Question 1

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

Accepted Answer

A)  does not face fixed costs in the short run. 
B)  has a marginal revenue curve that lies below its demand curve. 
C)  has no marginal cost curve. 
D)  faces a perfectly elastic demand for its product. 
A)  does not face fixed costs in the short run. 
B)  has a marginal revenue curve that lies below its demand curve. 
C)  has no marginal cost curve. 
D)  faces a perfectly elastic demand for its product.

Question 2

Which of the following is necessary for a monopolist to price discriminate between groups?

Accepted Answer

A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate. 
A)  The groups are identifiable. 
B)  The groups have different willingness to pay. 
C)  A customer from one group cannot resell to a customer in another group. 
D)  All of the above conditions are necessary for the monopolist to price discriminate.

Question 3

-West Coast Gas, Inc., is a natural gas supplier. The firm faces the demand schedule shown in the table above and cannot price discriminate. The company's fixed cost is $1,000 per month and its marginal cost is constant at $10 per thousand of cubic feet.
a) Draw the demand curve faced by West Coast Gas and the marginal revenue curve. Draw the company's marginal cost and average cost curves.
b) Is West Coast Gas a natural monopoly? Why or why not?
c) What are the firm's profit-maximizing output and price? What is the firm's economic profit per month?
d) If West Coast Gas maximizes its profit, does it also maximize total surplus? Why or why not? What is the deadweight loss (if any)?

Accepted Answer

@#IMG-DLM& a) The figure above shows the demand cu

Question 4

Patents encourage invention by

Accepted Answer

A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  allowing patent owners to make an economic profit. 
D)  preventing inventors from working on the same project. 
A)  offering subsidies to inventors. 
B)  offering tax breaks to inventors. 
C)  allowing patent owners to make an economic profit. 
D)  preventing inventors from working on the same project.

Question 5

-We know that the firm shown in the figure above is a natural monopoly because as output increases, the

Accepted Answer

A)  marginal cost is constant. 
B)  demand curve slopes downward. 
C)  marginal revenue curve lies below its demand curve. 
D)  average total cost decreases so that the firm can supply the market at lower cost than two firms. 
A)  marginal cost is constant. 
B)  demand curve slopes downward. 
C)  marginal revenue curve lies below its demand curve. 
D)  average total cost decreases so that the firm can supply the market at lower cost than two firms.

Question 6

-Rate of return regulation is most similar to

Accepted Answer

A)  a marginal cost pricing rule. 
B)  an average cost pricing rule. 
C)  an average variable cost pricing rule. 
D)  an inflation cost pricing rule. 
A)  a marginal cost pricing rule. 
B)  an average cost pricing rule. 
C)  an average variable cost pricing rule. 
D)  an inflation cost pricing rule.

Question 7

All of the following are examples of price discrimination EXCEPT

Accepted Answer

A)  buy-one-get-one-free offers. 
B)  "early bird specials" at a restaurant. 
C)  lower ticket prices for matinee performances. 
D)  "buy now, pay later" payment options. 
A)  buy-one-get-one-free offers. 
B)  "early bird specials" at a restaurant. 
C)  lower ticket prices for matinee performances. 
D)  "buy now, pay later" payment options.

Question 8

-The figure above shows a monopoly firm's demand curve. The monopoly's total revenue is at its maximum when the firm produces at point

Accepted Answer

A)  x. 
B)  r. 
C)  t. 
D)  u. 
A)  x. 
B)  r. 
C)  t. 
D)  u.

Question 9

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Accepted Answer

A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units. 
A)  0 units. 
B)  20 units. 
C)  40 units. 
D)  60 units.

Question 10

Price discrimination

Accepted Answer

A)  is common in perfectly competitive markets. 
B)  is more likely for services than for goods that can be stored and resold. 
C)  is illegal because it always violates antitrust laws. 
D)  works only if all groups of demanders have the same price elasticity of demand for the product. 
A)  is common in perfectly competitive markets. 
B)  is more likely for services than for goods that can be stored and resold. 
C)  is illegal because it always violates antitrust laws. 
D)  works only if all groups of demanders have the same price elasticity of demand for the product.

Question 11

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

Accepted Answer

A)  generally involves the use of price caps. 
B)  gives the firms an incentive to inflate their costs. 
C)  gives the firms an incentive to cut their costs as much as possible. 
D)  generally keeps their prices higher than if they were unregulated monopolists. 
A)  generally involves the use of price caps. 
B)  gives the firms an incentive to inflate their costs. 
C)  gives the firms an incentive to cut their costs as much as possible. 
D)  generally keeps their prices higher than if they were unregulated monopolists.

Question 12

Compared to a single-price monopolist, a price-discriminating monopolist

Accepted Answer

A)  produces more output. 
B)  produces the same amount of output but charges a higher price. 
C)  generates a larger deadweight loss. 
D)  produces less output but charges a lower price. 
A)  produces more output. 
B)  produces the same amount of output but charges a higher price. 
C)  generates a larger deadweight loss. 
D)  produces less output but charges a lower price.

Question 13

What are the conditions that define a monopoly?

Accepted Answer

There is only one firm produci

Question 14

Which of the following is an example of natural monopoly?

Accepted Answer

A)  cellular phone companies in a large city 
B)  local water utility companies 
C)  major league sports franchises in the largest cities 
D)  All of the above are natural monopolies. 
A)  cellular phone companies in a large city 
B)  local water utility companies 
C)  major league sports franchises in the largest cities 
D)  All of the above are natural monopolies.

Question 15

For a single-price monopolist, price is ________ marginal revenue.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  less than or equal to but never more than 
A)  less than 
B)  greater than 
C)  equal to 
D)  less than or equal to but never more than

Question 16

-The above figure illustrates the market for electric power that is served by the one utility in Alberta, Canada.
a) If the government did not regulate this utility, what would be the price of a kilowatt hour in this region and how much power would be generated?
b) If the government regulates the utility and chooses an average cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?
c) If the government regulates the utility and chooses a marginal cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?

Accepted Answer

a) The price would be 12¢ a kilowatt hou

Question 17

Which of the following is NOT a legal barrier to entry?

Accepted Answer

A)  public franchise 
B)  government license 
C)  patent 
D)  innovation 
A)  public franchise 
B)  government license 
C)  patent 
D)  innovation

Question 18

In the case of a perfectly price-discriminating monopoly, there is no

Accepted Answer

A)  transfer of consumer surplus to the producer. 
B)  deadweight loss. 
C)  short-run economic profit. 
D)  long-run economic profit. 
A)  transfer of consumer surplus to the producer. 
B)  deadweight loss. 
C)  short-run economic profit. 
D)  long-run economic profit.

Question 19

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is zero if it produces

Accepted Answer

A)  0 units of output. 
B)  5 or 20 units of output. 
C)  15 units of output. 
D)  none of the above 
A)  0 units of output. 
B)  5 or 20 units of output. 
C)  15 units of output. 
D)  none of the above

Question 20

A perfect price discriminating monopoly produces the same quantity of output as a ________.

Accepted Answer

A)  single-price monopoly but charges a higher price 
B)  perfectly competitive market 
C)  perfectly competitive firm 
D)  perfectly competitive market but charges a lower price 
A)  single-price monopoly but charges a higher price 
B)  perfectly competitive market 
C)  perfectly competitive firm 
D)  perfectly competitive market but charges a lower price

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

Which of the following is necessary for a monopolist to price discriminate between groups?

Patents encourage invention by

-We know that the firm shown in the figure above is a natural monopoly because as output increases, the

-Rate of return regulation is most similar to

All of the following are examples of price discrimination EXCEPT

-The figure above shows a monopoly firm's demand curve. The monopoly's total revenue is at its maximum when the firm produces at point

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Price discrimination

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

Compared to a single-price monopolist, a price-discriminating monopolist

What are the conditions that define a monopoly?

Which of the following is an example of natural monopoly?

For a single-price monopolist, price is ________ marginal revenue.

Which of the following is NOT a legal barrier to entry?

In the case of a perfectly price-discriminating monopoly, there is no

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is zero if it produces

A perfect price discriminating monopoly produces the same quantity of output as a ________.

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

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

Which of the following is necessary for a monopolist to price discriminate between groups?

Patents encourage invention by

-We know that the firm shown in the figure above is a natural monopoly because as output increases, the

-Rate of return regulation is most similar to

All of the following are examples of price discrimination EXCEPT

-The figure above shows a monopoly firm's demand curve. The monopoly's total revenue is at its maximum when the firm produces at point

-The table above shows the demand and costs for a single-price monopolist. The firm can maximize its profit by selling

Price discrimination

Rate of return regulation, as currently applied to many natural monopolies such as public utilities,

Compared to a single-price monopolist, a price-discriminating monopolist

What are the conditions that define a monopoly?

Which of the following is an example of natural monopoly?

For a single-price monopolist, price is ________ marginal revenue.

Which of the following is NOT a legal barrier to entry?

In the case of a perfectly price-discriminating monopoly, there is no

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is zero if it produces

A perfect price discriminating monopoly produces the same quantity of output as a ________.

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