Question 1

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes, some monopolies are created by gove

Question 2

-When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

Accepted Answer

A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation. 
A)  rate of return regulation. 
B)  price cap regulation. 
C)  earnings limited regulation. 
D)  target pricing regulation.

Question 3

Deadweight loss measures the inefficiency as the loss of

Accepted Answer

A)  consumer surplus only. 
B)  consumer surplus minus producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  producer surplus only. 
A)  consumer surplus only. 
B)  consumer surplus minus producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  producer surplus only.

Question 4

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Accepted Answer

A)  zero. 
B)  $8.00 per day. 
C)  $16.00 per day. 
D)  $32.00 per day. 
A)  zero. 
B)  $8.00 per day. 
C)  $16.00 per day. 
D)  $32.00 per day.

Question 5

-The figure above shows the demand curve (D) faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR), marginal cost (MC), and average cost (LRAC) curves. If Visual is regulated according to an average cost pricing rule, it will serve ________ million households and set a price of ________ per household per month.

Accepted Answer

A)  1; $48 
B)  4; $12 
C)  2; $36 
D)  3; $24 
A)  1; $48 
B)  4; $12 
C)  2; $36 
D)  3; $24

Question 6

Which of the following will result in the most deadweight loss?

Accepted Answer

A)  a natural monopoly regulated with marginal cost pricing 
B)  an unregulated natural monopoly 
C)  a natural monopoly regulated with average cost pricing 
D)  All of the above result in the same deadweight loss. 
A)  a natural monopoly regulated with marginal cost pricing 
B)  an unregulated natural monopoly 
C)  a natural monopoly regulated with average cost pricing 
D)  All of the above result in the same deadweight loss.

Question 7

If a natural monopoly has an average cost pricing rule imposed, the rule will

Accepted Answer

A)  maximize total surplus in the regulated industry. 
B)  generate an economic loss for the regulated firm. 
C)  reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule. 
D)  set price below marginal cost. 
A)  maximize total surplus in the regulated industry. 
B)  generate an economic loss for the regulated firm. 
C)  reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule. 
D)  set price below marginal cost.

Question 8

Price discrimination by a monopolist is less effective if the

Accepted Answer

A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold. 
A)  good can be resold. 
B)  good has no substitutes. 
C)  monopolist can identify buyers by willingness to pay. 
D)  good cannot be resold.

Question 9

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Accepted Answer

A) True 
 B)False

Question 10

Unregulated monopolies can often make an economic profit in the long run because

Accepted Answer

A)  they receive government subsidies. 
B)  they have high costs. 
C)  barriers to entry prevent competing firms from entering the market. 
D)  the risks of running a monopoly are high. 
A)  they receive government subsidies. 
B)  they have high costs. 
C)  barriers to entry prevent competing firms from entering the market. 
D)  the risks of running a monopoly are high.

Question 11

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

Accepted Answer

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

Question 12

Which of the following is TRUE for a profit maximizing monopolist?

Accepted Answer

A)  Marginal cost is always less than average total cost. 
B)  In the long run, the firm's economic profit equals zero. 
C)  In the short run, the firm will shut down if its marginal cost is less than its average variable cost. 
D)  In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost. 
A)  Marginal cost is always less than average total cost. 
B)  In the long run, the firm's economic profit equals zero. 
C)  In the short run, the firm will shut down if its marginal cost is less than its average variable cost. 
D)  In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost.

Question 13

Patents provide a firm with a monopoly on a given product. What is the economic rationale for granting patents?

Accepted Answer

The rationale for patents is t

Question 14

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. What does Kuenga Gyalthen mean he states that, "Up until now, because of the monopoly, we've all been suffering. So, I mean, it's finally time the consumer actually is king for a little while."?

Accepted Answer

A)  He believes that producer surplus is greater with competition. 
B)  He believes that total surplus is greater with a monopoly. 
C)  He believes that prices are lower with a monopoly. 
D)  He believes that consumer surplus is greater with competition. 
A)  He believes that producer surplus is greater with competition. 
B)  He believes that total surplus is greater with a monopoly. 
C)  He believes that prices are lower with a monopoly. 
D)  He believes that consumer surplus is greater with competition.

Question 15

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. To maximize profits, WaveHouse would produce a quantity where

Accepted Answer

A)  marginal revenue is greater than marginal cost. 
B)  marginal revenue is equal to marginal cost. 
C)  marginal revenue is less than marginal cost. 
D)  price is maximized. 
A)  marginal revenue is greater than marginal cost. 
B)  marginal revenue is equal to marginal cost. 
C)  marginal revenue is less than marginal cost. 
D)  price is maximized.

Question 16

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

Accepted Answer

A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce. 
A)  area hacd. 
B)  area bac. 
C)  area jae. 
D)  area jbce.

Question 17

-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. The government imposes a marginal cost pricing rule on the company.
a) What is the price of natural gas supplied by West Coast Gas? How many cubic feet does the company sell? What is the firm's economic profit per month?
b) How does the regulation affect total surplus?
c) Is the regulation in the social interest? Explain.

Accepted Answer

a) Marginal cost pricing regulation sets

Question 18

When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using a marginal cost pricing

Question 19

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry. What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

Accepted Answer

The price will fall and output will incr

Question 20

-La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is

Accepted Answer

A)  $168,000. 
B)  $312,000. 
C)  $336,000. 
D)  $624,000. 
A)  $168,000. 
B)  $312,000. 
C)  $336,000. 
D)  $624,000.

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

-When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

Deadweight loss measures the inefficiency as the loss of

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Which of the following will result in the most deadweight loss?

If a natural monopoly has an average cost pricing rule imposed, the rule will

Price discrimination by a monopolist is less effective if the

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Unregulated monopolies can often make an economic profit in the long run because

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

Which of the following is TRUE for a profit maximizing monopolist?

Patents provide a firm with a monopoly on a given product. What is the economic rationale for granting patents?

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry. What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

-La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is

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

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

-When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

Deadweight loss measures the inefficiency as the loss of

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Which of the following will result in the most deadweight loss?

If a natural monopoly has an average cost pricing rule imposed, the rule will

Price discrimination by a monopolist is less effective if the

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.

Unregulated monopolies can often make an economic profit in the long run because

Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?

Which of the following is TRUE for a profit maximizing monopolist?

Patents provide a firm with a monopoly on a given product. What is the economic rationale for granting patents?

-In the above figure, if the single-price monopolist charges a price that maximizes its profits, consumer surplus is

When a natural monopoly is regulated using a marginal cost pricing rule, what can you say about the firm's profit and the market's efficiency?

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry. What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

-La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is

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