Question 1

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

Accepted Answer

A) Hard cover books are long lasting and paperbacks can rip easily. 
B) Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C) A hardcover is the publishers' way of rewarding the avid readers. 
D) Publishers are not sure of the demand. 
E) Publishers cannot price discriminate. 
A) Hard cover books are long lasting and paperbacks can rip easily. 
B) Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C) A hardcover is the publishers' way of rewarding the avid readers. 
D) Publishers are not sure of the demand. 
E) Publishers cannot price discriminate. B

Question 2

Rent seeking is the act of obtaining special treatment by ________ to create ________.

Accepted Answer

A) a monopoly;consumer surplus 
B) the government;economic profit 
C) consumers;a monopoly 
D) the government;consumer surplus 
E) competitive producers;a monopoly 
A) a monopoly;consumer surplus 
B) the government;economic profit 
C) consumers;a monopoly 
D) the government;consumer surplus 
E) competitive producers;a monopoly B

Question 3

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What price is being charged for 4 units?

Accepted Answer

A) $52 each 
B) $18 each 
C) $60 each 
D) $12 each 
E) $20 each 
A) $52 each 
B) $18 each 
C) $60 each 
D) $12 each 
E) $20 each B

Question 4

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

Accepted Answer

A) The producer benefits,but consumers and society are harmed. 
B) The producer and society are harmed,but consumers benefit. 
C) The producer and society benefit,but consumers are harmed. 
D) The producer is harmed,but consumers and society benefit. 
E) The producer,consumers,and society all benefit. 
A) The producer benefits,but consumers and society are harmed. 
B) The producer and society are harmed,but consumers benefit. 
C) The producer and society benefit,but consumers are harmed. 
D) The producer is harmed,but consumers and society benefit. 
E) The producer,consumers,and society all benefit.

Question 5

Can a monopoly make an economic profit in the long run? Explain your answer.

Accepted Answer

A monopoly can make an economic profit i

Question 6

A natural monopoly's output is less if it is regulated with

Accepted Answer

A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces. 
A) a marginal cost pricing rule than if it is unregulated. 
B) an average cost pricing rule than if it is unregulated. 
C) an average cost pricing rule than if it is regulated with a marginal cost pricing rule. 
D) a marginal cost pricing rule than if it is regulated with an average cost pricing rule. 
E) More information about the firm's demand is needed to determine how its output depends on what regulation it faces.

Question 7

Which of the following statements about price discrimination is false?

Accepted Answer

A) Price discrimination is a method for a seller to capture some consumer surplus. 
B) Compared to a single-price monopoly,the number of units sold increases when a monopoly price discriminates. 
C) Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D) Price discrimination increases a monopoly's profit. 
E) All forms of price discrimination are illegal. 
A) Price discrimination is a method for a seller to capture some consumer surplus. 
B) Compared to a single-price monopoly,the number of units sold increases when a monopoly price discriminates. 
C) Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D) Price discrimination increases a monopoly's profit. 
E) All forms of price discrimination are illegal.

Question 8

"Price discrimination allows a monopoly to increase its economic profit 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 i

Question 9

Rate of return regulation is designed to allow a natural monopoly to

Accepted Answer

A) make an economic profit. 
B) make zero economic profit. 
C) underestimate its average cost. 
D) compete with any firm entering the market. 
E) make zero normal profit. 
A) make an economic profit. 
B) make zero economic profit. 
C) underestimate its average cost. 
D) compete with any firm entering the market. 
E) make zero normal profit.

Question 10

In a monopoly,producers ________ and consumers ________.

Accepted Answer

A) gain;lose 
B) lose;lose 
C) lose;gain 
D) gain;gain 
E) gain;do not gain or lose 
A) gain;lose 
B) lose;lose 
C) lose;gain 
D) gain;gain 
E) gain;do not gain or lose

Question 11

Price cap regulation

Accepted Answer

A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct. 
A) does not provide incentives to firms to minimize their costs because firms cannot change prices. 
B) sets the maximum price these firms can charge. 
C) gives firms the incentive to exaggerate their costs. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct.

Question 12

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

Accepted Answer

A) first unit is less than $20. 
B) third unit is less than $20. 
C) third unit is more than $20. 
D) third unit is also $20. 
E) more information is needed to determine if the marginal revenue for the third unit is more than,less than,or equal to $20. 
A) first unit is less than $20. 
B) third unit is less than $20. 
C) third unit is more than $20. 
D) third unit is also $20. 
E) more information is needed to determine if the marginal revenue for the third unit is more than,less than,or equal to $20.

Question 13

The long-run average cost curve of a natural monopoly

Accepted Answer

A) is positively sloped until it crosses the demand curve. 
B) intersects the demand curve while it is negative sloped. 
C) intersects the demand curve while it is positively sloped. 
D) is the natural monopoly's supply curve. 
E) is the same as the natural monopoly's demand curve. 
A) is positively sloped until it crosses the demand curve. 
B) intersects the demand curve while it is negative sloped. 
C) intersects the demand curve while it is positively sloped. 
D) is the natural monopoly's supply curve. 
E) is the same as the natural monopoly's demand curve.

Question 14

A natural monopoly's average cost curve
I.intersects the demand curve while the average cost curve slopes downward.
Ii.reaches its minimum before it intersects the demand curve.
Iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i,ii,and iii

Question 15

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

Accepted Answer

Rent seeking is the act of obtaining spe

Question 16

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under a marginal cost pricing rule,how many households in Oakland are served?

Accepted Answer

A) 20,000 
B) 30,000 
C) 40,000 
D) 50,000 
E) 10,000 
A) 20,000 
B) 30,000 
C) 40,000 
D) 50,000 
E) 10,000

Question 17

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the firm

Accepted Answer

A) avoids an economic loss,but produces less than the efficient quantity and creates a deadweight loss. 
B) incurs an economic loss,but produces the efficient quantity and creates a deadweight loss. 
C) avoids an economic loss,is able to produce the efficient quantity,and therefore avoids creating a deadweight loss. 
D) avoids an economic loss,produces the efficient quantity,and creates a deadweight loss. 
E) incurs an economic loss,produces the efficient quantity,and avoids creating a deadweight loss. 
A) avoids an economic loss,but produces less than the efficient quantity and creates a deadweight loss. 
B) incurs an economic loss,but produces the efficient quantity and creates a deadweight loss. 
C) avoids an economic loss,is able to produce the efficient quantity,and therefore avoids creating a deadweight loss. 
D) avoids an economic loss,produces the efficient quantity,and creates a deadweight loss. 
E) incurs an economic loss,produces the efficient quantity,and avoids creating a deadweight loss.

Question 18

When a firm is regulated so it uses an average cost pricing rule,the price

Accepted Answer

A) exceeds average total cost. 
B) equals marginal cost. 
C) is less than marginal cost. 
D) equals average total cost. 
E) equals marginal revenue. 
A) exceeds average total cost. 
B) equals marginal cost. 
C) is less than marginal cost. 
D) equals average total cost. 
E) equals marginal revenue.

Question 19

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Accepted Answer

A) not change. 
B) increase. 
C) decrease. 
D) either increase,decrease,or not change depending if the monopoly's marginal revenue curve lies below,above,or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly. 
A) not change. 
B) increase. 
C) decrease. 
D) either increase,decrease,or not change depending if the monopoly's marginal revenue curve lies below,above,or is the same as its demand curve. 
E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.

Question 20

Compared to a perfectly competitive industry,a single-price monopoly produces

Accepted Answer

A) more output. 
B) less output. 
C) the same output. 
D) some amount that might be more,less,or the same depending on whether the monopoly's marginal revenue curve lies above,below,or on its demand curve. 
E) some amount that might be more,less,or the same depending on whether the monopoly's marginal cost curve lies above,below,or on its marginal revenue curve. 
A) more output. 
B) less output. 
C) the same output. 
D) some amount that might be more,less,or the same depending on whether the monopoly's marginal revenue curve lies above,below,or on its demand curve. 
E) some amount that might be more,less,or the same depending on whether the monopoly's marginal cost curve lies above,below,or on its marginal revenue curve.

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

Rent seeking is the act of obtaining special treatment by to create .

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What price is being charged for 4 units?

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

Can a monopoly make an economic profit in the long run? Explain your answer.

A natural monopoly's output is less if it is regulated with

Which of the following statements about price discrimination is false?

Rate of return regulation is designed to allow a natural monopoly to

In a monopoly,producers and consumers .

Price cap regulation

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

The long-run average cost curve of a natural monopoly

A natural monopoly's average cost curve I.intersects the demand curve while the average cost curve slopes downward. Ii.reaches its minimum before it intersects the demand curve. Iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under a marginal cost pricing rule,how many households in Oakland are served?

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the firm

When a firm is regulated so it uses an average cost pricing rule,the price

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Compared to a perfectly competitive industry,a single-price monopoly produces

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 12: Monopoly

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

Rent seeking is the act of obtaining special treatment by ________ to create ________.

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What price is being charged for 4 units?

If a perfectly competitive industry becomes a monopoly and the costs do not change,which of the following allocation of costs and benefits applies?

Can a monopoly make an economic profit in the long run? Explain your answer.

A natural monopoly's output is less if it is regulated with

Which of the following statements about price discrimination is false?

Rate of return regulation is designed to allow a natural monopoly to

In a monopoly,producers ________ and consumers ________.

Price cap regulation

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

The long-run average cost curve of a natural monopoly

A natural monopoly's average cost curve I.intersects the demand curve while the average cost curve slopes downward. Ii.reaches its minimum before it intersects the demand curve. Iii.intersects the demand curve below the intersection of the marginal cost curve and the demand curve.

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under a marginal cost pricing rule,how many households in Oakland are served?

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the firm

When a firm is regulated so it uses an average cost pricing rule,the price

Assume someone organizes all farms in the nation into a monopoly.As a result,consumer surplus will

Compared to a perfectly competitive industry,a single-price monopoly produces

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Rent seeking is the act of obtaining special treatment by to create .

In a monopoly,producers and consumers .