Question 1

Compared to a single-price monopoly,when a monopoly can perfectly price discriminate,the deadweight loss

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) becomes infinite. 
E) probably changes,but more information is needed to determine if it increases,decreases,or remains constant. 
A) increases. 
B) decreases. 
C) remains the same. 
D) becomes infinite. 
E) probably changes,but more information is needed to determine if it increases,decreases,or remains constant.

Question 2

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is incorrect.The social in

Question 3

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) greater than in the long run and less than in the short run than 
E) not comparable to 
A) greater than 
B) less than 
C) equal to 
D) greater than in the long run and less than in the short run than 
E) not comparable to

Question 4

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Accepted Answer

A) monopoly. 
B) a barrier to entry. 
C) behavior that is not profit-maximizing. 
D) price discrimination. 
E) rent seeking. 
A) monopoly. 
B) a barrier to entry. 
C) behavior that is not profit-maximizing. 
D) price discrimination. 
E) rent seeking.

Question 5

Firms that can effectively price discriminate

Accepted Answer

A) can be either perfectly competitive firms or monopolies. 
B) can prevent the resale of their products. 
C) have only one class of buyers,buyers willing to pay a high price. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) can be either perfectly competitive firms or monopolies. 
B) can prevent the resale of their products. 
C) have only one class of buyers,buyers willing to pay a high price. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 6

A "buy one,get one for half price" promotion is an example of

Accepted Answer

A) price discriminating among units of a good. 
B) price discriminating among groups of buyers. 
C) a legal monopoly. 
D) a natural monopoly. 
E) marketing by a perfectly competitive firm designed to increase the firm's sales. 
A) price discriminating among units of a good. 
B) price discriminating among groups of buyers. 
C) a legal monopoly. 
D) a natural monopoly. 
E) marketing by a perfectly competitive firm designed to increase the firm's sales.

Question 7

Compared to the situation in which it sets a single price,a monopoly that price discriminates ________ its economic profit and ________ its output.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change

Question 8

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

Accepted Answer

A) a natural monopoly. 
B) a marginal cost pricing rule. 
C) an average cost pricing rule. 
D) the capture theory of regulation. 
E) the social interest theory of regulation. 
A) a natural monopoly. 
B) a marginal cost pricing rule. 
C) an average cost pricing rule. 
D) the capture theory of regulation. 
E) the social interest theory of regulation.

Question 9

Which of the following industries is most likely closest to achieving perfect price discrimination?

Accepted Answer

A) the airline industry 
B) the wheat industry 
C) the textbook industry 
D) the toilet paper industry 
E) the soft drink industry 
A) the airline industry 
B) the wheat industry 
C) the textbook industry 
D) the toilet paper industry 
E) the soft drink industry

Question 10

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,an

Accepted Answer

A) efficient output results,but the firm incurs a loss per household which must be subsidized in some way. 
B) inefficient output results,though the firm covers its costs. 
C) efficient output results,though marginal costs exceed average total costs. 
D) inefficient output results because the firm cannot cover its costs. 
E) efficient output results because consumer surplus is maximized. 
A) efficient output results,but the firm incurs a loss per household which must be subsidized in some way. 
B) inefficient output results,though the firm covers its costs. 
C) efficient output results,though marginal costs exceed average total costs. 
D) inefficient output results because the firm cannot cover its costs. 
E) efficient output results because consumer surplus is maximized.

Question 11

Explain how a single-price monopoly determines its output and price.Compare this process to how a perfectly competitive firm determines its output and price.

Accepted Answer

Single-price monopolies follow the same

Question 12

Gene's Car Wash is a natural monopoly.To wash 100 cars a week,if Gene is unregulated,he would charge a price of $10.Gene's average total cost for washing 100 cars is $8,his average variable cost is $6,and his marginal cost is $4.If Gene is regulated using an average cost pricing rule,the price he is allowed to charge to wash 100 cars is

Accepted Answer

A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400. 
A) $10. 
B) $8. 
C) $6. 
D) $4. 
E) $400.

Question 13

Which of the following is the best example of a natural monopoly?

Accepted Answer

A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug 
A) ownership of the only ferry across Puget Sound for twenty miles 
B) the United States Postal Service 
C) the cable television company in your hometown 
D) owning the only licensed taxicab in town 
E) producing a patented drug

Question 14

An example of a monopoly would be

Accepted Answer

A) one of many U.S.wheat farmers. 
B) one of the few U.S.auto makers. 
C) AT&T cell phone service. 
D) the local water company. 
E) Taco Bell 
A) one of many U.S.wheat farmers. 
B) one of the few U.S.auto makers. 
C) AT&T cell phone service. 
D) the local water company. 
E) Taco Bell

Question 15

One way a monopoly can convert additional consumer surplus into economic profit is to

Accepted Answer

A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost. 
A) lower prices. 
B) raise prices. 
C) price discriminate. 
D) become more competitive. 
E) produce where price equals average total cost.

Question 16

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

Accepted Answer

A) does not change,that is,it remains constant. 
B) falls. 
C) rises. 
D) might rise or fall depending on whether the demand for food is elastic or inelastic. 
E) might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve. 
A) does not change,that is,it remains constant. 
B) falls. 
C) rises. 
D) might rise or fall depending on whether the demand for food is elastic or inelastic. 
E) might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve.

Question 17

What potential problem is there with rate of return pricing?

Accepted Answer

The monopolist might exaggerate its cost

Question 18

Price cap regulation is defined as regulation that

Accepted Answer

A) imposes a price ceiling on the regulated firm. 
B) encourages firms to exaggerate costs to increase profits. 
C) uses marginal cost pricing to ensure efficient output. 
D) uses average cost pricing to ensure costs are covered. 
E) is essentially the same as rate of return regulation. 
A) imposes a price ceiling on the regulated firm. 
B) encourages firms to exaggerate costs to increase profits. 
C) uses marginal cost pricing to ensure efficient output. 
D) uses average cost pricing to ensure costs are covered. 
E) is essentially the same as rate of return regulation.

Question 19

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

Accepted Answer

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

Question 20

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

Accepted Answer

Marginal r

Compared to a single-price monopoly,when a monopoly can perfectly price discriminate,the deadweight loss

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect? Explain your answer.

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Firms that can effectively price discriminate

A "buy one,get one for half price" promotion is an example of

Compared to the situation in which it sets a single price,a monopoly that price discriminates its economic profit and its output.

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

Which of the following industries is most likely closest to achieving perfect price discrimination?

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,an

Explain how a single-price monopoly determines its output and price.Compare this process to how a perfectly competitive firm determines its output and price.

Which of the following is the best example of a natural monopoly?

An example of a monopoly would be

One way a monopoly can convert additional consumer surplus into economic profit is to

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

What potential problem is there with rate of return pricing?

Price cap regulation is defined as regulation that

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

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

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

Compared to a single-price monopoly,when a monopoly can perfectly price discriminate,the deadweight loss

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect? Explain your answer.

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Firms that can effectively price discriminate

A "buy one,get one for half price" promotion is an example of

Compared to the situation in which it sets a single price,a monopoly that price discriminates ________ its economic profit and ________ its output.

Suppose that a regulatory agency helps producers maximize economic profit.This type of regulation coincides with

Which of the following industries is most likely closest to achieving perfect price discrimination?

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,an

Explain how a single-price monopoly determines its output and price.Compare this process to how a perfectly competitive firm determines its output and price.

Which of the following is the best example of a natural monopoly?

An example of a monopoly would be

One way a monopoly can convert additional consumer surplus into economic profit is to

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the price consumers pay for food

What potential problem is there with rate of return pricing?

Price cap regulation is defined as regulation that

If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is

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

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

Compared to the situation in which it sets a single price,a monopoly that price discriminates its economic profit and its output.