Question 1

Under the social interest theory of regulation,the goal of regulating natural monopolies is

Accepted Answer

A)  to provide a larger, though not maximum, profit for the firms. 
B)  to use average cost pricing. 
C)  to provide an outcome similar to the competitive outcome. 
D)  to provide a the maximum profit for the firms. 
E)  None of the above answers is correct. 
A)  to provide a larger, though not maximum, profit for the firms. 
B)  to use average cost pricing. 
C)  to provide an outcome similar to the competitive outcome. 
D)  to provide a the maximum profit for the firms. 
E)  None of the above answers is correct.

Question 2

Can a monopoly make an economic profit in the long run? Explain your answer.

Accepted Answer

A monopoly can make an economic profit i

Question 3

-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge ________ per hour in rent,Mary would ________.

Accepted Answer

A)  $20 more; earn $0 economic profit 
B)  $20 more; still earn an economic profit because she is a monopolist 
C)  $30 more; earn $0 economic profit 
D)  $10 less; raise her prices and earn a higher profit 
E)  $30 more; operate on the inelastic portion of her demand curve 
A)  $20 more; earn $0 economic profit 
B)  $20 more; still earn an economic profit because she is a monopolist 
C)  $30 more; earn $0 economic profit 
D)  $10 less; raise her prices and earn a higher profit 
E)  $30 more; operate on the inelastic portion of her demand curve

Question 4

For a natural monopoly,economies of scale

Accepted Answer

A)  exist along the long-run average cost curve at least until it crosses the market demand curve. 
B)  and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C)  lead to a legal barrier to entry. 
D)  as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E)  are totally absent. 
A)  exist along the long-run average cost curve at least until it crosses the market demand curve. 
B)  and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
C)  lead to a legal barrier to entry. 
D)  as well as constant returns to scale and diseconomies of scale exist along the long-run average cost curve at least until it crosses the market demand curve. 
E)  are totally absent.

Question 5

Which of the following is NOT correct about patents?

Accepted Answer

A)  Patents encourage invention of new products. 
B)  Patents stimulate innovation. 
C)  A patent is a barrier to entry. 
D)  Patents enable a firm to be a permanent monopoly. 
E)  Patents are granted to the inventor of a product or service. 
A)  Patents encourage invention of new products. 
B)  Patents stimulate innovation. 
C)  A patent is a barrier to entry. 
D)  Patents enable a firm to be a permanent monopoly. 
E)  Patents are granted to the inventor of a product or service.

Question 6

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  minimized. 
E)  undefined. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  minimized. 
E)  undefined.

Question 7

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

Accepted Answer

A)  offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B)  lower its prices to younger customers too. 
C)  prevent senior citizens from reselling their rooms to younger customers. 
D)  shift its demand curve rightward. 
E)  determine if a senior citizen can pay a higher price. 
A)  offset the economic loss from charging senior citizens a lower price by lowering the marginal cost of renting rooms to senior citizens. 
B)  lower its prices to younger customers too. 
C)  prevent senior citizens from reselling their rooms to younger customers. 
D)  shift its demand curve rightward. 
E)  determine if a senior citizen can pay a higher price.

Question 8

With perfect price discrimination,the level of output

Accepted Answer

A)  exceeds the efficient quantity. 
B)  is the same as the amount produced by any monopoly that price discriminates. 
C)  is the same as the amount produced in a perfectly competitive market. 
D)  equals the amount produced by a single-price monopoly. 
E)  is unknown. 
A)  exceeds the efficient quantity. 
B)  is the same as the amount produced by any monopoly that price discriminates. 
C)  is the same as the amount produced in a perfectly competitive market. 
D)  equals the amount produced by a single-price monopoly. 
E)  is unknown.

Question 9

A major characteristic of monopoly is

Accepted Answer

A)  a single seller of a product. 
B)  multiple sellers of a product. 
C)  two sellers of a product. 
D)  a few sellers of differentiated products. 
E)  a few sellers of an identical product. 
A)  a single seller of a product. 
B)  multiple sellers of a product. 
C)  two sellers of a product. 
D)  a few sellers of differentiated products. 
E)  a few sellers of an identical product.

Question 10

A ________ between price and quantity sold because ________.

Accepted Answer

A)  monopoly faces a tradeoff; to sell a larger quantity, it must lower its price 
B)  monopoly does not face a tradeoff; it controls market entry and can sell at any price and any quantity 
C)  natural monopoly faces a tradeoff; it can always price discriminate 
D)  natural monopoly does not face a tradeoff; it is a price maker 
E)  perfectly competitive firm faces a tradeoff; it is a price taker 
A)  monopoly faces a tradeoff; to sell a larger quantity, it must lower its price 
B)  monopoly does not face a tradeoff; it controls market entry and can sell at any price and any quantity 
C)  natural monopoly faces a tradeoff; it can always price discriminate 
D)  natural monopoly does not face a tradeoff; it is a price maker 
E)  perfectly competitive firm faces a tradeoff; it is a price taker

Question 11

-The figure above shows a natural monopoly that the government must regulate.Which of the following pairs most likely results in similar outcomes?
A) marginal cost pricing and rate of return regulation
B) marginal cost pricing and a two-part tariff
C) average cost pricing and rate of return regulation
D) predatory pricing and price caps
E) marginal cost pricing and price cap regulation

Accepted Answer

The answer of  
-The figure above shows a natural...

Question 12

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  greater than in the long run and less than in the short run than 
E)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  greater than in the long run and less than in the short run than 
E)  not comparable to

Question 13

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the amount of food produced

Accepted Answer

A)  remains constant. 
B)  decreases. 
C)  increases. 
D)  might increase or decrease depending on whether the demand for food is elastic or inelastic. 
E)  might increase or decrease depending on whether the monopoly's marginal revenue curve lies below or above its demand curve. 
A)  remains constant. 
B)  decreases. 
C)  increases. 
D)  might increase or decrease depending on whether the demand for food is elastic or inelastic. 
E)  might increase or decrease depending on whether the monopoly's marginal revenue curve lies below or above its demand curve.

Question 14

-The figure above shows a natural monopoly that the government must regulate.If the government uses ________,the firm produces ________ units per week.
A) the HHI; 50
B) an average cost pricing rule; 30
C) rate of return regulation; 40
D) social interest regulation; 30
E) a marginal cost pricing rule; 20

Accepted Answer

The answer of  
-The figure above shows a natural...

Question 15

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

Accepted Answer

@#IMG-DLM& The compl

Question 16

What is price discrimination?

Accepted Answer

A firm price discriminates when it sells

Question 17

Why will a profit-maximizing,single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

Accepted Answer

When total revenue is at its maximum,the

Question 18

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

Accepted Answer

A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude. 
A)  is less than the price. 
B)  is greater than the price. 
C)  is equal to the price. 
D)  might be more than, less than, or equal to the price, depending on whether the slope of the demand curve exceeds 1.0 in magnitude. 
E)  might be more than, less than, or equal to the price, depending on whether the price elasticity of demand exceeds 1.0 in magnitude.

Question 19

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

Accepted Answer

A)  a natural monopoly develops. 
B)  the monopoly encounters competition. 
C)  economic profit is reduced to zero. 
D)  the monopoly converts all of the consumer surplus into economic profit. 
E)  there is always the opportunity to price discriminate. 
A)  a natural monopoly develops. 
B)  the monopoly encounters competition. 
C)  economic profit is reduced to zero. 
D)  the monopoly converts all of the consumer surplus into economic profit. 
E)  there is always the opportunity to price discriminate.

Question 20

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 2 to 3 units?

Accepted Answer

A)  $18 
B)  $4 
C)  $7 
D)  $6 
A)  $18 
B)  $4 
C)  $7 
D)  $6

Under the social interest theory of regulation,the goal of regulating natural monopolies is

Can a monopoly make an economic profit in the long run? Explain your answer.

-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge per hour in rent,Mary would .

For a natural monopoly,economies of scale

Which of the following is NOT correct about patents?

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

With perfect price discrimination,the level of output

A major characteristic of monopoly is

A between price and quantity sold because .

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the amount of food produced

-The figure above shows a natural monopoly that the government must regulate.If the government uses ,the firm produces units per week. A) the HHI; 50 B) an average cost pricing rule; 30 C) rate of return regulation; 40 D) social interest regulation; 30 E) a marginal cost pricing rule; 20

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

What is price discrimination?

Why will a profit-maximizing,single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 2 to 3 units?

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

Under the social interest theory of regulation,the goal of regulating natural monopolies is

Can a monopoly make an economic profit in the long run? Explain your answer.

-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge ________ per hour in rent,Mary would ________.

For a natural monopoly,economies of scale

Which of the following is NOT correct about patents?

If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is

In order for a hotel to successfully price discriminate so that senior citizens are given a discount,the hotel must be able to

With perfect price discrimination,the level of output

A major characteristic of monopoly is

A ________ between price and quantity sold because ________.

With an average cost pricing rule,the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Assume someone organizes all farms in the nation into a single-price monopoly.As a result,the amount of food produced

The table below gives a monopoly's demand schedule.Complete the table by calculating the total revenue and the marginal revenue.

What is price discrimination?

Why will a profit-maximizing,single-price monopoly NEVER produce the amount of output that maximizes its total revenue?

The marginal revenue for a single-price monopoly with a downward-sloping demand curve

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

-The table above gives the demand for a monopolist's output.What is the marginal revenue when output is increased from 2 to 3 units?

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

-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge per hour in rent,Mary would .

A between price and quantity sold because .