Question 1

-Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is

Accepted Answer

A)  7. 
B)  11. 
C)  13. 
D)  22. 
A)  7. 
B)  11. 
C)  13. 
D)  22.

Question 2

A natural monopoly is defined as

Accepted Answer

A)  a market in which competition and entry are restricted by the granting of a government license. 
B)  an industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a market in which competition and entry are restricted by the granting of a patent. 
D)  any market where one firm constitutes the entire industry. 
A)  a market in which competition and entry are restricted by the granting of a government license. 
B)  an industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost. 
C)  a market in which competition and entry are restricted by the granting of a patent. 
D)  any market where one firm constitutes the entire industry.

Question 3

-Bob's Country Bunker is the only restaurant in town that serves fried rutabaga. Bob faces the demand schedule shown in the table above.
a) What is Bob's marginal revenue from the 50th rutabaga?
   b) Bob has the cost schedule shown in the table above. Draw the demand curve faced by Bob and his marginal revenue curve. Draw Bob's marginal cost curve. If Bob wants to maximize his profit, how many fried rutabagas should he sell?
c) What price will Bob charge?
d) What is Bob's economic profit?
e) Bob currently charges $3 per fried rutabaga. Is he maximizing his profit? Why or why not?

Accepted Answer

a) When Bob sells 40 rutabagas, his tota

Question 4

A single-price monopolist maximizes profits by producing the output at which

Accepted Answer

A)  price equals marginal cost. 
B)  price equals marginal revenue. 
C)  marginal revenue equals marginal cost. 
D)  marginal cost equals average cost. 
A)  price equals marginal cost. 
B)  price equals marginal revenue. 
C)  marginal revenue equals marginal cost. 
D)  marginal cost equals average cost.

Question 5

-The table above gives the demand schedule for water bottled by Wanda's Healthy Waters. Wanda's marginal cost is a constant $4 a bottle and has no fixed cost. Wanda's makes an economic profit of ________ a day.

Accepted Answer

A)  $0 
B)  $24 
C)  $36 
D)  $60 
A)  $0 
B)  $24 
C)  $36 
D)  $60

Question 6

A single-price monopoly will set its price according to which of the following rules?

Accepted Answer

A)  P = MR and MR = MC 
B)  P = MC where the MC curve crosses the demand curve 
C)  P = MR where the MR curve crosses the demand curve 
D)  None of the above answers is correct. 
A)  P = MR and MR = MC 
B)  P = MC where the MC curve crosses the demand curve 
C)  P = MR where the MR curve crosses the demand curve 
D)  None of the above answers is correct.

Question 7

The more perfectly a monopoly can price discriminate, the

Accepted Answer

A)  smaller its output and the lower its profits. 
B)  smaller its output and the greater its profits. 
C)  larger its output and the lower its profits. 
D)  larger its output and the greater its profits. 
A)  smaller its output and the lower its profits. 
B)  smaller its output and the greater its profits. 
C)  larger its output and the lower its profits. 
D)  larger its output and the greater its profits.

Question 8

-The above figure shows the demand for cable and the cable company's cost of providing cable.
a) What price and quantity will be produced if the company is unregulated and profit maximizes?
b) What price and quantity will be produced if the company is regulated using the marginal cost pricing rule?
c) What is the advantage of the marginal cost pricing rule?
d) What price and quantity will be produced if the company is regulated using the average cost pricing rule?
e) What is the advantage of the average cost pricing rule?

Accepted Answer

a) The price will be $90 per month and t

Question 9

The iconic American drink-maker, Coca-Cola, announced plans in 2008 to buy the dominant Chinese fruit juice company for $2.5 billion. But China just rolled out a new law to guard against business monopolies. How would this rent-seeking behavior by Coca-Cola most likely affect efficiency in the drink market?

Accepted Answer

A)  Profit would increase. 
B)  Producer surplus would increase. 
C)  Consumer surplus would decrease. 
D)  Deadweight loss would increase. 
A)  Profit would increase. 
B)  Producer surplus would increase. 
C)  Consumer surplus would decrease. 
D)  Deadweight loss would increase.

Question 10

Price discrimination

Accepted Answer

A)  eliminates the producer surplus. 
B)  turns consumer surplus into producer surplus. 
C)  decreases output below the profit-maximizing level. 
D)  lowers a monopoly's economic profit. 
A)  eliminates the producer surplus. 
B)  turns consumer surplus into producer surplus. 
C)  decreases output below the profit-maximizing level. 
D)  lowers a monopoly's economic profit.

Question 11

A single-price monopolist will produce the output at which ________.

Accepted Answer

A)  marginal revenue equals marginal cost 
B)  demand is perfectly inelastic 
C)  marginal revenue is zero 
D)  demand is inelastic but not perfectly inelastic 
A)  marginal revenue equals marginal cost 
B)  demand is perfectly inelastic 
C)  marginal revenue is zero 
D)  demand is inelastic but not perfectly inelastic

Question 12

A monopoly that can perfectly price discriminate creates no deadweight loss.

Accepted Answer

A) True 
 B)False

Question 13

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost

Accepted Answer

A)  there would be a deadweight loss in their markets. 
B)  the firms might require a tax-financed subsidy to survive. 
C)  their customers would enjoy no consumer surplus. 
D)  None of the above answers are correct. 
A)  there would be a deadweight loss in their markets. 
B)  the firms might require a tax-financed subsidy to survive. 
C)  their customers would enjoy no consumer surplus. 
D)  None of the above answers are correct.

Question 14

"A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss." True or false? Explain.

Accepted Answer

The statement is True. A natural monopol

Question 15

Demand Schedule Facing aPerfectly Price Discriminating Firm  
-Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is

Accepted Answer

A)  $5. 
B)  $15. 
C)  $18. 
D)  $25. 
A)  $5. 
B)  $15. 
C)  $18. 
D)  $25.

Question 16

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

Accepted Answer

A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit. 
A)  $30 per unit. 
B)  $35 per unit. 
C)  $40 per unit. 
D)  $45 per unit.

Question 17

-For the monopoly shown in the figure above, the profit maximizing price is ________ per unit.

Accepted Answer

A)  $10 
B)  $20 
C)  $30 
D)  $50 
A)  $10 
B)  $20 
C)  $30 
D)  $50

Question 18

A marginal cost pricing rule for a natural monopoly sets ________.

Accepted Answer

A)  price equal to marginal cost and greater than average total cost 
B)  marginal revenue equal to marginal cost 
C)  marginal revenue equal to average total cost 
D)  price equal to marginal cost 
A)  price equal to marginal cost and greater than average total cost 
B)  marginal revenue equal to marginal cost 
C)  marginal revenue equal to average total cost 
D)  price equal to marginal cost

Question 19

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output.

Accepted Answer

A)  raise; decrease 
B)  lower; increase 
C)  lower; decrease 
D)  raise; increase 
A)  raise; decrease 
B)  lower; increase 
C)  lower; decrease 
D)  raise; increase

Question 20

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

Accepted Answer

A)  The amount of producer surplus 
B)  The quantity produced 
C)  The total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly. 
A)  The amount of producer surplus 
B)  The quantity produced 
C)  The total surplus 
D)  None of the above because they are all the same in a perfectly competitive market and in a market with a perfectly price discriminating monopoly.

-Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is

A natural monopoly is defined as

A single-price monopolist maximizes profits by producing the output at which

-The table above gives the demand schedule for water bottled by Wanda's Healthy Waters. Wanda's marginal cost is a constant $4 a bottle and has no fixed cost. Wanda's makes an economic profit of ________ a day.

A single-price monopoly will set its price according to which of the following rules?

The more perfectly a monopoly can price discriminate, the

Price discrimination

A single-price monopolist will produce the output at which ________.

A monopoly that can perfectly price discriminate creates no deadweight loss.

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost

"A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss." True or false? Explain.

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is

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

-For the monopoly shown in the figure above, the profit maximizing price is ________ per unit.

A marginal cost pricing rule for a natural monopoly sets ________.

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will its price and its output.

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

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

-Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is

A natural monopoly is defined as

A single-price monopolist maximizes profits by producing the output at which

-The table above gives the demand schedule for water bottled by Wanda's Healthy Waters. Wanda's marginal cost is a constant $4 a bottle and has no fixed cost. Wanda's makes an economic profit of ________ a day.

A single-price monopoly will set its price according to which of the following rules?

The more perfectly a monopoly can price discriminate, the

Price discrimination

A single-price monopolist will produce the output at which ________.

A monopoly that can perfectly price discriminate creates no deadweight loss.

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost

"A single-price natural monopoly that is regulated to set price equal to marginal cost incurs an economic loss." True or false? Explain.

Demand Schedule Facing aPerfectly Price Discriminating Firm -Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is

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

-For the monopoly shown in the figure above, the profit maximizing price is ________ per unit.

A marginal cost pricing rule for a natural monopoly sets ________.

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output.

Which of the following differs between a perfectly competitive market and a market with a perfectly price discriminating monopoly?

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

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will its price and its output.