Question 1

The theory that regulation seeks an efficient use of resources is the

Accepted Answer

A) social interest theory. 
B) producer surplus theory. 
C) consumer surplus theory. 
D) capture theory. 
E) deadweight loss theory. 
A) social interest theory. 
B) producer surplus theory. 
C) consumer surplus theory. 
D) capture theory. 
E) deadweight loss theory.

Question 2

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and

Question 3

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs?
I.Consumer surplus decreases.
Ii.Economic profit increases.
Iii.A deadweight loss is created.

Accepted Answer

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

Question 4

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the economic loss created is equal to the area of

Accepted Answer

A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no economic loss created. 
A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no economic loss created.

Question 5

The process of price cap regulation includes which of the following?
I.a price ceiling
Ii.marginal cost pricing
Iii.average cost pricing

Accepted Answer

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

Question 6

Price discrimination is prevented in situations where

Accepted Answer

A) customers can resell the good. 
B) firms have monopolies. 
C) there are legal barriers to entry. 
D) there are no close substitutes for the good or service. 
E) customers have different willingnesses to pay for the good. 
A) customers can resell the good. 
B) firms have monopolies. 
C) there are legal barriers to entry. 
D) there are no close substitutes for the good or service. 
E) customers have different willingnesses to pay for the good.

Question 7

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

Accepted Answer

A) ABH 
B) BFGH 
C) ACG 
D) BDEH 
E) ACE 
A) ABH 
B) BFGH 
C) ACG 
D) BDEH 
E) ACE

Question 8

A monopoly is a market with

Accepted Answer

A) many suppliers each producing an identical product. 
B) no barriers to entry. 
C) many substitutes. 
D) one supplier. 
E) many suppliers each producing a slightly different product. 
A) many suppliers each producing an identical product. 
B) no barriers to entry. 
C) many substitutes. 
D) one supplier. 
E) many suppliers each producing a slightly different product.

Question 9

If a monopoly can perfectly price discriminate,

Accepted Answer

A) all the demanders pay one price. 
B) it minimizes its profit. 
C) it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D) it produces less output than would be produced if the market was a perfectly competitive industry. 
E) it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry. 
A) all the demanders pay one price. 
B) it minimizes its profit. 
C) it produces the same amount of output as would be produced if the market was a perfectly competitive industry. 
D) it produces less output than would be produced if the market was a perfectly competitive industry. 
E) it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry.

Question 10

The demand curve for a monopoly is

Accepted Answer

A) horizontal because the demand is perfectly elastic. 
B) downward sloping. 
C) vertical because the demand is perfectly inelastic. 
D) upward sloping. 
E) undefined because it is the only supplier in the market. 
A) horizontal because the demand is perfectly elastic. 
B) downward sloping. 
C) vertical because the demand is perfectly inelastic. 
D) upward sloping. 
E) undefined because it is the only supplier in the market.

Question 11

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

Accepted Answer

In the short run,a monopoly can make an

Question 12

To be able to price discriminate,a firm must

Accepted Answer

A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct. 
A) lower prices for all customers. 
B) raise prices for all customers. 
C) be able to identify and separate different types of buyers. 
D) sell a product that can be resold. 
E) Both answers B and C are correct.

Question 13

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

Accepted Answer

A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) total cost. 
E) economic profit. 
A) consumer surplus. 
B) deadweight loss. 
C) producer surplus. 
D) total cost. 
E) economic profit.

Question 14

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A) marginal revenue is negative when output exceeds 100 units. 
B) elasticity of demand is less than 1 when output exceeds 100 units. 
C) marginal revenue is 0 when output equals 100 units. 
D) Only answers A and B are correct. 
E) Answers A,B,and C are correct. 
A) marginal revenue is negative when output exceeds 100 units. 
B) elasticity of demand is less than 1 when output exceeds 100 units. 
C) marginal revenue is 0 when output equals 100 units. 
D) Only answers A and B are correct. 
E) Answers A,B,and C are correct.

Question 15

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

Accepted Answer

A) exaggerate the firm's costs. 
B) underestimate the firm's costs. 
C) minimize the monopoly's deadweight loss. 
D) make zero economic profit. 
E) exaggerate the firm's profit. 
A) exaggerate the firm's costs. 
B) underestimate the firm's costs. 
C) minimize the monopoly's deadweight loss. 
D) make zero economic profit. 
E) exaggerate the firm's profit.

Question 16

In equilibrium,rent seeking eliminates the

Accepted Answer

A) deadweight loss. 
B) economic profit. 
C) consumer surplus. 
D) demand for the product. 
E) opportunity to price discriminate. 
A) deadweight loss. 
B) economic profit. 
C) consumer surplus. 
D) demand for the product. 
E) opportunity to price discriminate.

Question 17

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 18

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

Accepted Answer

A) $17.50. 
B) $17.00. 
C) $8.50. 
D) $8.00. 
E) $9.00. 
A) $17.50. 
B) $17.00. 
C) $8.50. 
D) $8.00. 
E) $9.00.

Question 19

Monopolies ________ fair and ________ efficient.

Accepted Answer

A) are always;are not 
B) might be;are always 
C) might be;might be 
D) are always;are always 
E) are never;are always 
A) are always;are not 
B) might be;are always 
C) might be;might be 
D) are always;are always 
E) are never;are always

Question 20

When a rent-seeking equilibrium is reached,the

Accepted Answer

A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated. 
A) economic profit is maximized. 
B) economic profit is eliminated by legislation. 
C) economic profit is eliminated. 
D) consumer surplus is greater than without rent seeking. 
E) consumer surplus is eliminated.

The theory that regulation seeks an efficient use of resources is the

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs? I.Consumer surplus decreases. Ii.Economic profit increases. Iii.A deadweight loss is created.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the economic loss created is equal to the area of

The process of price cap regulation includes which of the following? I.a price ceiling Ii.marginal cost pricing Iii.average cost pricing

Price discrimination is prevented in situations where

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

A monopoly is a market with

If a monopoly can perfectly price discriminate,

The demand curve for a monopoly is

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

To be able to price discriminate,a firm must

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

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

In equilibrium,rent seeking eliminates the

Why are water companies considered a natural monopoly?

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

Monopolies fair and efficient.

When a rent-seeking equilibrium is reached,the

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

The theory that regulation seeks an efficient use of resources is the

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Assume someone organizes all farms in the nation into a monopoly.Which of the following occurs? I.Consumer surplus decreases. Ii.Economic profit increases. Iii.A deadweight loss is created.

The figure above shows a natural monopoly. -In the figure above,if the firm is regulated using an average cost pricing rule,the economic loss created is equal to the area of

The process of price cap regulation includes which of the following? I.a price ceiling Ii.marginal cost pricing Iii.average cost pricing

Price discrimination is prevented in situations where

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly,the producer surplus is the area ________.

A monopoly is a market with

If a monopoly can perfectly price discriminate,

The demand curve for a monopoly is

What kind of profit can a monopoly make in the short run? In the long run? Explain your answers.

To be able to price discriminate,a firm must

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

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

In equilibrium,rent seeking eliminates the

Why are water companies considered a natural monopoly?

A single-price monopoly can sell 1 unit for $9.00.To sell 2 units,the price must be $8.50 per unit.The marginal revenue from selling the second unit is

Monopolies ________ fair and ________ efficient.

When a rent-seeking equilibrium is reached,the

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

Monopolies fair and efficient.