Question 1

-The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

Accepted Answer

A)  $8. 
B)  $6. 
C)  $4. 
D)  None of the above prices force Bigshow to incur an economic loss. 
A)  $8. 
B)  $6. 
C)  $4. 
D)  None of the above prices force Bigshow to incur an economic loss.

Question 2

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule ________ flights will be offered each month at a price of ________ per flight.

Accepted Answer

A)  200; $300 
B)  200; $100 
C)  300; $200 
D)  400; $100 
A)  200; $300 
B)  200; $100 
C)  300; $200 
D)  400; $100

Question 3

-Ron's Hamburger Joint is the only restaurant in town. The above figure represents Ron's cost, demand, and marginal revenue curves. Ron operates as a single-price monopoly.
a) How many hamburgers does Ron produce?
b) What price does Ron charge for a hamburger?
c) What is Ron's total revenue?
d) What is his total cost?
e) What is Ron's economic profit?

Accepted Answer

a) Ron produces 20 hamburgers

Question 4

Why will a profit-maximizing, single-price monopolist NOT produce the amount of output that maximizes its total revenue?

Accepted Answer

When total revenue is at its maximum, th

Question 5

________ is defined as any attempt to capture consumer surplus, producer surplus or economic profit.

Accepted Answer

A)  Search 
B)  Rent seeking 
C)  Maximizing monopoly profits 
D)  Price discrimination 
A)  Search 
B)  Rent seeking 
C)  Maximizing monopoly profits 
D)  Price discrimination

Question 6

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

Accepted Answer

Price cap regulation is intended to moti

Question 7

Which of the following is FALSE for a profit-maximizing single-price monopolist?

Accepted Answer

A)  P = MC 
B)  MC = MR 
C)  P > MR 
D)  None of the above because they are all true. 
A)  P = MC 
B)  MC = MR 
C)  P > MR 
D)  None of the above because they are all true.

Question 8

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

Accepted Answer

A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units. 
A)  2 million units. 
B)  3 million units. 
C)  4 million units. 
D)  5 million units.

Question 9

A regulated monopoly facing average cost pricing rule will make the same profit as a firm in ________ market does in the long run.

Accepted Answer

A)  an unregulated monopoly 
B)  an oligopoly 
C)  a perfectly competitive 
D)  All of the above answers are correct. 
A)  an unregulated monopoly 
B)  an oligopoly 
C)  a perfectly competitive 
D)  All of the above answers are correct.

Question 10

-In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of

Accepted Answer

A)  trapezoid beic. 
B)  triangle abe. 
C)  rectangle begd. 
D)  rectangle befc. 
A)  trapezoid beic. 
B)  triangle abe. 
C)  rectangle begd. 
D)  rectangle befc.

Question 11

-If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

Accepted Answer

A)  zero. 
B)  $450. 
C)  $400. 
D)  $200. 
A)  zero. 
B)  $450. 
C)  $400. 
D)  $200.

Question 12

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the consumer surplus equals ________.

Accepted Answer

A)  $20,000 
B)  $10,000 
C)  $45,000 
D)  $40,000 
A)  $20,000 
B)  $10,000 
C)  $45,000 
D)  $40,000

Question 13

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

Accepted Answer

A)  $111 
B)  $141 
C)  $151 
D)  $161 
A)  $111 
B)  $141 
C)  $151 
D)  $161

Question 14

An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a

Accepted Answer

A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  one-firm monopoly. 
A)  legal monopoly. 
B)  natural monopoly. 
C)  single-price monopoly. 
D)  one-firm monopoly.

Question 15

-The unregulated, single-price monopoly shown in the figure above will sell

Accepted Answer

A)  less than 30 tickets. 
B)  30 tickets. 
C)  50 tickets. 
D)  100 tickets. 
A)  less than 30 tickets. 
B)  30 tickets. 
C)  50 tickets. 
D)  100 tickets.

Question 16

The attempt to capture consumer surplus, producer surplus, or economic profit is called ________.

Accepted Answer

A)  a natural monopoly 
B)  price discrimination 
C)  rent seeking 
D)  gouging 
A)  a natural monopoly 
B)  price discrimination 
C)  rent seeking 
D)  gouging

Question 17

A monopoly

Accepted Answer

A)  faces a perfectly elastic demand curve. 
B)  does not need to take account of demand because it's the only seller. 
C)  is able to raise the price it can charge for its product by increasing the quantity sold. 
D)  is able to raise the price it can charge for its product by decreasing the quantity sold. 
A)  faces a perfectly elastic demand curve. 
B)  does not need to take account of demand because it's the only seller. 
C)  is able to raise the price it can charge for its product by increasing the quantity sold. 
D)  is able to raise the price it can charge for its product by decreasing the quantity sold.

Question 18

A legal monopoly is defined as a market where

Accepted Answer

A)  only one lawyer operates. 
B)  a legal barrier to entry exists. 
C)  only one firm could earn a profit. 
D)  entry and exit are legal. 
A)  only one lawyer operates. 
B)  a legal barrier to entry exists. 
C)  only one firm could earn a profit. 
D)  entry and exit are legal.

Question 19

Price discrimination takes place when a firm

Accepted Answer

A)  charges the same price for all the units of its product that it sells. 
B)  charges different prices for different units of its product. 
C)  is discriminated against by consumers. 
D)  None of the above answers is correct. 
A)  charges the same price for all the units of its product that it sells. 
B)  charges different prices for different units of its product. 
C)  is discriminated against by consumers. 
D)  None of the above answers is correct.

Question 20

When an average cost pricing rule is imposed on a natural monopoly, ________.

Accepted Answer

A)  total surplus is maximized and the monopoly incurs an economic loss 
B)  the monopoly makes zero economic profit 
C)  the monopoly makes an economic profit 
D)  total surplus is maximized and the monopoly makes an economic profit 
A)  total surplus is maximized and the monopoly incurs an economic loss 
B)  the monopoly makes zero economic profit 
C)  the monopoly makes an economic profit 
D)  total surplus is maximized and the monopoly makes an economic profit

-The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule flights will be offered each month at a price of per flight.

Why will a profit-maximizing, single-price monopolist NOT produce the amount of output that maximizes its total revenue?

________ is defined as any attempt to capture consumer surplus, producer surplus or economic profit.

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

Which of the following is FALSE for a profit-maximizing single-price monopolist?

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

A regulated monopoly facing average cost pricing rule will make the same profit as a firm in ________ market does in the long run.

-In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of

-If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the consumer surplus equals ________.

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a

-The unregulated, single-price monopoly shown in the figure above will sell

The attempt to capture consumer surplus, producer surplus, or economic profit is called ________.

A monopoly

A legal monopoly is defined as a market where

Price discrimination takes place when a firm

When an average cost pricing rule is imposed on a natural monopoly, ________.

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

-The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule ________ flights will be offered each month at a price of ________ per flight.

Why will a profit-maximizing, single-price monopolist NOT produce the amount of output that maximizes its total revenue?

________ is defined as any attempt to capture consumer surplus, producer surplus or economic profit.

What incentive does price cap regulation attempt to give the firm? How does it give the firm this incentive?

Which of the following is FALSE for a profit-maximizing single-price monopolist?

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

A regulated monopoly facing average cost pricing rule will make the same profit as a firm in ________ market does in the long run.

-In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of

-If an average cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the consumer surplus equals ________.

-The table above shows the demand and total cost schedule for a monopolist hotel. What is the marginal revenue from renting out the fifth room each night?

An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a

-The unregulated, single-price monopoly shown in the figure above will sell

The attempt to capture consumer surplus, producer surplus, or economic profit is called ________.

A monopoly

A legal monopoly is defined as a market where

Price discrimination takes place when a firm

When an average cost pricing rule is imposed on a natural monopoly, ________.

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

-The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule flights will be offered each month at a price of per flight.