Question 1

-In the above figure, if the market was a single-price monopoly rather than perfectly competitive, which area shows the transfer of consumer surplus from consumers to producers?

Accepted Answer

A)  A + B 
B)  C + D 
C)  C + D + E 
D)  E + H 
A)  A + B 
B)  C + D 
C)  C + D + E 
D)  E + H

Question 2

Define price discrimination. What factors must be present in order for a monopolist to price discriminate? Why do firms price discriminate?

Accepted Answer

Price discrimination is selling a good o

Question 3

The social interest theory of regulation assumes that

Accepted Answer

A)  regulations favor voters over producers. 
B)  regulations promote the attainment of competitive output. 
C)  public officials seek to keep their jobs. 
D)  public officials favor consumers over producers. 
A)  regulations favor voters over producers. 
B)  regulations promote the attainment of competitive output. 
C)  public officials seek to keep their jobs. 
D)  public officials favor consumers over producers.

Question 4

"Price discrimination allows a monopolist to increase his or her economic profits by capturing part of the consumer surplus and turning it into economic profit." Is the previous statement correct or incorrect? If the statement is correct, why is it important in understanding firms' behaviors? If it is incorrect, why is it incorrect?

Accepted Answer

The statement is correct. The statement

Question 5

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

Accepted Answer

A)  Price will decrease and quantity will increase. 
B)  Price will increase and quantity will decrease. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease. 
A)  Price will decrease and quantity will increase. 
B)  Price will increase and quantity will decrease. 
C)  Both price and quantity will increase. 
D)  Both price and quantity will decrease.

Question 6

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

Accepted Answer

Both types of firms maximize profits by

Question 7

Today, you might be buying from a regulated natural monopoly when you purchase

Accepted Answer

A)  a car, a truck, or a bicycle. 
B)  a computer, a phone, or a camera. 
C)  natural gas or electricity. 
D)  a house, a condominium, or a plot of land. 
A)  a car, a truck, or a bicycle. 
B)  a computer, a phone, or a camera. 
C)  natural gas or electricity. 
D)  a house, a condominium, or a plot of land.

Question 8

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

Accepted Answer

In regulating a natural monopoly, a pric

Question 9

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

Accepted Answer

A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00 
A)  zero 
B)  $5.00 
C)  $17.50 
D)  $50.00

Question 10

-The firm shown in the figure above is

Accepted Answer

A)  a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
B)  not a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
C)  not a natural monopoly because its MC curve is horizontal. 
D)  not a natural monopoly because its MC curve is below its LRAC curve. 
A)  a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
B)  not a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve. 
C)  not a natural monopoly because its MC curve is horizontal. 
D)  not a natural monopoly because its MC curve is below its LRAC curve.

Question 11

A public franchise is

Accepted Answer

A)  an exclusive right granted to a firm to supply a good or service. 
B)  a government issued license required to practice a profession. 
C)  an exclusive right granted to an inventor of a product. 
D)  a unique source of raw materials. 
A)  an exclusive right granted to a firm to supply a good or service. 
B)  a government issued license required to practice a profession. 
C)  an exclusive right granted to an inventor of a product. 
D)  a unique source of raw materials.

Question 12

-In the figure above, the elasticity of demand facing the monopoly equals one when it produces ________ units of output.

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 13

What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?

Accepted Answer

Marginal cost equals

Question 14

If the regulator wants to avoid any deadweight loss in a natural monopoly market, the regulator has the firm set its price equal to its

Accepted Answer

A)  average fixed cost. 
B)  average total cost. 
C)  average variable cost. 
D)  marginal cost. 
A)  average fixed cost. 
B)  average total cost. 
C)  average variable cost. 
D)  marginal cost.

Question 15

-The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point r, the monopoly's

Accepted Answer

A)  total revenue will rise. 
B)  total revenue will fall. 
C)  total revenue will remain the same. 
D)  marginal revenue will decrease. 
A)  total revenue will rise. 
B)  total revenue will fall. 
C)  total revenue will remain the same. 
D)  marginal revenue will decrease.

Question 16

What does the deadweight loss from monopoly measure?

Accepted Answer

The deadweight loss from monopoly measur

Question 17

Price cap regulation is a type of regulation that

Accepted Answer

A)  offers price subsidies to firms that comply with regulation guidelines. 
B)  is equivalent to rate of return. 
C)  sets the maximum price the firm can charge. 
D)  sets the minimum price the firm can charge. 
A)  offers price subsidies to firms that comply with regulation guidelines. 
B)  is equivalent to rate of return. 
C)  sets the maximum price the firm can charge. 
D)  sets the minimum price the firm can charge.

Question 18

The capture theory of regulation implies that

Accepted Answer

A)  regulations promote the attainment of efficiency. 
B)  regulations promote the attainment of economic profit. 
C)  public officials favor voters over producers. 
D)  the demand for regulation is less elastic than the supply. 
A)  regulations promote the attainment of efficiency. 
B)  regulations promote the attainment of economic profit. 
C)  public officials favor voters over producers. 
D)  the demand for regulation is less elastic than the supply.

Question 19

Which of the following is TRUE for a perfect price-discriminating monopoly?

Accepted Answer

A)  P = MR for each unit sold 
B)  P = ATC for each unit sold 
C)  P = MC for each unit sold 
D)  P > MC for each unit sold 
A)  P = MR for each unit sold 
B)  P = ATC for each unit sold 
C)  P = MC for each unit sold 
D)  P > MC for each unit sold

Question 20

Which of the following is a characteristic of monopoly in the long run?

Accepted Answer

A)  The firm makes zero economic profit. 
B)  The firm can make an economic profit. 
C)  Price equals marginal cost. 
D)  Price equals marginal revenue. 
A)  The firm makes zero economic profit. 
B)  The firm can make an economic profit. 
C)  Price equals marginal cost. 
D)  Price equals marginal revenue.

-In the above figure, if the market was a single-price monopoly rather than perfectly competitive, which area shows the transfer of consumer surplus from consumers to producers?

Define price discrimination. What factors must be present in order for a monopolist to price discriminate? Why do firms price discriminate?

The social interest theory of regulation assumes that

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

Today, you might be buying from a regulated natural monopoly when you purchase

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

-The firm shown in the figure above is

A public franchise is

-In the figure above, the elasticity of demand facing the monopoly equals one when it produces ________ units of output.

What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?

If the regulator wants to avoid any deadweight loss in a natural monopoly market, the regulator has the firm set its price equal to its

-The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point r, the monopoly's

What does the deadweight loss from monopoly measure?

Price cap regulation is a type of regulation that

The capture theory of regulation implies that

Which of the following is TRUE for a perfect price-discriminating monopoly?

Which of the following is a characteristic of monopoly in the long run?

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

-In the above figure, if the market was a single-price monopoly rather than perfectly competitive, which area shows the transfer of consumer surplus from consumers to producers?

Define price discrimination. What factors must be present in order for a monopolist to price discriminate? Why do firms price discriminate?

The social interest theory of regulation assumes that

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

Why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?

Today, you might be buying from a regulated natural monopoly when you purchase

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

-The firm shown in the figure above is

A public franchise is

-In the figure above, the elasticity of demand facing the monopoly equals one when it produces ________ units of output.

What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?

If the regulator wants to avoid any deadweight loss in a natural monopoly market, the regulator has the firm set its price equal to its

-The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point r, the monopoly's

What does the deadweight loss from monopoly measure?

Price cap regulation is a type of regulation that

The capture theory of regulation implies that

Which of the following is TRUE for a perfect price-discriminating monopoly?

Which of the following is a characteristic of monopoly in the long run?

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