Question 1

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

Accepted Answer

A)  Hard cover books are long lasting and paperbacks can rip easily. 
B)  Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C)  A hardcover is the publishers' way of rewarding the avid readers. 
D)  Publishers are not sure of the demand. 
E)  Publishers cannot price discriminate. 
A)  Hard cover books are long lasting and paperbacks can rip easily. 
B)  Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. 
C)  A hardcover is the publishers' way of rewarding the avid readers. 
D)  Publishers are not sure of the demand. 
E)  Publishers cannot price discriminate.

Question 2

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 3

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly,the deadweight loss 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

Question 4

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 5

A ________ can price discriminate if,in part,it ________.

Accepted Answer

A)  natural monopoly; is the only seller of a good or service 
B)  monopoly; can prevent resales of its product 
C)  monopoly; is the only seller of a good or service 
D)  perfectly competitive firm; can sell goods at a lower price than a monopoly 
E)  perfectly competitive firm; changes from a price taker to a price maker 
A)  natural monopoly; is the only seller of a good or service 
B)  monopoly; can prevent resales of its product 
C)  monopoly; is the only seller of a good or service 
D)  perfectly competitive firm; can sell goods at a lower price than a monopoly 
E)  perfectly competitive firm; changes from a price taker to a price maker

Question 6

When a firm is regulated so it uses an average cost pricing rule,the price

Accepted Answer

A)  exceeds average total cost. 
B)  equals marginal cost. 
C)  is less than marginal cost. 
D)  equals average total cost. 
E)  equals marginal revenue. 
A)  exceeds average total cost. 
B)  equals marginal cost. 
C)  is less than marginal cost. 
D)  equals average total cost. 
E)  equals marginal revenue.

Question 7

-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 is left unregulated,how many households in Oakland are served?

Accepted Answer

A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  10,000 
A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  10,000

Question 8

How can managers of natural monopolies exaggerate their costs?

Accepted Answer

By increasing on-the-job luxury items su

Question 9

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 10

A difference between a perfectly competitive industry and a monopoly is that

Accepted Answer

A)  in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B)  a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C)  only monopolies have an incentive to maximize profit. 
D)  perfectly competitive firms can have a public franchise. 
E)  a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run. 
A)  in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. 
B)  a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. 
C)  only monopolies have an incentive to maximize profit. 
D)  perfectly competitive firms can have a public franchise. 
E)  a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run.

Question 11

-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.In order to maximize profit,the Busy Bee produces ________ hamburgers per hour and sets a price of ________ per hamburger.

Accepted Answer

A)  20; $3.00 
B)  20; $1.00 
C)  30; $2.00 
D)  30; $4.00 
E)  50; $5.00 
A)  20; $3.00 
B)  20; $1.00 
C)  30; $2.00 
D)  30; $4.00 
E)  50; $5.00

Question 12

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Accepted Answer

A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly. 
A)  patented the market. 
B)  a natural monopoly. 
C)  increasing average total costs. 
D)  a legal barrier to entry. 
E)  a discriminatory monopoly.

Question 13

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

Accepted Answer

A)  monopoly. 
B)  a barrier to entry. 
C)  behavior that is not profit-maximizing. 
D)  price discrimination. 
E)  rent seeking. 
A)  monopoly. 
B)  a barrier to entry. 
C)  behavior that is not profit-maximizing. 
D)  price discrimination. 
E)  rent seeking.

Question 14

-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 difference between marginal cost and price

Accepted Answer

A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20. 
A)  $0. 
B)  $40. 
C)  $60. 
D)  $30. 
E)  $20.

Question 15

Price cap regulation involves

Accepted Answer

A)  setting the monopoly's price equal to its average total cost. 
B)  setting the monopoly's price equal to its profit-maximizing price. 
C)  setting a maximum price the monopoly may charge. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost. 
A)  setting the monopoly's price equal to its average total cost. 
B)  setting the monopoly's price equal to its profit-maximizing price. 
C)  setting a maximum price the monopoly may charge. 
D)  assuming a natural monopoly will not charge a higher than profit-maximizing price. 
E)  setting the monopoly's price equal to its marginal cost.

Question 16

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Accepted Answer

Because the monopoly does control the ma

Question 17

-"Price discrimination allows a monopoly to increase its economic profit by capturing part of the consumer surplus and turning it into economic profit." Is the previous statement correct or incorrect? If the statement is correct,why is it important in understanding firms' behaviors? If it is incorrect,why is it incorrect?

Accepted Answer

The statement is correct.The statement i

Question 18

Which of the following must a firm be able to do to successfully price discriminate?
i.divide buyers into different groups according to their willingness to pay
ii.prevent resale of the good or service
iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

Accepted Answer

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

Question 19

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)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  total revenue is at its maximum when 100 units are produced. 
B)  marginal revenue is positive at 100 units. 
C)  marginal revenue is negative at 100 units. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 20

A single-price monopoly

Accepted Answer

A)  sets a single, different price for each consumer. 
B)  sets a single price for all consumers. 
C)  asks each consumer what single price they would be willing to pay. 
D)  sets a single, different price for each of two different groups. 
E)  sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay. 
A)  sets a single, different price for each consumer. 
B)  sets a single price for all consumers. 
C)  asks each consumer what single price they would be willing to pay. 
D)  sets a single, different price for each of two different groups. 
E)  sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay.

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

In equilibrium,rent seeking eliminates the

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

Price discrimination occurs when a firm

A can price discriminate if,in part,it .

When a firm is regulated so it uses an average cost pricing rule,the price

-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 is left unregulated,how many households in Oakland are served?

How can managers of natural monopolies exaggerate their costs?

A price-discriminating monopoly is a monopoly that

A difference between a perfectly competitive industry and a monopoly is that

-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.In order to maximize profit,the Busy Bee produces hamburgers per hour and sets a price of per hamburger.

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

-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 difference between marginal cost and price

Price cap regulation involves

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Which of the following must a firm be able to do to successfully price discriminate? i.divide buyers into different groups according to their willingness to pay ii.prevent resale of the good or service iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

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

A single-price monopoly

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

Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback?

In equilibrium,rent seeking eliminates the

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

Price discrimination occurs when a firm

A ________ can price discriminate if,in part,it ________.

When a firm is regulated so it uses an average cost pricing rule,the price

-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 is left unregulated,how many households in Oakland are served?

How can managers of natural monopolies exaggerate their costs?

A price-discriminating monopoly is a monopoly that

A difference between a perfectly competitive industry and a monopoly is that

If the technology for producing a good enables one firm to meet the entire market demand at a lower average total cost than two or more firms could,then that firm has

Pizza producers charge one price for a single pizza and almost give away a second one.This is an example of

-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 difference between marginal cost and price

Price cap regulation involves

A monopoly,unlike a perfect competitor,has total control in its market because it is the single producer.Why,then,must a single-price monopoly decrease its price if it wants to increase its output?

Which of the following must a firm be able to do to successfully price discriminate? i.divide buyers into different groups according to their willingness to pay ii.prevent resale of the good or service iii.identify into which group (high willingness to pay or low willingness to pay)a buyer falls

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

A single-price monopoly

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

A can price discriminate if,in part,it .