Question 1

Compared to a single-price monopoly, the price charged by a perfectly competitive market with the same costs

Accepted Answer

A)  is higher than the monopoly's price. 
B)  is the same as the monopoly's price. 
C)  is lower than the monopoly's price. 
D)  could be higher than, lower than, or the same as the monopoly's price. 
A)  is higher than the monopoly's price. 
B)  is the same as the monopoly's price. 
C)  is lower than the monopoly's price. 
D)  could be higher than, lower than, or the same as the monopoly's price.

Question 2

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

Accepted Answer

A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss 
A)  makes an economic profit; a deadweight loss 
B)  makes zero economic profit; no deadweight loss 
C)  makes zero economic profit; a deadweight loss. 
D)  incurs an economic loss; no deadweight loss

Question 3

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $24.00 per day. 
D)  $36.00 per day.

Question 4

-In the above figure, if the natural monopoly is not regulated then consumer surplus is

Accepted Answer

A)  $48 million. 
B)  $60 million. 
C)  $108 million. 
D)  $192 million. 
A)  $48 million. 
B)  $60 million. 
C)  $108 million. 
D)  $192 million.

Question 5

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

Accepted Answer

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

Question 6

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

Accepted Answer

A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit. 
A)  $5 per unit. 
B)  $25 per unit. 
C)  $15 per unit. 
D)  $20 per unit.

Question 7

"Because of rent seeking, a monopoly may end up making zero economic profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct. Competition am

Question 8

Demand Schedule Facing aPerfectly Price Discriminating Firm  
-Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $6.

Question 9

One difference between perfectly competitive markets and single-price monopoly markets is that

Accepted Answer

A)  marginal revenue equals marginal cost for perfectly competitive firms, but not for monopolists. 
B)  marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists. 
C)  marginal cost equals average variable cost for perfectly competitive firms but not for monopolists. 
D)  All the above answers are correct. 
A)  marginal revenue equals marginal cost for perfectly competitive firms, but not for monopolists. 
B)  marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists. 
C)  marginal cost equals average variable cost for perfectly competitive firms but not for monopolists. 
D)  All the above answers are correct.

Question 10

Demand Schedule Facing aPerfectly Price Discriminating Firm  
-Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price discriminating monopolist is

Accepted Answer

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

Question 11

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the consumer surplus will be

Accepted Answer

A)  $0. 
B)  $8 million. 
C)  $16 million. 
D)  $32 million. 
A)  $0. 
B)  $8 million. 
C)  $16 million. 
D)  $32 million.

Question 12

-Prime Pharmaceuticals has developed a new asthma medicine, for which it has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if Prime Pharmaceuticals could perfectly price discriminate, then producer surplus would equal

Accepted Answer

A)  $64 million. 
B)  $16 million. 
C)  $32 million. 
D)  zero. 
A)  $64 million. 
B)  $16 million. 
C)  $32 million. 
D)  zero.

Question 13

The use of a two-part price in a regulated natural monopoly

Accepted Answer

A)  maximizes the deadweight loss. 
B)  allows the firm to maximize profits. 
C)  may make it possible for the firm to obey a marginal cost pricing rule and not go out of business. 
D)  All of the above answers are correct. 
A)  maximizes the deadweight loss. 
B)  allows the firm to maximize profits. 
C)  may make it possible for the firm to obey a marginal cost pricing rule and not go out of business. 
D)  All of the above answers are correct.

Question 14

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator of Bigshow Cable Company set its price at $4, the company would

Accepted Answer

A)  receive a producer surplus equal to $18 million. 
B)  make zero economic profit. 
C)  incur an economic loss of $7 million. 
D)  none of the above. 
A)  receive a producer surplus equal to $18 million. 
B)  make zero economic profit. 
C)  incur an economic loss of $7 million. 
D)  none of the above.

Question 15

-The figure shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly and charges one price to all customers, then the consumer surplus is ________.

Accepted Answer

A)  $400 
B)  $900 
C)  $0 
D)  $200 
A)  $400 
B)  $900 
C)  $0 
D)  $200

Question 16

A natural monopoly that is regulated to set its price according to the marginal cost pricing rule will

Accepted Answer

A)  incur an economic loss. 
B)  maximize its profit. 
C)  produce a quantity of output such that price is above average total cost. 
D)  produce a quantity of output such that marginal cost is above average total cost. 
A)  incur an economic loss. 
B)  maximize its profit. 
C)  produce a quantity of output such that price is above average total cost. 
D)  produce a quantity of output such that marginal cost is above average total cost.

Question 17

-In the above figure, a single-price monopolist charges a price of ________ and the equilibrium competitive price is ________.

Accepted Answer

A)  $10; $20 
B)  $20; $30 
C)  $30; $20 
D)  $30; $10 
A)  $10; $20 
B)  $20; $30 
C)  $30; $20 
D)  $30; $10

Question 18

What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?

Accepted Answer

A)  No deadweight loss is eliminated. 
B)  The firm will incur an economic loss. 
C)  The gain in consumer surplus will be less than the loss in producer surplus, thus creating additional deadweight loss. 
D)  None of the above answers is correct. 
A)  No deadweight loss is eliminated. 
B)  The firm will incur an economic loss. 
C)  The gain in consumer surplus will be less than the loss in producer surplus, thus creating additional deadweight loss. 
D)  None of the above answers is correct.

Question 19

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation.

Accepted Answer

Marginal cost pricing: The regulated pri

Question 20

In a regulated natural monopoly, a marginal cost pricing rule maximizes

Accepted Answer

A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus. 
A)  total costs. 
B)  producer surplus. 
C)  economic profit. 
D)  total surplus.

Compared to a single-price monopoly, the price charged by a perfectly competitive market with the same costs

Under an average cost pricing rule, a regulated natural monopoly and there is .

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

-In the above figure, if the natural monopoly is not regulated then consumer surplus is

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

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

"Because of rent seeking, a monopoly may end up making zero economic profit." Is the previous statement correct or incorrect? Why?

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is

One difference between perfectly competitive markets and single-price monopoly markets is that

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price discriminating monopolist is

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the consumer surplus will be

The use of a two-part price in a regulated natural monopoly

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator of Bigshow Cable Company set its price at $4, the company would

-The figure shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly and charges one price to all customers, then the consumer surplus is ________.

A natural monopoly that is regulated to set its price according to the marginal cost pricing rule will

-In the above figure, a single-price monopolist charges a price of and the equilibrium competitive price is .

What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation.

In a regulated natural monopoly, a marginal cost pricing rule maximizes

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

Compared to a single-price monopoly, the price charged by a perfectly competitive market with the same costs

Under an average cost pricing rule, a regulated natural monopoly ________ and there is ________.

-In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is

-In the above figure, if the natural monopoly is not regulated then consumer surplus is

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

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

"Because of rent seeking, a monopoly may end up making zero economic profit." Is the previous statement correct or incorrect? Why?

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is

One difference between perfectly competitive markets and single-price monopoly markets is that

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price discriminating monopolist is

-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the consumer surplus will be

The use of a two-part price in a regulated natural monopoly

-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator of Bigshow Cable Company set its price at $4, the company would

-The figure shows the demand for and costs of producing Charlene's Chocolates. If Charlene's Chocolates is a monopoly and charges one price to all customers, then the consumer surplus is ________.

A natural monopoly that is regulated to set its price according to the marginal cost pricing rule will

-In the above figure, a single-price monopolist charges a price of ________ and the equilibrium competitive price is ________.

What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation.

In a regulated natural monopoly, a marginal cost pricing rule maximizes

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

Under an average cost pricing rule, a regulated natural monopoly and there is .

-In the above figure, a single-price monopolist charges a price of and the equilibrium competitive price is .