Question 1

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

Accepted Answer

A)  sandwich shops
B)  printing services
C)  welding services
D)  automotive service
E)  electric utilitiesF) D) and E)
G) None of the above E

Question 2

Use the figure below to answer the following questions.
  
Figure 13.2.3
-Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Accepted Answer

A)  20 tickets
B)  30 tickets
C)  50 tickets
D)  60 tickets
E)  100 ticketsF) A) and D)
G) A) and E)

Question 3

An efficient use of resources occurs when

Accepted Answer

A)  a deadweight loss arises.
B)  total social benefit from a good equals its total social cost.
C)  producer surplus is eliminated.
D)  consumer surplus is maximized.
E)  a monopoly practices perfect price discrimination.F) None of the above
G) B) and E) D

Question 4

Which of the following is least likely to be a natural monopoly?

Accepted Answer

A)  subway services
B)  electric utilities
C)  water and sewer services
D)  taxicab service
E)  cable television servicesF) C) and E)
G) A) and C)

Question 5

Rate of return regulation can end up serving the self-interest of the firm if

Accepted Answer

A)  there is a great demand for the good.
B)  there is a competitive struggle to determine which firms will supply the market.
C)  the regulated firm overstates its costs of production.
D)  price is set at average total cost.
E)  the rate is set too low.F) A) and D)
G) None of the above C

Question 6

For the regulated natural monopoly, an average cost pricing rule sets price equal to

Accepted Answer

A)  marginal cost.
B)  total fixed cost.
C)  average variable cost.
D)  average fixed cost.
E)  average total cost.F) A) and D)
G) All of the above

Question 7

Use the information below to answer the following questions.
Fact 13.1.1
The following statements give some information about seven markets.
1. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase its market share.
2. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
3. A barrier to entry exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
-Refer to Fact 13.1.1.The firm described in statement ________ is a natural monopoly.The firm described in statement ________ is a legal monopoly.

Accepted Answer

A)  7; 6
B)  2; 7
C)  6; 7
D)  2; 6
E)  1; 4F) A) and B)
G) B) and D)

Question 8

A single-price monopolist

Accepted Answer

A)  maximizes economic profit by producing the quantity at which marginal revenue equals marginal cost.
B)  maximizes economic profit by producing the quantity at which marginal revenue equals average total cost.
C)  can increase the price and the quantity sold simultaneously.
D)  is not restricted by the law of demand.
E)  can sell as much as it wants at a given price because it is the only seller.F) A) and E)
G) A) and D)

Question 9

Capture theory states that

Accepted Answer

A)  public officials favour consumers over producers.
B)  regulations promote the attainment of an efficient outcome.
C)  regulations lead to deadweight loss.
D)  regulation eliminates economic profit.
E)  rate of return regulation is best for all parties.F) B) and D)
G) All of the above

Question 10

The marginal revenue curve for a single-price monopoly

Accepted Answer

A)  is below its demand curve.
B)  is the same as the demand curve.
C)  lies above its demand curve.
D)  is horizontal.
E)  has a slope equal to the slope of the demand curve.F) C) and D)
G) A) and C)

Question 11

Use the figure below to answer the following questions.
  
Figure 13.3.4
-Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Accepted Answer

A)  Q₁ and price is P₁.
B)  Q₁ and price is P₃.
C)  Q₂ and price is P₂.
D)  Q₃ and price is P₀.
E)  Q₄ and price is 0.F) A) and B)
G) None of the above

Question 12

Use the figure below to answer the following questions.
  
Figure 13.2.2
-Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Accepted Answer

A)  $3
B)  $4
C)  $6
D)  $9
E)  $7F) A) and E)
G) A) and B)

Question 13

Social interest theory states that

Accepted Answer

A)  public officials favour consumers over producers.
B)  regulations promote the attainment of an efficient outcome.
C)  regulations promote the attainment of an inefficient outcome.
D)  regulation maximizes economic profit.
E)  rate of return regulation is best for all parties.F) A) and E)
G) D) and E)

Question 14

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Accepted Answer

A)  only Pfizer.
B)  Canada Post, Pfizer, and Rogers Communications.
C)  Canada Post and Pfizer.
D)  only Canada Post.
E)  only Rogers Communications.F) A) and B)
G) A) and C)

Question 15

For a monopoly able to practice perfect price discrimination, the market

Accepted Answer

A)  supply curve is horizontal.
B)  supply curve is the same as the marginal revenue curve.
C)  demand curve is the same as the marginal cost curve.
D)  demand curve is the same as the marginal revenue curve.
E)  demand curve is horizontal.F) B) and C)
G) D) and E)

Question 16

A perfect price-discriminating monopoly produces

Accepted Answer

A)  less than a single-price monopoly.
B)  more than a single-price monopoly but less than a perfectly competitive industry.
C)  less than a monopoly that practices price discrimination but not perfect price discrimination.
D)  more than a perfectly competitive industry.
E)  the same amount as a perfectly competitive industry.F) All of the above
G) A) and B)

Question 17

To prevent monopoly from arising, there must be

Accepted Answer

A)  a single supplier of a good in the market.
B)  no close substitutes for the good.
C)  barriers preventing entry of other firms.
D)  freedom of entry into the market.
E)  economies of scale.F) B) and C)
G) A) and D)

Question 18

A monopoly

Accepted Answer

A)  faces a perfectly elastic demand.
B)  ignores the demand curve because it is the only seller.
C)  can raise the price it charges only if it decreases the quantity that it sells.
D)  can raise the price it charges only if it increases the quantity that it sells.
E)  faces a perfectly inelastic demand.F) None of the above
G) A) and D)

Question 19

Which of the following markets will have the largest deadweight loss?

Accepted Answer

A)  a single-price monopoly
B)  a perfectly competitive market
C)  a perfectly price discriminating monopoly
D)  both B and C
E)  both A and CF) A) and C)
G) B) and C)

Question 20

A monopolist under marginal cost pricing has an incentive to

Accepted Answer

A)  inflate costs.
B)  produce more than the efficient quantity of output.
C)  produce less than the efficient quantity of output.
D)  maximize consumer surplus.
E)  produce the efficient quantity of output.F) B) and D)
G) A) and D)

Exam 13: Monopoly

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

Correct Answer
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E

Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Correct Answer
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An efficient use of resources occurs when

Correct Answer
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D

Which of the following is least likely to be a natural monopoly?

Correct Answer
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Rate of return regulation can end up serving the self-interest of the firm if

Correct Answer
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C

For the regulated natural monopoly, an average cost pricing rule sets price equal to

Correct Answer
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A single-price monopolist

Correct Answer
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Capture theory states that

Correct Answer
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The marginal revenue curve for a single-price monopoly

Correct Answer
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Use the figure below to answer the following questions. Figure 13.3.4 -Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Correct Answer
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Use the figure below to answer the following questions. Figure 13.2.2 -Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Correct Answer
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Social interest theory states that

Correct Answer
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Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Correct Answer
verified

For a monopoly able to practice perfect price discrimination, the market

Correct Answer
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A perfect price-discriminating monopoly produces

Correct Answer
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To prevent monopoly from arising, there must be

Correct Answer
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A monopoly

Correct Answer
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Which of the following markets will have the largest deadweight loss?

Correct Answer
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A monopolist under marginal cost pricing has an incentive to

Correct Answer
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Exam 13: Monopoly

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

Correct AnswerverifiedE

Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

Correct AnswerverifiedShow Answer

An efficient use of resources occurs when

Correct AnswerverifiedD

Which of the following is least likely to be a natural monopoly?

Correct AnswerverifiedShow Answer

Rate of return regulation can end up serving the self-interest of the firm if

Correct AnswerverifiedC

For the regulated natural monopoly, an average cost pricing rule sets price equal to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A single-price monopolist

Correct AnswerverifiedShow Answer

Capture theory states that

Correct AnswerverifiedShow Answer

The marginal revenue curve for a single-price monopoly

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 13.3.4 -Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 13.2.2 -Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

Correct AnswerverifiedShow Answer

Social interest theory states that

Correct AnswerverifiedShow Answer

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

Correct AnswerverifiedShow Answer

For a monopoly able to practice perfect price discrimination, the market

Correct AnswerverifiedShow Answer

A perfect price-discriminating monopoly produces

Correct AnswerverifiedShow Answer

To prevent monopoly from arising, there must be

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

Which of the following markets will have the largest deadweight loss?

Correct AnswerverifiedShow Answer

A monopolist under marginal cost pricing has an incentive to

Correct AnswerverifiedShow Answer

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E

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D

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C

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