Question 1

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 2

Which of the following is true regarding price discrimination?
i.It converts consumer surplus to economic profit.
ii.A price discriminator must be a monopoly.
iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

Accepted Answer

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

Question 3

One of the tendencies that is common among firms regulated using rate of return regulation is to

Accepted Answer

A)  increase production to an inefficient level. 
B)  inflate the costs of production. 
C)  incur an economic loss. 
D)  understate the costs of production. 
E)  overstate their total revenue. 
A)  increase production to an inefficient level. 
B)  inflate the costs of production. 
C)  incur an economic loss. 
D)  understate the costs of production. 
E)  overstate their total revenue.

Question 4

Patents

Accepted Answer

A)  are a legal barrier to entry. 
B)  remove legal barriers to entry. 
C)  create economies of scale. 
D)  decrease the incentive to innovate. 
E)  are prohibited in the United States. 
A)  are a legal barrier to entry. 
B)  remove legal barriers to entry. 
C)  create economies of scale. 
D)  decrease the incentive to innovate. 
E)  are prohibited in the United States.

Question 5

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 6

Compared to setting a single price,if a firm can price discriminate it

Accepted Answer

A)  makes a larger economic profit. 
B)  makes a lower economic profit. 
C)  makes zero economic profit. 
D)  has no change in its economic profit from when it set a single price. 
E)  might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve. 
A)  makes a larger economic profit. 
B)  makes a lower economic profit. 
C)  makes zero economic profit. 
D)  has no change in its economic profit from when it set a single price. 
E)  might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve.

Question 7

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 8

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 9

A monopoly will arise if

Accepted Answer

A)  two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B)  the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C)  Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D)  several big pizza chains force several small pizzerias out of business. 
E)  people decide they like pizza more than before so some pizzeria's gain new customers. 
A)  two out of three of a town's pizzerias go out of business and only one new pizzeria opens. 
B)  the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. 
C)  Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. 
D)  several big pizza chains force several small pizzerias out of business. 
E)  people decide they like pizza more than before so some pizzeria's gain new customers.

Question 10

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 11

-The above figure represents the market for cable television in Oakland,Florida.Time Warner Communications (TWC)is the sole provider of cable television to the residents of this Central Florida community.If TWC operated under an average cost pricing rule,what is the price of cable television in Oakland?

Accepted Answer

A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $50 
A)  $40 
B)  $30 
C)  $20 
D)  $10 
E)  $50

Question 12

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 13

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

Accepted Answer

A)  distribution of electricity 
B)  diamonds 
C)  first-class mail 
D)  a patented good 
E)  blouses 
A)  distribution of electricity 
B)  diamonds 
C)  first-class mail 
D)  a patented good 
E)  blouses

Question 14

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 15

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The capture t

Question 16

For a single-price monopoly,price is

Accepted Answer

A)  equal to marginal revenue. 
B)  greater than marginal revenue. 
C)  less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D)  less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E)  equal to zero because the firm is not a price taker. 
A)  equal to marginal revenue. 
B)  greater than marginal revenue. 
C)  less than marginal revenue because the firm must lower its price in order to sell another unit of output. 
D)  less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. 
E)  equal to zero because the firm is not a price taker.

Question 17

A single-price monopoly

Accepted Answer

A)  must practice price discrimination. 
B)  can lower its price for only a few select consumers if it wants to increase its sales. 
C)  will set its price equal to a consumer's willingness to pay. 
D)  must lower the price for all customers if it wants to increase its sales. 
E)  is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly. 
A)  must practice price discrimination. 
B)  can lower its price for only a few select consumers if it wants to increase its sales. 
C)  will set its price equal to a consumer's willingness to pay. 
D)  must lower the price for all customers if it wants to increase its sales. 
E)  is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly.

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,his total economic profit is

Accepted Answer

A)  $60. 
B)  $405. 
C)  $0. 
D)  $210,000. 
E)  unknown because more information is needed to determine Paul's profit. 
A)  $60. 
B)  $405. 
C)  $0. 
D)  $210,000. 
E)  unknown because more information is needed to determine Paul's profit.

Question 19

-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 20

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

Accepted Answer

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

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

Which of the following is true regarding price discrimination? i.It converts consumer surplus to economic profit. ii.A price discriminator must be a monopoly. iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

One of the tendencies that is common among firms regulated using rate of return regulation is to

Patents

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

Compared to setting a single price,if a firm can price discriminate it

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

A price-discriminating monopoly

A monopoly will arise if

A natural monopoly is one that arises from

Rent seeking is defined as

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

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

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

For a single-price monopoly,price is

A single-price monopoly

-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,his total economic profit is

-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

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

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 16: Monopoly

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

Which of the following is true regarding price discrimination? i.It converts consumer surplus to economic profit. ii.A price discriminator must be a monopoly. iii.To be able to price discriminate,the firm must be able to identify different types of buyers.

One of the tendencies that is common among firms regulated using rate of return regulation is to

Patents

The demand schedule for a single-price monopoly is given in the table below.Calculate the marginal revenue.

Compared to setting a single price,if a firm can price discriminate it

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

A price-discriminating monopoly

A monopoly will arise if

A natural monopoly is one that arises from

Rent seeking is defined as

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

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

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

For a single-price monopoly,price is

A single-price monopoly

-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,his total economic profit is

-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

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

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters