Question 1

Which of the following statements is correct?

Accepted Answer

A) Any firm can price discriminate. 
B) Only firms that sell high-priced products can price discriminate. 
C) In order to price discriminate,a firm must sell a good or service that cannot be resold. 
D) In order to price discriminate,the firms must sell a low-priced product. 
E) Price discrimination is always illegal. 
A) Any firm can price discriminate. 
B) Only firms that sell high-priced products can price discriminate. 
C) In order to price discriminate,a firm must sell a good or service that cannot be resold. 
D) In order to price discriminate,the firms must sell a low-priced product. 
E) Price discrimination is always illegal.

Question 2

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

Accepted Answer

A) the same as its demand curve. 
B) the same as its supply curve. 
C) the same as its marginal cost curve. 
D) a vertical line at the profit-maximizing quantity of output. 
E) undefined because it does not exist. 
A) the same as its demand curve. 
B) the same as its supply curve. 
C) the same as its marginal cost curve. 
D) a vertical line at the profit-maximizing quantity of output. 
E) undefined because it does not exist.

Question 3

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

Accepted Answer

A) marginal revenue will exceed marginal cost. 
B) profit will be maximized. 
C) marginal revenue will be negative. 
D) marginal revenue will be maximized. 
E) both the marginal revenue and the price will be negative. 
A) marginal revenue will exceed marginal cost. 
B) profit will be maximized. 
C) marginal revenue will be negative. 
D) marginal revenue will be maximized. 
E) both the marginal revenue and the price will be negative.

Question 4

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.MR = MC = $42 when 3 haircuts are produced.
Ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
Iii.The firm's economic profit is $12.

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 5

How can managers of natural monopolies exaggerate their costs?

Accepted Answer

By increasing on-the-job luxury items su

Question 6

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

Accepted Answer

A) zero 
B) $5.00 
C) $17.50 
D) $50.00 
A) zero 
B) $5.00 
C) $17.50 
D) $50.00

Question 7

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

Accepted Answer

A) the Pittsburgh Penguins hockey team,a National Hockey League team 
B) Ford Motors,the large automobile producing company 
C) Florida Power and Light,an electric utility in Florida 
D) Sony,the Japanese producer of the Playstation III 
E) JCPenney,the large department store chain 
A) the Pittsburgh Penguins hockey team,a National Hockey League team 
B) Ford Motors,the large automobile producing company 
C) Florida Power and Light,an electric utility in Florida 
D) Sony,the Japanese producer of the Playstation III 
E) JCPenney,the large department store chain

Question 8

Patents
I.encourage the invention of new products and production methods.
Ii.generally discourage innovation.
Iii.are exclusive rights granted to the inventor of a product or service.

Accepted Answer

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

Question 9

Rent seeking

Accepted Answer

A) is the act of obtaining special treatment by the government to create economic profit. 
B) is the attempt to get rent from tardy renters. 
C) occurs when landlords advertise for apartments and other property for rent. 
D) is an attempt to sell a property and capture economic profit. 
E) occurs when a firm charges different prices for different units of its good or service. 
A) is the act of obtaining special treatment by the government to create economic profit. 
B) is the attempt to get rent from tardy renters. 
C) occurs when landlords advertise for apartments and other property for rent. 
D) is an attempt to sell a property and capture economic profit. 
E) occurs when a firm charges different prices for different units of its good or service.

Question 10

Rent seeking is defined as

Accepted Answer

A) charging higher prices for an apartment. 
B) the act of obtaining special treatment by the government to create an economic profit. 
C) charging a price below marginal cost. 
D) selling a greater quantity than is profitable. 
E) charging different prices for different units of the good or service. 
A) charging higher prices for an apartment. 
B) the act of obtaining special treatment by the government to create an economic profit. 
C) charging a price below marginal cost. 
D) selling a greater quantity than is profitable. 
E) charging different prices for different units of the good or service.

Question 11

Capture theory is

Accepted Answer

A) an economic theory of regulation. 
B) a model about perfect competition. 
C) the same as the public interest theory. 
D) the theory that regulators capture firms' attention by dictating a very low price. 
E) a theory that explains behavior of competitive firms. 
A) an economic theory of regulation. 
B) a model about perfect competition. 
C) the same as the public interest theory. 
D) the theory that regulators capture firms' attention by dictating a very low price. 
E) a theory that explains behavior of competitive firms.

Question 12

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using a marginal 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 13

In order to maximize its profit,a single-price monopoly produces the amount of output so that

Accepted Answer

A) P = MC. 
B) MR = MC. 
C) P = MC - MR. 
D) P = MR. 
E) P = ATC. 
A) P = MC. 
B) MR = MC. 
C) P = MC - MR. 
D) P = MR. 
E) P = ATC.

Question 14

The good produced by a monopoly

Accepted Answer

A) has perfect substitutes. 
B) has no substitutes at all. 
C) has no close substitutes. 
D) can be easily duplicated. 
E) must be unable to be resold. 
A) has perfect substitutes. 
B) has no substitutes at all. 
C) has no close substitutes. 
D) can be easily duplicated. 
E) must be unable to be resold.

Question 15

-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

Accepted Answer

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

Question 16

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air's marginal revenue will ________ when its total revenue ________.

Accepted Answer

A) equal $0;is maximized 
B) be negative;is maximized 
C) be positive;is maximized 
D) inelastic;is increasing 
E) elastic;is increasing 
A) equal $0;is maximized 
B) be negative;is maximized 
C) be positive;is maximized 
D) inelastic;is increasing 
E) elastic;is increasing

Question 17

How should a natural monopoly be regulated under the social interest theory of regulation?

Accepted Answer

A) by setting price equal to the average cost of production 
B) by allowing a price that maximizes the profit of the natural monopoly 
C) by using a marginal cost pricing rule 
D) by subsidizing other producers to compete with the monopoly 
E) by using rate of return regulation 
A) by setting price equal to the average cost of production 
B) by allowing a price that maximizes the profit of the natural monopoly 
C) by using a marginal cost pricing rule 
D) by subsidizing other producers to compete with the monopoly 
E) by using rate of return regulation

Question 18

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

Accepted Answer

A) The ATC curve is downward sloping throughout the relevant range,therefore the MC is lower than the ATC. 
B) The demand curve is downward sloping,therefore price falls as quantity increases. 
C) The MC is constant and equal to price. 
D) Because output is determined by setting MC equal to the price,consumer surplus is maximized. 
E) The firm's MR is always less than its price. 
A) The ATC curve is downward sloping throughout the relevant range,therefore the MC is lower than the ATC. 
B) The demand curve is downward sloping,therefore price falls as quantity increases. 
C) The MC is constant and equal to price. 
D) Because output is determined by setting MC equal to the price,consumer surplus is maximized. 
E) The firm's MR is always less than its price.

Question 19

A price-discriminating monopoly

Accepted Answer

A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly. 
A) sells a larger quantity than it would if it were a single-price monopoly. 
B) is illegal. 
C) cannot offer discounts. 
D) cannot control the price of its product. 
E) makes a smaller economic profit than it would if it were a single-price monopoly.

Question 20

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the consumer surplus 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 consumer surplus created. 
A) ABG. 
B) BEFG. 
C) BCFG. 
D) BCE. 
E) None of the above because there is no consumer surplus created.

Which of the following statements is correct?

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

How can managers of natural monopolies exaggerate their costs?

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

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

Patents I.encourage the invention of new products and production methods. Ii.generally discourage innovation. Iii.are exclusive rights granted to the inventor of a product or service.

Rent seeking

Rent seeking is defined as

Capture theory is

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

In order to maximize its profit,a single-price monopoly produces the amount of output so that

The good produced by a monopoly

-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

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air's marginal revenue will when its total revenue .

How should a natural monopoly be regulated under the social interest theory of regulation?

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

A price-discriminating monopoly

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

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

Which of the following statements is correct?

If a monopoly can perfectly price discriminate,then its marginal revenue curve will be

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then

How can managers of natural monopolies exaggerate their costs?

-Christy's Haircuts,the sole supplier of haircuts in a small town,faces the demand schedule shown in the table above.What is Christy's marginal revenue from the 25th haircut?

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

Patents I.encourage the invention of new products and production methods. Ii.generally discourage innovation. Iii.are exclusive rights granted to the inventor of a product or service.

Rent seeking

Rent seeking is defined as

Capture theory is

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

In order to maximize its profit,a single-price monopoly produces the amount of output so that

The good produced by a monopoly

-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

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air's marginal revenue will ________ when its total revenue ________.

How should a natural monopoly be regulated under the social interest theory of regulation?

Which of the following explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?

A price-discriminating monopoly

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

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

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air's marginal revenue will when its total revenue .