Question 1

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

Accepted Answer

A) greater than but not equal to 
B) less than 
C) equal to but not greater than 
D) not comparable to 
E) either greater than or equal to 
A) greater than but not equal to 
B) less than 
C) equal to but not greater than 
D) not comparable to 
E) either greater than or equal to

Question 2

In contrast to competitive firms,single-price monopolies

Accepted Answer

A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply. 
A) do not have to worry about market demand. 
B) sell only if demand is inelastic. 
C) can never incur a loss. 
D) can make an economic profit indefinitely. 
E) must take the price that is determined by the market demand and market supply.

Question 3

The U.S.Postal Service's monopoly on first-class mail service is the result of

Accepted Answer

A) a natural monopoly. 
B) a patent. 
C) a public franchise. 
D) a government license. 
E) an ownership barrier to entry. 
A) a natural monopoly. 
B) a patent. 
C) a public franchise. 
D) a government license. 
E) an ownership barrier to entry.

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

Question 5

A natural monopoly is one that arises from

Accepted Answer

A) patent law. 
B) copyright law. 
C) a firm buying all of a natural resource. 
D) economies of scale. 
E) ownership of a natural resource. 
A) patent law. 
B) copyright law. 
C) a firm buying all of a natural resource. 
D) economies of scale. 
E) ownership of a natural resource.

Question 6

To maximize its profit,a single-price monopoly produces the quantity at which

Accepted Answer

A) the difference between marginal revenue and marginal cost is as large as possible. 
B) marginal revenue equals marginal cost. 
C) average total cost is at its minimum. 
D) the marginal cost curve intersects the demand curve. 
E) the marginal revenue curve intersects the horizontal axis. 
A) the difference between marginal revenue and marginal cost is as large as possible. 
B) marginal revenue equals marginal cost. 
C) average total cost is at its minimum. 
D) the marginal cost curve intersects the demand curve. 
E) the marginal revenue curve intersects the horizontal axis.

Question 7

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Accepted Answer

A) a natural monopoly develops. 
B) the monopoly encounters competition. 
C) economic profit is reduced to zero. 
D) the monopoly converts all of the consumer surplus into economic profit. 
E) there is always the opportunity to price discriminate. 
A) a natural monopoly develops. 
B) the monopoly encounters competition. 
C) economic profit is reduced to zero. 
D) the monopoly converts all of the consumer surplus into economic profit. 
E) there is always the opportunity to price discriminate.

Question 8

"A single-price monopoly will always charge a price that is on the elastic range of the demand for the monopoly's output." Explain why the previous statement is correct or incorrect.

Accepted Answer

The statement is correct.Only when the d

Question 9

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements are correct?
I.When 3 haircuts are produced,the firm's ATC is $10.
Ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
Iii.The firm is NOT a perfect competitor.

Accepted Answer

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

Question 10

Price discrimination occurs when a firm

Accepted Answer

A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal. 
A) charges customers different prices for different goods. 
B) is able to sell different units of a good at different prices. 
C) charges customers the same price for different goods. 
D) can determine which of the many market equilibrium prices it will charge. 
E) has a marginal cost curve that is horizontal.

Question 11

The relationship between marginal revenue and elasticity is

Accepted Answer

A) when demand is elastic,marginal revenue is positive and when demand is inelastic,marginal revenue is negative. 
B) whenever the elasticity is positive,marginal revenue is positive. 
C) whenever the elasticity is negative,marginal revenue is positive. 
D) when demand is elastic,marginal revenue is negative and when demand is inelastic,marginal revenue is positive. 
E) that total revenue equals zero at the quantity for which the demand is unit elastic. 
A) when demand is elastic,marginal revenue is positive and when demand is inelastic,marginal revenue is negative. 
B) whenever the elasticity is positive,marginal revenue is positive. 
C) whenever the elasticity is negative,marginal revenue is positive. 
D) when demand is elastic,marginal revenue is negative and when demand is inelastic,marginal revenue is positive. 
E) that total revenue equals zero at the quantity for which the demand is unit elastic.

Question 12

-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 perfectly competitive,the price of a pound of steak is ________ and when it is a monopoly,the price of a pound of steak is ________.

Accepted Answer

A) $4;$20 
B) $8;$4 
C) $8;$12 
D) $4;$8 
E) $4;$12 
A) $4;$20 
B) $8;$4 
C) $8;$12 
D) $4;$8 
E) $4;$12

Question 13

-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 quantity of steak is

Accepted Answer

A) 2,000 pounds. 
B) 3,000 pounds. 
C) 4,000 pounds. 
D) 5,000 pounds. 
E) less than 2,000 pounds. 
A) 2,000 pounds. 
B) 3,000 pounds. 
C) 4,000 pounds. 
D) 5,000 pounds. 
E) less than 2,000 pounds.

Question 14

The capture theory of regulation is defined as

Accepted Answer

A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests. 
A) the use of regulations to assure the efficient use of resources. 
B) the constant reapplication of regulation on the cable TV industry. 
C) the use of regulation to assist producers to maximize profits. 
D) the removal of regulations on business activities. 
E) regulation that focuses on consumers' interests and ignores producers' interests.

Question 15

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

Accepted Answer

A) abP1. 
B) acP2. 
C) bce. 
D) bed. 
E) P1beP3. 
A) abP1. 
B) acP2. 
C) bce. 
D) bed. 
E) P1beP3.

Question 16

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot pillows,a monopoly producer of pillows stuffed with parrot feathers.When the pillow market is a monopoly,the price of a pillow is ________,and if the pillow market is perfectly competitive,the price of a pillow is ________.

Accepted Answer

A) $40;$20 
B) $70;$60 
C) $40;$60 
D) $60;$40 
E) $100;$40 
A) $40;$20 
B) $70;$60 
C) $40;$60 
D) $60;$40 
E) $100;$40

Question 17

Price cap regulation is regulation that

Accepted Answer

A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated. 
A) is a marginal cost pricing rule. 
B) is an average cost pricing rule. 
C) imposes a price ceiling on the regulated firm. 
D) has the same incentive effects as does rate of return regulation. 
E) is the same as allowing the firm to operate as if it was totally unregulated.

Question 18

-In the above figure,the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

Accepted Answer

A) 200;$10 
B) 300;$20 
C) 500;$50 
D) 200;$30 
E) 300;$30 
A) 200;$10 
B) 300;$20 
C) 500;$50 
D) 200;$30 
E) 300;$30

Question 19

The capture theory of regulation predicts that

Accepted Answer

A) regulation helps producers to maximize profits. 
B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus. 
C) regulators eliminate the deadweight loss a monopoly can create. 
D) resources are used efficiently. 
E) regulators capture the firm's economic profit and transfer it to themselves. 
A) regulation helps producers to maximize profits. 
B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus. 
C) regulators eliminate the deadweight loss a monopoly can create. 
D) resources are used efficiently. 
E) regulators capture the firm's economic profit and transfer it to themselves.

Question 20

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

Accepted Answer

A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly. 
A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly.

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

In contrast to competitive firms,single-price monopolies

The U.S.Postal Service's monopoly on first-class mail service is the result of

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

A natural monopoly is one that arises from

To maximize its profit,a single-price monopoly produces the quantity at which

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

"A single-price monopoly will always charge a price that is on the elastic range of the demand for the monopoly's output." Explain why the previous statement is correct or incorrect.

Price discrimination occurs when a firm

The relationship between marginal revenue and elasticity is

-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 quantity of steak is

The capture theory of regulation is defined as

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

Price cap regulation is regulation that

-In the above figure,the profit-maximizing output for this single-price monopoly is units and the price is .

The capture theory of regulation predicts that

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

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

With perfect price discrimination,the quantity of output produced by a monopoly is ________ the quantity produced by a perfectly competitive industry.

In contrast to competitive firms,single-price monopolies

The U.S.Postal Service's monopoly on first-class mail service is the result of

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

A natural monopoly is one that arises from

To maximize its profit,a single-price monopoly produces the quantity at which

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

"A single-price monopoly will always charge a price that is on the elastic range of the demand for the monopoly's output." Explain why the previous statement is correct or incorrect.

Price discrimination occurs when a firm

The relationship between marginal revenue and elasticity is

-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 quantity of steak is

The capture theory of regulation is defined as

-In the above figure,for a single-price monopoly the deadweight loss is equal to the area

Price cap regulation is regulation that

-In the above figure,the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

The capture theory of regulation predicts that

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

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

-In the above figure,the profit-maximizing output for this single-price monopoly is units and the price is .