Question 1

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

Accepted Answer

A)  $38 
B)  $285 
C)  $570 
D)  $19 
E)  There is not enough information given to answer the question. 
A)  $38 
B)  $285 
C)  $570 
D)  $19 
E)  There is not enough information given to answer the question.

Question 2

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.

Question 3

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

Accepted Answer

A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive. 
A)  1 unit to 2 units. 
B)  2 units to 3 units. 
C)  3 units to 4 units. 
D)  4 units to 5 units. 
E)  None of the above; the total revenue is always positive so the marginal revenue must always be positive.

Question 4

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

Accepted Answer

A)  It is a horizontal line at the competitive industry's price. 
B)  It is a line that lies below the new monopoly's demand curve. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is identical to the demand curve for the monopolist's output. 
E)  It is a line that lies above the new monopoly's demand curve. 
A)  It is a horizontal line at the competitive industry's price. 
B)  It is a line that lies below the new monopoly's demand curve. 
C)  It is a vertical line at the monopoly's chosen output level. 
D)  It is identical to the demand curve for the monopolist's output. 
E)  It is a line that lies above the new monopoly's demand curve.

Question 5

Rent seeking is the act of obtaining special treatment by ________ to create ________.

Accepted Answer

A)  a monopoly; consumer surplus 
B)  the government; economic profit 
C)  consumers; a monopoly 
D)  the government; consumer surplus 
E)  competitive producers; a monopoly 
A)  a monopoly; consumer surplus 
B)  the government; economic profit 
C)  consumers; a monopoly 
D)  the government; consumer surplus 
E)  competitive producers; a monopoly

Question 6

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The social in

Question 7

-Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

Accepted Answer

The price will fall and output will incr

Question 8

-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 35th haircut?

Accepted Answer

A)  zero 
B)  -$5.00 
C)  $5.00 
D)  $12.50 
A)  zero 
B)  -$5.00 
C)  $5.00 
D)  $12.50

Question 9

The process of price cap regulation includes which of the following?
i.a price ceiling
ii.marginal cost pricing
iii.average cost pricing

Accepted Answer

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

Question 10

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

Accepted Answer

A)  choosing output levels according to the profit-maximizing rule. 
B)  using price discrimination. 
C)  increasing production. 
D)  decreasing production. 
E)  decreasing its marginal cost but not changing its average total cost. 
A)  choosing output levels according to the profit-maximizing rule. 
B)  using price discrimination. 
C)  increasing production. 
D)  decreasing production. 
E)  decreasing its marginal cost but not changing its average total cost.

Question 11

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 5 to 6 units?

Accepted Answer

A)  $18 
B)  $4 
C)  $3 
D)  -$2 
A)  $18 
B)  $4 
C)  $3 
D)  -$2

Question 12

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 13

With perfect price discrimination,a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

Accepted Answer

A)  maximum; consumer 
B)  minimum; producer 
C)  maximum; producer 
D)  minimum; consumer 
E)  None of the above answers is correct. 
A)  maximum; consumer 
B)  minimum; producer 
C)  maximum; producer 
D)  minimum; consumer 
E)  None of the above answers is correct.

Question 14

-The above figure represents the cost and demand curves for a natural monopoly that is regulated using a marginal cost pricing rule.
a.What is the quantity?
b.What price is charged?
c.What area represents the consumer surplus when the firm is regulated using a marginal cost pricing rule?
d.What distance represents the firm's loss per unit when the firm is regulated using a marginal cost pricing rule?

Accepted Answer

a.The quantity is the efficient quantity

Question 15

Is a single-price monopoly efficient?

Accepted Answer

A)  Yes, because it creates a deadweight loss. 
B)  No, because it creates a deadweight loss. 
C)  Yes, because consumers gain and producers lose some of their surpluses. 
D)  Yes, because consumers lose and producers gain some of their surpluses. 
E)  Yes, because it produces the quantity at which MR = MC. 
A)  Yes, because it creates a deadweight loss. 
B)  No, because it creates a deadweight loss. 
C)  Yes, because consumers gain and producers lose some of their surpluses. 
D)  Yes, because consumers lose and producers gain some of their surpluses. 
E)  Yes, because it produces the quantity at which MR = MC.

Question 16

-The maximum profit for a single-price monopoly is found when the firm produces the level of output so that

Accepted Answer

A)  marginal revenue equals marginal cost. 
B)  price equals marginal cost. 
C)  it can charge the highest possible price. 
D)  marginal revenue exceeds marginal cost by as much as possible. 
E)  total revenue equals total cost. 
A)  marginal revenue equals marginal cost. 
B)  price equals marginal cost. 
C)  it can charge the highest possible price. 
D)  marginal revenue exceeds marginal cost by as much as possible. 
E)  total revenue equals total cost.

Question 17

Which of the following is an example of a two-part tariff?

Accepted Answer

A)  price discrimination based on the buyers' willingness to pay 
B)  charging a hookup fee plus a monthly charge equal to marginal cost 
C)  higher sales tax on specific products 
D)  different prices based on the cost of production and quantity bought 
E)  A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers. 
A)  price discrimination based on the buyers' willingness to pay 
B)  charging a hookup fee plus a monthly charge equal to marginal cost 
C)  higher sales tax on specific products 
D)  different prices based on the cost of production and quantity bought 
E)  A regulated firm uses marginal cost pricing for some customers and average cost pricing for other customers.

Question 18

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

Question 19

Which of the following is an example of price discrimination?

Accepted Answer

A)  UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B)  Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C)  Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are all correct. 
A)  UPS charges more if a package is sent from New York to Hawaii and less if it is sent from New York to New Jersey. 
B)  Frank's Furniture shop charges no delivery fee for furniture delivered within Dutchess County but charges $40 delivery fee outside of the county. 
C)  Albert pays 25 percent less on prescription drugs because he is a senior citizen. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are all correct.

Question 20

If a natural monopoly is regulated using the marginal cost pricing rule,how will that affect prices,outputs,profits,and the distribution of surpluses? What are the pros and cons to this method of regulation?

Accepted Answer

The marginal cost pricing rule sets the

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

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

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

Rent seeking is the act of obtaining special treatment by to create .

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

-Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

-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 35th haircut?

The process of price cap regulation includes which of the following? i.a price ceiling ii.marginal cost pricing iii.average cost pricing

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 5 to 6 units?

With perfect price discrimination,a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.

Is a single-price monopoly efficient?

-The maximum profit for a single-price monopoly is found when the firm produces the level of output so that

Which of the following is an example of a two-part tariff?

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

Which of the following is an example of price discrimination?

If a natural monopoly is regulated using the marginal cost pricing rule,how will that affect prices,outputs,profits,and the distribution of surpluses? What are the pros and cons to this method of regulation?

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

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38.What is the firm's total revenue?

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

-The above table gives the demand schedule for a single-price monopoly.The marginal revenue first becomes negative when going from

Assume someone organizes all farms in the nation into a single-price monopoly.What is the monopoly's marginal revenue curve?

Rent seeking is the act of obtaining special treatment by ________ to create ________.

"Under the social interest theory of regulation,regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect?

-Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

-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 35th haircut?

The process of price cap regulation includes which of the following? i.a price ceiling ii.marginal cost pricing iii.average cost pricing

One way a company can cover its costs and,at the same time,obey a marginal cost pricing rule is by

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 5 to 6 units?

With perfect price discrimination,a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.

Is a single-price monopoly efficient?

-The maximum profit for a single-price monopoly is found when the firm produces the level of output so that

Which of the following is an example of a two-part tariff?

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

Which of the following is an example of price discrimination?

If a natural monopoly is regulated using the marginal cost pricing rule,how will that affect prices,outputs,profits,and the distribution of surpluses? What are the pros and cons to this method of regulation?

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

Rent seeking is the act of obtaining special treatment by to create .

With perfect price discrimination,a monopoly can extract the price each customer is willing to pay and thereby obtain the entire surplus.