the monopoly is

-The table above shows the demand and costs for a single-price monopolist. When it maximizes its profit, the firm makes an economic profit of

Electric utilities are often considered natural monopolies and are regulated. When would the price be highest: when the utility is not regulated, when it is regulated using an average cost pricing rule, or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

A single-price monopolist determines

-In the figure above, a perfectly price-discriminating monopoly will maximize profit by producing at amount of output equal to

Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?

Monopolists

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

Which of the following statements regarding perfect price discrimination is FALSE?

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace, Inc. is definitely

If a natural monopoly does not inflate its costs, the output it produces is the smallest when the monopoly is

Price discrimination, where different units of a good are sold for different prices

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