Question 1

Which of the following is not necessarily true for a profit-maximizing single-price monopolist?

Accepted Answer

A)  P > ATC 
B)  P > MC 
C)  P > MR 
D)  MR = MC 
A)  P > ATC 
B)  P > MC 
C)  P > MR 
D)  MR = MC

Question 2

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

Accepted Answer

A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms. 
A)  an economic profit for the firm. 
B)  zero economic profit for the firm. 
C)  an economic loss for the firm. 
D)  an accounting loss for the firms.

Question 3

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

Accepted Answer

A)  rectangle 0heb. 
B)  triangle abe. 
C)  triangle eig. 
D)  rectangle 0hgd. 
A)  rectangle 0heb. 
B)  triangle abe. 
C)  triangle eig. 
D)  rectangle 0hgd.

Question 4

Under a marginal cost pricing rule, a regulated natural monopoly

Accepted Answer

A)  makes a positive economic profit and there is a deadweight loss. 
B)  makes zero economic profit and there is no deadweight loss. 
C)  incurs an economic loss and there is a deadweight loss. 
D)  incurs an economic loss and there is no deadweight loss. 
A)  makes a positive economic profit and there is a deadweight loss. 
B)  makes zero economic profit and there is no deadweight loss. 
C)  incurs an economic loss and there is a deadweight loss. 
D)  incurs an economic loss and there is no deadweight loss.

Question 5

-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 is the amount of economic profit made or loss incurred at the quantity of TV repairs that profits are maximized or losses minimized?

Accepted Answer

A)  -$400 
B)  $800 
C)  -$100 
D)  $200 
A)  -$400 
B)  $800 
C)  -$100 
D)  $200

Question 6

Which of the following is TRUE about a perfect price discriminating monopolist?

Accepted Answer

A)  Price is greater than marginal revenue. 
B)  Price always exceeds marginal cost. 
C)  The firm makes zero economic profit. 
D)  The firm produces the efficient level of output. 
A)  Price is greater than marginal revenue. 
B)  Price always exceeds marginal cost. 
C)  The firm makes zero economic profit. 
D)  The firm produces the efficient level of output.

Question 7

The primary reason why a monopoly can make a long-run economic profit is the existence of

Accepted Answer

A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers. 
A)  barriers to entry. 
B)  inelastic demand. 
C)  price discrimination. 
D)  many buyers.

Question 8

Buying a monopoly from the existing owner does not ensure an economic profit because

Accepted Answer

A)  the market for monopolies is a monopoly. 
B)  competition among buyers drives up the cost of buying the firm. 
C)  profits equal zero in the long run anyway. 
D)  of the deadweight loss triangle. 
A)  the market for monopolies is a monopoly. 
B)  competition among buyers drives up the cost of buying the firm. 
C)  profits equal zero in the long run anyway. 
D)  of the deadweight loss triangle.

Question 9

-The firm shown in the figure above is

Accepted Answer

A)  a natural monopoly. 
B)  a monopoly, but not a natural monopoly. 
C)  perfectly competitive. 
D)  naturally competitive. 
A)  a natural monopoly. 
B)  a monopoly, but not a natural monopoly. 
C)  perfectly competitive. 
D)  naturally competitive.

Question 10

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

Accepted Answer

A)  area FHIL 
B)  area GHJM 
C)  area IJH 
D)  area LJK 
A)  area FHIL 
B)  area GHJM 
C)  area IJH 
D)  area LJK

Question 11

A natural monopoly occurs when

Accepted Answer

A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus. 
A)  one firm owns all the vital resources needed to produce a particular good. 
B)  economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a few firms collude to act as a single firm. 
D)  one firm captures all the consumer surplus.

Question 12

Which of the following statements is TRUE?

Accepted Answer

A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit. 
A)  All monopolists are perfect price discriminators. 
B)  All monopolists earn short-run economic profits. 
C)  A monopolist will leave the market if it incurs an economic loss in the long run. 
D)  A monopolist does not need barriers to entry to sustain a long-run economic profit.

Question 13

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________.

Accepted Answer

A)  shutting down 
B)  lowering its price and increasing its output 
C)  raising its price and decreasing its output 
D)  lowering its price and decreasing its output 
A)  shutting down 
B)  lowering its price and increasing its output 
C)  raising its price and decreasing its output 
D)  lowering its price and decreasing its output

Question 14

The value of resources devoted to rent seeking will

Accepted Answer

A)  at most equal the monopoly's economic profit. 
B)  reduce deadweight loss. 
C)  reduce consumer surplus. 
D)  raise output to an efficient level. 
A)  at most equal the monopoly's economic profit. 
B)  reduce deadweight loss. 
C)  reduce consumer surplus. 
D)  raise output to an efficient level.

Question 15

-If a marginal 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 16

Rent seeking is best defined as attempts

Accepted Answer

A)  by landlords to get tenants. 
B)  to achieve monopoly power and the resulting economic profit. 
C)  by individuals to avoid paying taxes. 
D)  by owners of a monopoly to sell the firm. 
A)  by landlords to get tenants. 
B)  to achieve monopoly power and the resulting economic profit. 
C)  by individuals to avoid paying taxes. 
D)  by owners of a monopoly to sell the firm.

Question 17

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

Accepted Answer

A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct. 
A)  15; $20 
B)  10; $20 
C)  10; $30 
D)  None of the above answers is correct.

Question 18

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be

Accepted Answer

A)  $0. 
B)  $22.50. 
C)  $90.00. 
D)  $250.00. 
A)  $0. 
B)  $22.50. 
C)  $90.00. 
D)  $250.00.

Question 19

-In the above figure, if a single-price monopolist maximized its profit, the deadweight loss in the market is equal to the area

Accepted Answer

A)  ace. 
B)  acg. 
C)  ecg. 
D)  bch. 
A)  ace. 
B)  acg. 
C)  ecg. 
D)  bch.

Question 20

A single-price monopolist produces a ________ quantity than a perfectly competitive market with the same costs and charges a ________ price than the perfectly competitive market.

Accepted Answer

A)  greater; higher 
B)  greater; lower 
C)  lesser; lower 
D)  lesser; higher 
A)  greater; higher 
B)  greater; lower 
C)  lesser; lower 
D)  lesser; higher

Which of the following is not necessarily true for a profit-maximizing single-price monopolist?

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

Under a marginal cost pricing rule, a regulated natural 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 is the amount of economic profit made or loss incurred at the quantity of TV repairs that profits are maximized or losses minimized?

Which of the following is TRUE about a perfect price discriminating monopolist?

The primary reason why a monopoly can make a long-run economic profit is the existence of

Buying a monopoly from the existing owner does not ensure an economic profit because

-The firm shown in the figure above is

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

A natural monopoly occurs when

Which of the following statements is TRUE?

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________.

The value of resources devoted to rent seeking will

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

Rent seeking is best defined as attempts

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce units and set a price of per unit.

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be

-In the above figure, if a single-price monopolist maximized its profit, the deadweight loss in the market is equal to the area

A single-price monopolist produces a quantity than a perfectly competitive market with the same costs and charges a price than the perfectly competitive market.

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

Which of the following is not necessarily true for a profit-maximizing single-price monopolist?

If the regulator require a natural monopoly set its price equal to its marginal cost, that would ensure

-In the figure above, consumer surplus at the price that maximizes the profit for an unregulated, single-price monopolist is the area of

Under a marginal cost pricing rule, a regulated natural 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 is the amount of economic profit made or loss incurred at the quantity of TV repairs that profits are maximized or losses minimized?

Which of the following is TRUE about a perfect price discriminating monopolist?

The primary reason why a monopoly can make a long-run economic profit is the existence of

Buying a monopoly from the existing owner does not ensure an economic profit because

-The firm shown in the figure above is

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the deadweight loss?

A natural monopoly occurs when

Which of the following statements is TRUE?

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________.

The value of resources devoted to rent seeking will

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

Rent seeking is best defined as attempts

-The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit.

-If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be

-In the above figure, if a single-price monopolist maximized its profit, the deadweight loss in the market is equal to the area

A single-price monopolist produces a ________ quantity than a perfectly competitive market with the same costs and charges a ________ price than the perfectly competitive market.

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 demand and cost curves for a single-price monopoly. The firm will produce units and set a price of per unit.

A single-price monopolist produces a quantity than a perfectly competitive market with the same costs and charges a price than the perfectly competitive market.