Question 1

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

Accepted Answer

A)  There are barriers to entry. 
B)  The monopoly must be keeping the amount earned secret. 
C)  The market must be too small. 
D)  The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E)  Nothing, other firms will enter and will compete away the profit. 
A)  There are barriers to entry. 
B)  The monopoly must be keeping the amount earned secret. 
C)  The market must be too small. 
D)  The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. 
E)  Nothing, other firms will enter and will compete away the profit.

Question 2

Monopolies are inefficient because,at the profit-maximizing output level,

Accepted Answer

A)  MC = MR. 
B)  MC does not equal MR. 
C)  MB = MC. 
D)  MB does not equal MC. 
E)  P = ATC. 
A)  MC = MR. 
B)  MC does not equal MR. 
C)  MB = MC. 
D)  MB does not equal MC. 
E)  P = ATC.

Question 3

-To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Accepted Answer

A)  MR = MC; MR > MC 
B)  MR > MC; MR = MC 
C)  MR = MC; MR = MC 
D)  MR > MC; MR > MC 
E)  P = ATC; P = ATC 
A)  MR = MC; MR > MC 
B)  MR > MC; MR = MC 
C)  MR = MC; MR = MC 
D)  MR > MC; MR > MC 
E)  P = ATC; P = ATC

Question 4

Describe the difference between social interest theory of regulation and the capture theory of regulation.

Accepted Answer

Both are theories of regulation but they

Question 5

-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,how many households in Oakland are served?

Accepted Answer

A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  None of the above answers is correct. 
A)  20,000 
B)  30,000 
C)  40,000 
D)  50,000 
E)  None of the above answers is correct.

Question 6

Under earnings-sharing regulation,if a firm's profits ________ above a certain level,they must be shared with the firm's ________.

Accepted Answer

A)  rise; customers 
B)  fall; customers 
C)  rise; suppliers 
D)  fall; suppliers 
E)  rise; competitors 
A)  rise; customers 
B)  fall; customers 
C)  rise; suppliers 
D)  fall; suppliers 
E)  rise; competitors

Question 7

Patents

Accepted Answer

A)  are granted only to competitive firms and not monopolies. 
B)  require that monopolies increase the amount they produce. 
C)  increase the incentive to capture economies of scale. 
D)  increase the incentive to innovate. 
E)  grant the holder a monopoly that lasts forever. 
A)  are granted only to competitive firms and not monopolies. 
B)  require that monopolies increase the amount they produce. 
C)  increase the incentive to capture economies of scale. 
D)  increase the incentive to innovate. 
E)  grant the holder a monopoly that lasts forever.

Question 8

-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.Compared to a marginal cost pricing rule,under an average cost pricing rule,TWC ________ output by ________ households.

Accepted Answer

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

Question 9

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 10

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

Accepted Answer

The point where MR = MC maximizes any fi

Question 11

The social interest theory of regulation assumes that

Accepted Answer

A)  regulation is against the public interest. 
B)  the public is indifferent to regulation. 
C)  regulation seeks an efficient use of resources. 
D)  the public cares deeply about regulation. 
E)  regulators are captured by the firms being regulated. 
A)  regulation is against the public interest. 
B)  the public is indifferent to regulation. 
C)  regulation seeks an efficient use of resources. 
D)  the public cares deeply about regulation. 
E)  regulators are captured by the firms being regulated.

Question 12

Who receives benefits if regulation works according to social interest theory?

Accepted Answer

A)  the entire economy 
B)  cohesive interest groups 
C)  everyone not in the cohesive interest group 
D)  the regulators 
E)  It is impossible to determine who benefits. 
A)  the entire economy 
B)  cohesive interest groups 
C)  everyone not in the cohesive interest group 
D)  the regulators 
E)  It is impossible to determine who benefits.

Question 13

Which of the following is a legal barrier to entry?
i.public franchise
ii.government license
iii.patent

Accepted Answer

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

Question 14

-In the above figure,the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

Accepted Answer

A)  200; $10 
B)  300; $20 
C)  500; $50 
D)  200; $30 
E)  300; $30 
A)  200; $10 
B)  300; $20 
C)  500; $50 
D)  200; $30 
E)  300; $30

Question 15

-Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and

Question 16

Compared to a similar perfectly competitive industry,a single-price monopoly

Accepted Answer

A)  creates a deadweight loss and decreases economic profit. 
B)  produces more output. 
C)  creates a deadweight loss and decreases consumer surplus. 
D)  is more efficient because there is no wasteful competition. 
E)  sets a lower price because there is less competition. 
A)  creates a deadweight loss and decreases economic profit. 
B)  produces more output. 
C)  creates a deadweight loss and decreases consumer surplus. 
D)  is more efficient because there is no wasteful competition. 
E)  sets a lower price because there is less competition.

Question 17

The theory that regulation seeks an efficient use of resources is the

Accepted Answer

A)  social interest theory. 
B)  producer surplus theory. 
C)  consumer surplus theory. 
D)  capture theory. 
E)  deadweight loss theory. 
A)  social interest theory. 
B)  producer surplus theory. 
C)  consumer surplus theory. 
D)  capture theory. 
E)  deadweight loss theory.

Question 18

The demand curve facing a single-price monopoly

Accepted Answer

A)  lies below the marginal revenue curve. 
B)  lies above the marginal revenue curve. 
C)  is the same as only the marginal revenue curve. 
D)  is the same as only the marginal cost curve. 
E)  is the same as both the marginal revenue curve and the marginal cost curve. 
A)  lies below the marginal revenue curve. 
B)  lies above the marginal revenue curve. 
C)  is the same as only the marginal revenue curve. 
D)  is the same as only the marginal cost curve. 
E)  is the same as both the marginal revenue curve and the marginal cost curve.

Question 19

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.At this output,average total cost is $15.What is the total profit earned?

Accepted Answer

A)  $225 
B)  $285 
C)  $345 
D)  $570 
E)  $19 
A)  $225 
B)  $285 
C)  $345 
D)  $570 
E)  $19

Question 20

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

Accepted Answer

A)  $52 
B)  $18 
C)  $60 
D)  $12 
E)  $20 
A)  $52 
B)  $18 
C)  $60 
D)  $12 
E)  $20

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

Monopolies are inefficient because,at the profit-maximizing output level,

-To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Describe the difference between social interest theory of regulation and the capture theory of regulation.

-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,how many households in Oakland are served?

Under earnings-sharing regulation,if a firm's profits above a certain level,they must be shared with the firm's .

Patents

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

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

The social interest theory of regulation assumes that

Who receives benefits if regulation works according to social interest theory?

Which of the following is a legal barrier to entry? i.public franchise ii.government license iii.patent

-In the above figure,the profit-maximizing output for this single-price monopoly is units and the price is .

-Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Compared to a similar perfectly competitive industry,a single-price monopoly

The theory that regulation seeks an efficient use of resources is the

The demand curve facing a single-price 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.At this output,average total cost is $15.What is the total profit earned?

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

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

If a single-price monopoly is making a large economic profit,what keeps other firms from competing away the profit?

Monopolies are inefficient because,at the profit-maximizing output level,

-To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Describe the difference between social interest theory of regulation and the capture theory of regulation.

-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,how many households in Oakland are served?

Under earnings-sharing regulation,if a firm's profits ________ above a certain level,they must be shared with the firm's ________.

Patents

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

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

The social interest theory of regulation assumes that

Who receives benefits if regulation works according to social interest theory?

Which of the following is a legal barrier to entry? i.public franchise ii.government license iii.patent

-In the above figure,the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.

-Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Compared to a similar perfectly competitive industry,a single-price monopoly

The theory that regulation seeks an efficient use of resources is the

The demand curve facing a single-price 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.At this output,average total cost is $15.What is the total profit earned?

Suppose a single-price monopoly sells 3 units of a good at $20 per unit.If the monopoly sells 4 units,the total revenue increases to $72.What is the marginal revenue of the fourth unit?

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

-To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Under earnings-sharing regulation,if a firm's profits above a certain level,they must be shared with the firm's .

-In the above figure,the profit-maximizing output for this single-price monopoly is units and the price is .