Question 1

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

Accepted Answer

A)  the trademark protecting Gatorade 
B)  the talents of Tom Hanks 
C)  the local water company 
D)  the patent on an Intel processor 
E)  De Beers' ownership of a large fraction of the world's diamonds 
A)  the trademark protecting Gatorade 
B)  the talents of Tom Hanks 
C)  the local water company 
D)  the patent on an Intel processor 
E)  De Beers' ownership of a large fraction of the world's diamonds

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Any firm can price discriminate. 
B)  Only firms that sell high-priced products can price discriminate. 
C)  In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D)  In order to price discriminate, the firms must sell a low-priced product. 
E)  Price discrimination is always illegal. 
A)  Any firm can price discriminate. 
B)  Only firms that sell high-priced products can price discriminate. 
C)  In order to price discriminate, a firm must sell a good or service that cannot be resold. 
D)  In order to price discriminate, the firms must sell a low-priced product. 
E)  Price discrimination is always illegal.

Question 3

A natural monopoly that is regulated to set price equal to marginal cost

Accepted Answer

A)  makes an economic profit. 
B)  makes zero economic profit. 
C)  incurs an economic loss. 
D)  could make an economic loss, an economic profit, or zero economic profit. 
E)  makes zero normal profit. 
A)  makes an economic profit. 
B)  makes zero economic profit. 
C)  incurs an economic loss. 
D)  could make an economic loss, an economic profit, or zero economic profit. 
E)  makes zero normal profit.

Question 4

An airline company

Accepted Answer

A)  cannot price discriminate because it is against the law. 
B)  price discriminates by charging higher prices to business travelers. 
C)  price discriminates by charging lower prices to business travelers. 
D)  price discriminates even though its profits are lower because competition forces it to do so. 
E)  has fewer customers because it price discriminates than it would have if it did not price discriminate. 
A)  cannot price discriminate because it is against the law. 
B)  price discriminates by charging higher prices to business travelers. 
C)  price discriminates by charging lower prices to business travelers. 
D)  price discriminates even though its profits are lower because competition forces it to do so. 
E)  has fewer customers because it price discriminates than it would have if it did not price discriminate.

Question 5

Which of the following firms is most likely to be a monopoly?

Accepted Answer

A)  local restaurant 
B)  local distributor of natural gas 
C)  local book store 
D)  clothing store 
E)  local bank 
A)  local restaurant 
B)  local distributor of natural gas 
C)  local book store 
D)  clothing store 
E)  local bank

Question 6

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

Accepted Answer

A)  first unit is less than $20. 
B)  third unit is less than $20. 
C)  third unit is more than $20. 
D)  third unit is also $20. 
E)  more information is needed to determine if the marginal revenue for the third unit is more than, less than, or equal to $20. 
A)  first unit is less than $20. 
B)  third unit is less than $20. 
C)  third unit is more than $20. 
D)  third unit is also $20. 
E)  more information is needed to determine if the marginal revenue for the third unit is more than, less than, or equal to $20.

Question 7

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

Accepted Answer

The profit-maximizing output i

Question 8

How does marginal revenue compare to price for a single-price monopoly?

Accepted Answer

Marginal r

Question 9

Why do some utilities have an incentive to exaggerate their costs of production?

Accepted Answer

Because utilities are generally allowed

Question 10

Natural barriers to entry arise when,over the relevant range of output,there

Accepted Answer

A)  are diseconomies of scale. 
B)  are constant returns to scale. 
C)  are several firms who produce at the lowest average cost. 
D)  are economies of scale. 
E)  is one firm that owns a key natural resource. 
A)  are diseconomies of scale. 
B)  are constant returns to scale. 
C)  are several firms who produce at the lowest average cost. 
D)  are economies of scale. 
E)  is one firm that owns a key natural resource.

Question 11

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

Accepted Answer

A)  2,000 pounds. 
B)  3,000 pounds. 
C)  4,000 pounds. 
D)  5,000 pounds. 
E)  less than 2,000 pounds. 
A)  2,000 pounds. 
B)  3,000 pounds. 
C)  4,000 pounds. 
D)  5,000 pounds. 
E)  less than 2,000 pounds.

Question 12

With price discrimination,a monopoly

Accepted Answer

A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  can charge a single price to all customers. 
D)  produces less output than if it does not price discriminate. 
E)  converts consumer surplus into deadweight loss. 
A)  converts consumer surplus into economic profit. 
B)  converts producer surplus into economic profit. 
C)  can charge a single price to all customers. 
D)  produces less output than if it does not price discriminate. 
E)  converts consumer surplus into deadweight loss.

Question 13

A single-price monopoly transfers

Accepted Answer

A)  consumer surplus to producers. 
B)  producer surplus to consumers. 
C)  economic profit to consumers. 
D)  economic profit to the government. 
E)  economic profit to deadweight loss. 
A)  consumer surplus to producers. 
B)  producer surplus to consumers. 
C)  economic profit to consumers. 
D)  economic profit to the government. 
E)  economic profit to deadweight loss.

Question 14

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

Accepted Answer

A)  more output. 
B)  less output. 
C)  the same output. 
D)  some amount that might be more, less, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E)  some amount that might be more, less, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve. 
A)  more output. 
B)  less output. 
C)  the same output. 
D)  some amount that might be more, less, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E)  some amount that might be more, less, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve.

Question 15

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o

Question 16

-"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct.Competition amo

Question 17

A monopoly produces a product ________ and there ________ barriers to entry into the market.

Accepted Answer

A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are 
A)  identical to its many competitors; are 
B)  with no close substitutes; are 
C)  identical to its many competitors; are no 
D)  with no close substitutes; are no 
E)  slightly different from those of its many competitors; are

Question 18

A monopoly creates a deadweight loss because the monopoly

Accepted Answer

A)  sets a price that is too low. 
B)  makes a normal profit. 
C)  does not maximize profit. 
D)  produces less than the efficient quantity. 
E)  produces more than the efficient quantity. 
A)  sets a price that is too low. 
B)  makes a normal profit. 
C)  does not maximize profit. 
D)  produces less than the efficient quantity. 
E)  produces more than the efficient quantity.

Question 19

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

Accepted Answer

A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2 
A)  6 and 5 
B)  5 and 4 
C)  4 and 3 
D)  3 and 2

Question 20

The figure above shows a natural monopoly regulated using a marginal cost pricing rule.
-In the figure above,the length of the double sided arrow is the

Accepted Answer

A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  economic loss per unit. 
E)  economic profit. 
A)  consumer surplus. 
B)  deadweight loss. 
C)  producer surplus. 
D)  economic loss per unit. 
E)  economic profit.

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

Which of the following statements is correct?

A natural monopoly that is regulated to set price equal to marginal cost

An airline company

Which of the following firms is most likely to be a monopoly?

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

How does marginal revenue compare to price for a single-price monopoly?

Why do some utilities have an incentive to exaggerate their costs of production?

Natural barriers to entry arise when,over the relevant range of output,there

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

With price discrimination,a monopoly

A single-price monopoly transfers

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

Why are water companies considered a natural monopoly?

-"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

A monopoly produces a product and there barriers to entry into the market.

A monopoly creates a deadweight loss because the monopoly

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the length of the double sided arrow is the

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 an example of a natural monopoly?

Which of the following statements is correct?

A natural monopoly that is regulated to set price equal to marginal cost

An airline company

Which of the following firms is most likely to be a monopoly?

A single-price monopoly faces a linear demand curve.If the marginal revenue for the second unit is $20,then the marginal revenue for the

-A single-price monopoly has the demand and marginal cost schedules given in the above table.What is the profit-maximizing level of output and price?

How does marginal revenue compare to price for a single-price monopoly?

Why do some utilities have an incentive to exaggerate their costs of production?

Natural barriers to entry arise when,over the relevant range of output,there

-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is

With price discrimination,a monopoly

A single-price monopoly transfers

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

Why are water companies considered a natural monopoly?

-"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

A monopoly produces a product ________ and there ________ barriers to entry into the market.

A monopoly creates a deadweight loss because the monopoly

-The table above gives the demand for a monopolist's output.Between which two quantities is demand elastic?

The figure above shows a natural monopoly regulated using a marginal cost pricing rule. -In the figure above,the length of the double sided arrow is the

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 monopoly produces a product and there barriers to entry into the market.