Question 1

Competition keeps prices lower for consumers. So why do we have patent laws?

Accepted Answer

Patent laws are necessary to promote inn

Question 2

-Roxie's Movie Theatre has a monopoly and discovers that at $12 a movie, no one is buying movie tickets during weekdays. Roxie's conducts a survey and the table above reveals the results of the survey. Roxie decides to price discriminate between weekend and weekday moviegoers. The marginal cost of a showing a movie is $6. Roxie's charges ________ on weekdays and ________ on weekends.

Accepted Answer

A)  $9; $12 
B)  $6; $15 
C)  $6; $18 
D)  $3; $12 
A)  $9; $12 
B)  $6; $15 
C)  $6; $18 
D)  $3; $12

Question 3

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

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 4

If the demand for its product is inelastic, a monopoly's

Accepted Answer

A)  total revenue increases when the firm lowers its price. 
B)  total revenue is unchanged when the firm lowers its price. 
C)  marginal revenue is negative. 
D)  marginal revenue is equal to zero. 
A)  total revenue increases when the firm lowers its price. 
B)  total revenue is unchanged when the firm lowers its price. 
C)  marginal revenue is negative. 
D)  marginal revenue is equal to zero.

Question 5

A major difference between a single-price monopolist and a perfectly competitive firm is that the

Accepted Answer

A)  monopolist can maximize profit by setting the price of the output where demand is inelastic. 
B)  monopolist can always increase its profits by increasing the price of its output. 
C)  monopolist's marginal revenue is less than price. 
D)  monopolist is guaranteed to earn an economic profit. 
A)  monopolist can maximize profit by setting the price of the output where demand is inelastic. 
B)  monopolist can always increase its profits by increasing the price of its output. 
C)  monopolist's marginal revenue is less than price. 
D)  monopolist is guaranteed to earn an economic profit.

Question 6

How does marginal revenue compare to price for a single-price monopoly?

Accepted Answer

Marginal r

Question 7

-If the industry in the above figure was perfectly competitive, the level of output would

Accepted Answer

A)  be less than the single-price monopoly level of output. 
B)  be the same as the single-price monopoly level of output. 
C)  exceed the single-price monopoly level of output by 20 units per day. 
D)  exceed the single-price monopoly level of output by 60 units per day. 
A)  be less than the single-price monopoly level of output. 
B)  be the same as the single-price monopoly level of output. 
C)  exceed the single-price monopoly level of output by 20 units per day. 
D)  exceed the single-price monopoly level of output by 60 units per day.

Question 8

-In the above figure, what price will a single-price monopoly set?

Accepted Answer

A)  P1 
B)  P2 
C)  P4 
D)  P5 
A)  P1 
B)  P2 
C)  P4 
D)  P5

Question 9

Why do some utilities have an incentive to exaggerate their costs of production?

Accepted Answer

Because utilities are generally allowed

Question 10

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

Accepted Answer

A) True 
 B)False

Question 11

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. What do you predict will happen to efficiency in the market for satellite radio?

Accepted Answer

A)  Deadweight loss will increase when an industry moves from competition to monopoly. 
B)  Consumer surplus will increase when an industry moves from competition to monopoly. 
C)  Producer surplus will decrease when an industry moves from competition to monopoly. 
D)  Total surplus will increase when an industry moves from competition to monopoly. 
A)  Deadweight loss will increase when an industry moves from competition to monopoly. 
B)  Consumer surplus will increase when an industry moves from competition to monopoly. 
C)  Producer surplus will decrease when an industry moves from competition to monopoly. 
D)  Total surplus will increase when an industry moves from competition to monopoly.

Question 12

-If an average cost pricing rule is imposed on the firm in the figure above, the firm will make an economic profit of

Accepted Answer

A)  zero. 
B)  -$240. 
C)  $150. 
D)  $400. 
A)  zero. 
B)  -$240. 
C)  $150. 
D)  $400.

Question 13

-If a monopolist can perfectly price discriminate, it will

Accepted Answer

A)  charge the same price for each unit sold. 
B)  produce until price elasticity of demand equals one. 
C)  not be concerned with the market demand. 
D)  charge a different price for every unit sold. 
A)  charge the same price for each unit sold. 
B)  produce until price elasticity of demand equals one. 
C)  not be concerned with the market demand. 
D)  charge a different price for every unit sold.

Question 14

-In the above figure, for a single-price monopolist producing at its profit-maximizing equilibrium price and quantity, the price elasticity of demand at this equilibrium will be

Accepted Answer

A)  greater than 1 and the monopolist's total revenue is maximized. 
B)  less than 1 and the monopolist's economic profit could be larger. 
C)  equal to 1 and the monopolist's total revenue is maximized. 
D)  greater than 1 and the economic profit is maximized but the total revenue is not. 
A)  greater than 1 and the monopolist's total revenue is maximized. 
B)  less than 1 and the monopolist's economic profit could be larger. 
C)  equal to 1 and the monopolist's total revenue is maximized. 
D)  greater than 1 and the economic profit is maximized but the total revenue is not.

Question 15

Which of the following statements is TRUE?

Accepted Answer

A)  Perfectly competitive markets are efficient, but monopoly markets never are efficient. 
B)  Perfectly competitive markets always reach equilibrium but monopoly markets never reach equilibrium. 
C)  Perfect price discriminating monopolists can eliminate all deadweight losses and achieve efficiency. 
D)  All the above statements are true. 
A)  Perfectly competitive markets are efficient, but monopoly markets never are efficient. 
B)  Perfectly competitive markets always reach equilibrium but monopoly markets never reach equilibrium. 
C)  Perfect price discriminating monopolists can eliminate all deadweight losses and achieve efficiency. 
D)  All the above statements are true.

Question 16

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

Accepted Answer

A)  $2.00 per unit. 
B)  $4.00 per unit. 
C)  $6.00 per unit. 
D)  $8.00 per unit. 
A)  $2.00 per unit. 
B)  $4.00 per unit. 
C)  $6.00 per unit. 
D)  $8.00 per unit.

Question 17

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle.

Accepted Answer

A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar 
A)  70 cents 
B)  50 cents 
C)  40 cents 
D)  1 dollar

Question 18

-An unregulated, single-price monopoly is shown in the figure above. If its fixed cost is $20, the monopoly's total economic profit when it is maximizing its profit will be

Accepted Answer

A)  negative. 
B)  $0. 
C)  $25. 
D)  $50. 
A)  negative. 
B)  $0. 
C)  $25. 
D)  $50.

Question 19

Monopolies can make an economic profit in the long run because of

Accepted Answer

A)  rent seeking by competitors. 
B)  the elastic demand for the monopoly's product. 
C)  the cost-savings gained by the monopoly. 
D)  barriers to enter the monopoly's market. 
A)  rent seeking by competitors. 
B)  the elastic demand for the monopoly's product. 
C)  the cost-savings gained by the monopoly. 
D)  barriers to enter the monopoly's market.

Competition keeps prices lower for consumers. So why do we have patent laws?

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

If the demand for its product is inelastic, a monopoly's

A major difference between a single-price monopolist and a perfectly competitive firm is that the

How does marginal revenue compare to price for a single-price monopoly?

-If the industry in the above figure was perfectly competitive, the level of output would

-In the above figure, what price will a single-price monopoly set?

Why do some utilities have an incentive to exaggerate their costs of production?

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. What do you predict will happen to efficiency in the market for satellite radio?

-If an average cost pricing rule is imposed on the firm in the figure above, the firm will make an economic profit of

-If a monopolist can perfectly price discriminate, it will

-In the above figure, for a single-price monopolist producing at its profit-maximizing equilibrium price and quantity, the price elasticity of demand at this equilibrium will be

Which of the following statements is TRUE?

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

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle.

-An unregulated, single-price monopoly is shown in the figure above. If its fixed cost is $20, the monopoly's total economic profit when it is maximizing its profit will be

Monopolies can make an economic profit in the long run because of

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

Competition keeps prices lower for consumers. So why do we have patent laws?

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

If the demand for its product is inelastic, a monopoly's

A major difference between a single-price monopolist and a perfectly competitive firm is that the

How does marginal revenue compare to price for a single-price monopoly?

-If the industry in the above figure was perfectly competitive, the level of output would

-In the above figure, what price will a single-price monopoly set?

Why do some utilities have an incentive to exaggerate their costs of production?

A natural monopoly is any market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright.

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. What do you predict will happen to efficiency in the market for satellite radio?

-If an average cost pricing rule is imposed on the firm in the figure above, the firm will make an economic profit of

-If a monopolist can perfectly price discriminate, it will

-In the above figure, for a single-price monopolist producing at its profit-maximizing equilibrium price and quantity, the price elasticity of demand at this equilibrium will be

Which of the following statements is TRUE?

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

-Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle.

-An unregulated, single-price monopoly is shown in the figure above. If its fixed cost is $20, the monopoly's total economic profit when it is maximizing its profit will be

Monopolies can make an economic profit in the long run because of

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