Question 1

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

Accepted Answer

A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output. 
A)  0 units of output. 
B)  5 units of output. 
C)  15 units of output. 
D)  20 units of output.

Question 2

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

Accepted Answer

A)  $4 
B)  $7 
C)  $9 
D)  $11 
A)  $4 
B)  $7 
C)  $9 
D)  $11

Question 3

Natural monopolies occur when there are

Accepted Answer

A)  large diseconomies of scale. 
B)  external economies. 
C)  large economies of scale. 
D)  natural resources involved. 
A)  large diseconomies of scale. 
B)  external economies. 
C)  large economies of scale. 
D)  natural resources involved.

Question 4

The maximum amount a rent seeker would pay for a monopoly is the ________.

Accepted Answer

A)  market price 
B)  deadweight loss 
C)  monopoly's economic profit 
D)  monopoly's normal profit 
A)  market price 
B)  deadweight loss 
C)  monopoly's economic profit 
D)  monopoly's normal profit

Question 5

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

Accepted Answer

A)  average cost pricing rule 
B)  rate of return regulation 
C)  price cap regulation 
D)  None of the above encourages cost cutting. 
A)  average cost pricing rule 
B)  rate of return regulation 
C)  price cap regulation 
D)  None of the above encourages cost cutting.

Question 6

-If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

Accepted Answer

A)  $2. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $2. 
B)  $4. 
C)  $5. 
D)  $6.

Question 7

-In the figure above, the single-price, unregulated monopoly sets a price of

Accepted Answer

A)  $80 per unit. 
B)  $60 per unit. 
C)  $40 per unit. 
D)  $0 per unit. 
A)  $80 per unit. 
B)  $60 per unit. 
C)  $40 per unit. 
D)  $0 per unit.

Question 8

Customers are most likely buying from a natural monopoly when they purchase

Accepted Answer

A)  aspirin from a generic drug company. 
B)  a laptop computer from Sony. 
C)  a glass of water from the local water company. 
D)  all of the above. 
A)  aspirin from a generic drug company. 
B)  a laptop computer from Sony. 
C)  a glass of water from the local water company. 
D)  all of the above.

Question 9

-Adele's Springs produces a unique mineral water. The firm faces the demand schedule shown in the first table above and has the cost schedule shown in the second table above.
a) Calculate Adele's marginal revenue schedule. In a figure, draw the demand curve and the marginal revenue curve.
b) Calculate Adele'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 Adele's profit-maximizing output and price? What is Adele's economic profit? Explain your answer.
d) Does Adele's Springs use resources efficiently? Explain your answer.

Accepted Answer

@#IMG-DLM& a) Adele's marginal revenue schedule is

Question 10

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will decrease production by

Accepted Answer

A)  zero. 
B)  2 units per day. 
C)  4 units per day. 
D)  6 units per day. 
A)  zero. 
B)  2 units per day. 
C)  4 units per day. 
D)  6 units per day.

Question 11

-The unregulated, single-price monopoly shown in the figure above makes a total economic profit of

Accepted Answer

A)  $24. 
B)  $16. 
C)  $8. 
D)  $4. 
A)  $24. 
B)  $16. 
C)  $8. 
D)  $4.

Question 12

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.

Accepted Answer

A)  $20 and 30,000 households are served 
B)  $40 and 40,000 households are served 
C)  $40 and 30,000 households are served 
D)  $60 and 20,000 households are served 
A)  $20 and 30,000 households are served 
B)  $40 and 40,000 households are served 
C)  $40 and 30,000 households are served 
D)  $60 and 20,000 households are served

Question 13

-The deadweight loss incurred when the market in the above figure is a single-price monopoly rather than perfectly competitive is the area

Accepted Answer

A)  cab. 
B)  fcd. 
C)  bed. 
D)  fae. 
A)  cab. 
B)  fcd. 
C)  bed. 
D)  fae.

Question 14

-Rate of return regulation is equivalent to

Accepted Answer

A)  average cost pricing rule. 
B)  marginal cost pricing rule. 
C)  maximizing consumer surplus. 
D)  maximizing producer surplus. 
A)  average cost pricing rule. 
B)  marginal cost pricing rule. 
C)  maximizing consumer surplus. 
D)  maximizing producer surplus.

Question 15

-For the single-price monopoly shown in the figure above, the deadweight loss is

Accepted Answer

A)  zero. 
B)  between $0 and $10. 
C)  between $10.01 and $20. 
D)  more than $20.01. 
A)  zero. 
B)  between $0 and $10. 
C)  between $10.01 and $20. 
D)  more than $20.01.

Question 16

-For the monopoly shown in the figure above, the economic profit is

Accepted Answer

A)  $0. 
B)  $10. 
C)  $40. 
D)  $100. 
A)  $0. 
B)  $10. 
C)  $40. 
D)  $100.

Question 17

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of ________, demand is ________.

Accepted Answer

A)  20; elastic 
B)  50; unit elastic 
C)  50; elastic 
D)  30; unit elastic 
A)  20; elastic 
B)  50; unit elastic 
C)  50; elastic 
D)  30; unit elastic

Question 18

A monopolist can make an economic profit in the long run because of

Accepted Answer

A)  the relatively elastic demand for its product. 
B)  the relatively inelastic demand for its product. 
C)  the firm's price setting behavior. 
D)  barriers to entry. 
A)  the relatively elastic demand for its product. 
B)  the relatively inelastic demand for its product. 
C)  the firm's price setting behavior. 
D)  barriers to entry.

Question 19

Which of the following is TRUE of a monopoly?

Accepted Answer

A)  It can always increase its revenue by increasing the price to its customers. 
B)  It will always operate somewhere along the inelastic portion of the demand curve. 
C)  Its marginal cost curve is always downward sloping. 
D)  None of the above is correct. 
A)  It can always increase its revenue by increasing the price to its customers. 
B)  It will always operate somewhere along the inelastic portion of the demand curve. 
C)  Its marginal cost curve is always downward sloping. 
D)  None of the above is correct.

Question 20

-If the natural monopoly shown in the figure above is unregulated, then consumer surplus will be

Accepted Answer

A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million. 
A)  $0. 
B)  $4 million. 
C)  $8 million. 
D)  $16 million.

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

Natural monopolies occur when there are

The maximum amount a rent seeker would pay for a monopoly is the ________.

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

-If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

-In the figure above, the single-price, unregulated monopoly sets a price of

Customers are most likely buying from a natural monopoly when they purchase

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will decrease production by

-The unregulated, single-price monopoly shown in the figure above makes a total economic profit of

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.

-The deadweight loss incurred when the market in the above figure is a single-price monopoly rather than perfectly competitive is the area

-Rate of return regulation is equivalent to

-For the single-price monopoly shown in the figure above, the deadweight loss is

-For the monopoly shown in the figure above, the economic profit is

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of , demand is .

A monopolist can make an economic profit in the long run because of

Which of the following is TRUE of a monopoly?

-If the natural monopoly shown in the figure above is unregulated, then consumer surplus will be

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

-To maximize its profit, the monopoly with the TR and TC curves shown in the figure above will produce

-Consider the monopolist depicted in the figure above. When it maximizes its profit, a single-price monopolist sets a price of ________ per unit.

Natural monopolies occur when there are

The maximum amount a rent seeker would pay for a monopoly is the ________.

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

-If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

-In the figure above, the single-price, unregulated monopoly sets a price of

Customers are most likely buying from a natural monopoly when they purchase

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will decrease production by

-The unregulated, single-price monopoly shown in the figure above makes a total economic profit of

-Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.

-The deadweight loss incurred when the market in the above figure is a single-price monopoly rather than perfectly competitive is the area

-Rate of return regulation is equivalent to

-For the single-price monopoly shown in the figure above, the deadweight loss is

-For the monopoly shown in the figure above, the economic profit is

-The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of ________, demand is ________.

A monopolist can make an economic profit in the long run because of

Which of the following is TRUE of a monopoly?

-If the natural monopoly shown in the figure above is unregulated, then consumer surplus will be

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 cost, demand, and marginal revenue curves for a monopoly. At an output level of , demand is .