Question 1

To be able to price discriminate,a firm must

Accepted Answer

A) have a public franchise. 
B) be a natural monopoly. 
C) be able to prevent resales of its good. 
D) have a patent. 
E) have an ownership barrier to entry. 
A) have a public franchise. 
B) be a natural monopoly. 
C) be able to prevent resales of its good. 
D) have a patent. 
E) have an ownership barrier to entry.

Question 2

The above figure shows a market.
-The figure above shows that monopoly is ________ because it produces a level of output at which ________.

Accepted Answer

A) inefficient;marginal benefit equals marginal cost 
B) efficient;marginal benefit equals marginal cost 
C) efficient;marginal benefit exceeds marginal cost 
D) inefficient;marginal benefit exceeds marginal cost 
E) efficient;producer surplus is maximized 
A) inefficient;marginal benefit equals marginal cost 
B) efficient;marginal benefit equals marginal cost 
C) efficient;marginal benefit exceeds marginal cost 
D) inefficient;marginal benefit exceeds marginal cost 
E) efficient;producer surplus is maximized

Question 3

For a single-price monopolist,why is marginal revenue less than price?

Accepted Answer

A) Because the firm is a price taker. 
B) To sell another unit,the price must be lowered. 
C) Demand is elastic when another unit is sold. 
D) Demand is inelastic when another unit is sold. 
E) The question is false because marginal revenue is always equal to price. 
A) Because the firm is a price taker. 
B) To sell another unit,the price must be lowered. 
C) Demand is elastic when another unit is sold. 
D) Demand is inelastic when another unit is sold. 
E) The question is false because marginal revenue is always equal to price.

Question 4

A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units,the monopoly must cut the price to $44.What is the marginal revenue of the extra unit sold?

Accepted Answer

A) $484 
B) $450 
C) $44 
D) $34 
E) -$1 
A) $484 
B) $450 
C) $44 
D) $34 
E) -$1

Question 5

A price-discriminating monopoly is a monopoly that

Accepted Answer

A) sells its output at a single price to all of its customers. 
B) sells different units of a good or service at different prices. 
C) has control over the resources used to produce the product. 
D) has a license to sell the product. 
E) illegally charges different customers different prices for the good it produces. 
A) sells its output at a single price to all of its customers. 
B) sells different units of a good or service at different prices. 
C) has control over the resources used to produce the product. 
D) has a license to sell the product. 
E) illegally charges different customers different prices for the good it produces.

Question 6

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Accepted Answer

A) not maximizing its profit and should decrease output to increase its profit. 
B) not maximizing its profit and should increase output to increase its profit. 
C) maximizing its profit but should shut down. 
D) maximizing its profit and should not shut down. 
E) maximizing its profit but still should decrease output to earn even more profit. 
A) not maximizing its profit and should decrease output to increase its profit. 
B) not maximizing its profit and should increase output to increase its profit. 
C) maximizing its profit but should shut down. 
D) maximizing its profit and should not shut down. 
E) maximizing its profit but still should decrease output to earn even more profit.

Question 7

Which of the following is NOT a requirement for a firm to be able to price discriminate?

Accepted Answer

A) monopoly power 
B) groups of customers with different willingness to pay for the good 
C) economies of scale 
D) ability to keep the members of different customer groups separate 
E) ability to prevent resales of the product by customers 
A) monopoly power 
B) groups of customers with different willingness to pay for the good 
C) economies of scale 
D) ability to keep the members of different customer groups separate 
E) ability to prevent resales of the product by customers

Question 8

A single-price monopoly transfers

Accepted Answer

A) consumer surplus to producers. 
B) producer surplus to consumers. 
C) economic profit to consumers. 
D) economic profit to the government. 
E) economic profit to deadweight loss. 
A) consumer surplus to producers. 
B) producer surplus to consumers. 
C) economic profit to consumers. 
D) economic profit to the government. 
E) economic profit to deadweight loss.

Question 9

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Accepted Answer

Yes,some monopolies are created by gover

Question 10

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Accepted Answer

Marginal cost pricing: The regulated pri

Question 11

Which of the following best describes the capture theory of regulation?
I.Regulation seeks an efficient use of resources.
Ii.Regulation is aimed at keeping prices as low as possible.
Iii.Regulation helps firms maximize economic profit.

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 12

With a natural monopoly,

Accepted Answer

A) no regulation is necessary because it is a natural monopoly. 
B) regulation takes the form of forcing competition from new firms. 
C) regulation takes the form of forcing the company out of business. 
D) regulation can take the form of average cost pricing to allow coverage of costs. 
E) regulation takes the form of breaking the company into several competing firms. 
A) no regulation is necessary because it is a natural monopoly. 
B) regulation takes the form of forcing competition from new firms. 
C) regulation takes the form of forcing the company out of business. 
D) regulation can take the form of average cost pricing to allow coverage of costs. 
E) regulation takes the form of breaking the company into several competing firms.

Question 13

The theory that regulation helps producers to maximize profit is the

Accepted Answer

A) social interest theory. 
B) consumer surplus theory. 
C) antitrust theory. 
D) capture theory. 
E) oligopoly theory of regulatory bodies. 
A) social interest theory. 
B) consumer surplus theory. 
C) antitrust theory. 
D) capture theory. 
E) oligopoly theory of regulatory bodies.

Question 14

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

Accepted Answer

A) greater with marginal cost pricing,but average cost pricing allows for costs to be covered. 
B) the same under both cases,but the profit is greater with average cost pricing. 
C) greater under average cost pricing,but profits are greater with marginal cost pricing. 
D) the same but profits are greater with marginal cost pricing. 
E) greater with marginal cost pricing,and the firm's profit is larger with marginal cost pricing. 
A) greater with marginal cost pricing,but average cost pricing allows for costs to be covered. 
B) the same under both cases,but the profit is greater with average cost pricing. 
C) greater under average cost pricing,but profits are greater with marginal cost pricing. 
D) the same but profits are greater with marginal cost pricing. 
E) greater with marginal cost pricing,and the firm's profit is larger with marginal cost pricing.

Question 15

If a monopoly engages in rent seeking,
I.its average total cost curve is lower than otherwise.
Ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking.
Iii.it necessarily incurs an economic loss.

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 16

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

Accepted Answer

A) that the firm makes a normal profit. 
B) that the firm maximizes its profit. 
C) that consumer surplus is less than what it would be if the firm maximized its profit. 
D) an efficient level of production. 
E) that the firm makes an economic profit. 
A) that the firm makes a normal profit. 
B) that the firm maximizes its profit. 
C) that consumer surplus is less than what it would be if the firm maximized its profit. 
D) an efficient level of production. 
E) that the firm makes an economic profit.

Question 17

A profit-maximizing output for a single-price monopoly is determined by the intersection of the ________ curves and the profit-maximizing price is found on the ________ curve.

Accepted Answer

A) marginal cost and marginal revenue;marginal revenue 
B) marginal cost and marginal revenue;demand 
C) total revenue and total cost;total revenue 
D) marginal cost and average total cost;demand 
E) demand and supply;supply 
A) marginal cost and marginal revenue;marginal revenue 
B) marginal cost and marginal revenue;demand 
C) total revenue and total cost;total revenue 
D) marginal cost and average total cost;demand 
E) demand and supply;supply

Question 18

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the price per pillow is

Accepted Answer

A) $70. 
B) $60. 
C) $40. 
D) $100. 
E) $30. 
A) $70. 
B) $60. 
C) $40. 
D) $100. 
E) $30.

Question 19

If a producer wants a monopoly with a legal barrier to entry,how can this be done?
I.The producer can spend funds lobbying to attain passage of the legal barrier to entry.
Ii.The producer can purchase an existing monopoly.
Iii.The producer can make rent seeking expenditures.

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) None of the above are ways to acquire a monopoly with a legal barrier to entry. 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) None of the above are ways to acquire a monopoly with a legal barrier to entry.

Question 20

The total revenue test using the price elasticity of demand

Accepted Answer

A) explains why monopolies will only operate on the elastic portion of their demand curve. 
B) explains why monopolies will only operate on the inelastic portion of their demand curves. 
C) demonstrates why a monopoly can earn an economic profit in the long run. 
D) determines whether a monopoly can perfectly price discriminate or not. 
E) cannot be used for a price discriminating monopoly. 
A) explains why monopolies will only operate on the elastic portion of their demand curve. 
B) explains why monopolies will only operate on the inelastic portion of their demand curves. 
C) demonstrates why a monopoly can earn an economic profit in the long run. 
D) determines whether a monopoly can perfectly price discriminate or not. 
E) cannot be used for a price discriminating monopoly.

To be able to price discriminate,a firm must

The above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .

For a single-price monopolist,why is marginal revenue less than price?

A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units,the monopoly must cut the price to $44.What is the marginal revenue of the extra unit sold?

A price-discriminating monopoly is a monopoly that

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Which of the following is NOT a requirement for a firm to be able to price discriminate?

A single-price monopoly transfers

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Which of the following best describes the capture theory of regulation? I.Regulation seeks an efficient use of resources. Ii.Regulation is aimed at keeping prices as low as possible. Iii.Regulation helps firms maximize economic profit.

With a natural monopoly,

The theory that regulation helps producers to maximize profit is the

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

If a monopoly engages in rent seeking, I.its average total cost curve is lower than otherwise. Ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking. Iii.it necessarily incurs an economic loss.

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

A profit-maximizing output for a single-price monopoly is determined by the intersection of the curves and the profit-maximizing price is found on the curve.

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the price per pillow is

If a producer wants a monopoly with a legal barrier to entry,how can this be done? I.The producer can spend funds lobbying to attain passage of the legal barrier to entry. Ii.The producer can purchase an existing monopoly. Iii.The producer can make rent seeking expenditures.

The total revenue test using the price elasticity of demand

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

To be able to price discriminate,a firm must

The above figure shows a market. -The figure above shows that monopoly is ________ because it produces a level of output at which ________.

For a single-price monopolist,why is marginal revenue less than price?

A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units,the monopoly must cut the price to $44.What is the marginal revenue of the extra unit sold?

A price-discriminating monopoly is a monopoly that

A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is

Which of the following is NOT a requirement for a firm to be able to price discriminate?

A single-price monopoly transfers

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?

Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing,average cost pricing,rate of return regulation,and price cap regulation.

Which of the following best describes the capture theory of regulation? I.Regulation seeks an efficient use of resources. Ii.Regulation is aimed at keeping prices as low as possible. Iii.Regulation helps firms maximize economic profit.

With a natural monopoly,

The theory that regulation helps producers to maximize profit is the

If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule,we see that output is

If a monopoly engages in rent seeking, I.its average total cost curve is lower than otherwise. Ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking. Iii.it necessarily incurs an economic loss.

The outcome of regulating a natural monopoly using the marginal cost pricing rule is

A profit-maximizing output for a single-price monopoly is determined by the intersection of the ________ curves and the profit-maximizing price is found on the ________ curve.

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the price per pillow is

If a producer wants a monopoly with a legal barrier to entry,how can this be done? I.The producer can spend funds lobbying to attain passage of the legal barrier to entry. Ii.The producer can purchase an existing monopoly. Iii.The producer can make rent seeking expenditures.

The total revenue test using the price elasticity of demand

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

The above figure shows a market. -The figure above shows that monopoly is because it produces a level of output at which .

A profit-maximizing output for a single-price monopoly is determined by the intersection of the curves and the profit-maximizing price is found on the curve.