Question 1

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

Accepted Answer

A) choosing output levels according to the profit-maximizing rule. 
B) using price discrimination. 
C) increasing production. 
D) decreasing production. 
E) decreasing its marginal cost but not changing its average total cost. 
A) choosing output levels according to the profit-maximizing rule. 
B) using price discrimination. 
C) increasing production. 
D) decreasing production. 
E) decreasing its marginal cost but not changing its average total cost.

Question 2

For a natural monopoly,economies of scale

Accepted Answer

A) exist along the long-run average cost curve at least until it crosses the market demand curve. 
B) and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C) lead to a legal barrier to entry. 
D) as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E) are totally absent. 
A) exist along the long-run average cost curve at least until it crosses the market demand curve. 
B) and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C) lead to a legal barrier to entry. 
D) as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E) are totally absent.

Question 3

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is a monopoly,the price of a pound of steak is

Accepted Answer

A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2. 
A) $4. 
B) $8. 
C) $12. 
D) $20. 
E) $2.

Question 4

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

Accepted Answer

A) is less than the price. 
B) is greater than the price. 
C) is equal to the price. 
D) might be more than,less than,or equal to the price,depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E) might be more than,less than,or equal to the price,depending on whether the price elasticity of demand exceeds 1.0 in magnitude. 
A) is less than the price. 
B) is greater than the price. 
C) is equal to the price. 
D) might be more than,less than,or equal to the price,depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E) might be more than,less than,or equal to the price,depending on whether the price elasticity of demand exceeds 1.0 in magnitude.

Question 5

-A monopolist has the market demand and marginal cost schedules given in the above table.If the monopoly can perfectly price discriminate,what is the profit-maximizing level of output and price?

Accepted Answer

As a perfectly price discrimin

Question 6

A price-discriminating monopoly charges

Accepted Answer

A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product,even though there are no differences in costs. 
C) a different price to different buyers,because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer. 
A) the same price to every buyer for the same product. 
B) a different price to different types of buyers for the same product,even though there are no differences in costs. 
C) a different price to different buyers,because the costs are different. 
D) different prices to buyers for different products. 
E) each customer a price that equals the marginal cost of serving that customer.

Question 7

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces ________ output and charges ________ price.

Accepted Answer

A) a larger;a lower 
B) a smaller;a lower 
C) the same;a higher 
D) a smaller;a higher 
E) a smaller;the same 
A) a larger;a lower 
B) a smaller;a lower 
C) the same;a higher 
D) a smaller;a higher 
E) a smaller;the same

Question 8

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Accepted Answer

Average cost pricing means that the firm

Question 9

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on:
a.efficiency.
b.consumer surplus.
c.economic profit in the long run.

Accepted Answer

a.Both perfect competition and perfect p

Question 10

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 11

A single-price monopoly can sell 2 units for $8.50 per unit.In order to sell 3 units,the price must be $8.00 per unit.The marginal revenue from selling the third unit is

Accepted Answer

A) $24.00. 
B) $8.50. 
C) $7.00. 
D) $6.50. 
E) $17.00. 
A) $24.00. 
B) $8.50. 
C) $7.00. 
D) $6.50. 
E) $17.00.

Question 12

For a single-price monopoly,price is

Accepted Answer

A) greater than marginal revenue. 
B) one half of marginal revenue. 
C) equal to marginal revenue. 
D) unrelated to marginal revenue. 
E) always less than average total cost when the firm maximizes its profit. 
A) greater than marginal revenue. 
B) one half of marginal revenue. 
C) equal to marginal revenue. 
D) unrelated to marginal revenue. 
E) always less than average total cost when the firm maximizes its profit.

Question 13

Monopolies are inefficient because,at the profit-maximizing output level,

Accepted Answer

A) MC = MR. 
B) MC does not equal MR. 
C) MB = MC. 
D) MB does not equal MC. 
E) P = ATC. 
A) MC = MR. 
B) MC does not equal MR. 
C) MB = MC. 
D) MB does not equal MC. 
E) P = ATC.

Question 14

Which of the following is NOT correct about patents?

Accepted Answer

A) Patents encourage invention of new products. 
B) Patents stimulate innovation. 
C) A patent is a barrier to entry. 
D) Patents enable a firm to be a permanent monopoly. 
E) Patents are granted to the inventor of a product or service. 
A) Patents encourage invention of new products. 
B) Patents stimulate innovation. 
C) A patent is a barrier to entry. 
D) Patents enable a firm to be a permanent monopoly. 
E) Patents are granted to the inventor of a product or service.

Question 15

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

Accepted Answer

A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined. 
A) negative. 
B) positive. 
C) zero. 
D) maximized. 
E) undefined.

Question 16

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

Accepted Answer

A) discrimination among units of a good. 
B) discrimination between groups of buyers. 
C) perfect price discrimination. 
D) perfect cost minimization. 
E) the normal amount of economic profit. 
A) discrimination among units of a good. 
B) discrimination between groups of buyers. 
C) perfect price discrimination. 
D) perfect cost minimization. 
E) the normal amount of economic profit.

Question 17

The figure above shows a firm's demand and average total cost curves.
-The situation in the figure above creates a barrier to entry for a second firm because
I.a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss.
Ii.a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers.
Iii.the first firm's average total cost curve indicates it has been given a patent for the product.

Accepted Answer

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

Question 18

Which of the following is an example of a two-part tariff?

Accepted Answer

A) price discrimination based on the buyers' willingness to pay 
B) charging a hookup fee plus a monthly charge equal to marginal cost 
C) higher sales tax on specific products 
D) different prices based on the cost of production and quantity bought 
E) A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers. 
A) price discrimination based on the buyers' willingness to pay 
B) charging a hookup fee plus a monthly charge equal to marginal cost 
C) higher sales tax on specific products 
D) different prices based on the cost of production and quantity bought 
E) A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers.

Question 19

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements is (are)correct?
I.MR = MC when 3 haircuts are produced.
Ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $42.
Iii.The firm's MC equals $30.

Accepted Answer

A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) None of the above is correct. 
A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) None of the above is correct.

Question 20

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 is the marginal revenue of the fourth unit?

Accepted Answer

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

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

For a natural monopoly,economies of scale

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is a monopoly,the price of a pound of steak is

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

-A monopolist has the market demand and marginal cost schedules given in the above table.If the monopoly can perfectly price discriminate,what is the profit-maximizing level of output and price?

A price-discriminating monopoly charges

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces output and charges price.

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on: a.efficiency. b.consumer surplus. c.economic profit in the long run.

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

A single-price monopoly can sell 2 units for $8.50 per unit.In order to sell 3 units,the price must be $8.00 per unit.The marginal revenue from selling the third unit is

For a single-price monopoly,price is

Monopolies are inefficient because,at the profit-maximizing output level,

Which of the following is NOT correct about patents?

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

Which of the following is an example of a two-part tariff?

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 is the marginal revenue of the fourth unit?

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

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

For a natural monopoly,economies of scale

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is a monopoly,the price of a pound of steak is

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

-A monopolist has the market demand and marginal cost schedules given in the above table.If the monopoly can perfectly price discriminate,what is the profit-maximizing level of output and price?

A price-discriminating monopoly charges

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces ________ output and charges ________ price.

What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on: a.efficiency. b.consumer surplus. c.economic profit in the long run.

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

A single-price monopoly can sell 2 units for $8.50 per unit.In order to sell 3 units,the price must be $8.00 per unit.The marginal revenue from selling the third unit is

For a single-price monopoly,price is

Monopolies are inefficient because,at the profit-maximizing output level,

Which of the following is NOT correct about patents?

If the Boston Red Sox baseball team is currently charging a ticket price where its demand is inelastic,then the Red Sox's marginal revenue is

If a firm is able to convert every dollar of consumer surplus to economic profit,the firm has achieved

Which of the following is an example of a two-part tariff?

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 is the marginal revenue of the fourth unit?

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

When compared to a perfectly competitive market,a single-price monopoly with the same costs produces output and charges price.