Question 1

When a firm is able to engage in perfect price discrimination, its marginal revenue curve

Accepted Answer

A)  lies below its demand curve.
B)  is the same as its demand curve.
C)  lies above its demand curve.
D)  is the same as its supply curve.
E)  is undefined because it does not exist.F) C) and E)
G) A) and B)

Question 2

To maximize its profit, a single-price monopoly produces the amount of output so that its marginal revenue

Accepted Answer

A)  equals zero.
B)  equals its marginal cost.
C)  exceeds its marginal cost but not necessarily by as much as possible.
D)  is less than its marginal cost.
E)  exceeds its marginal cost by as much as possible.F) A) and B)
G) A) and C)

Question 3

A monopoly is a market with

Accepted Answer

A)  many suppliers each producing an identical product.
B)  no barriers to entry.
C)  many substitutes.
D)  one supplier.
E)  many suppliers each producing a slightly different product.F) D) and E)
G) None of the above

Question 4

An example of a monopoly would be

Accepted Answer

A)  one of many U.S. wheat farmers.
B)  one of the few U.S. auto makers.
C)  AT&T cell phone service.
D)  the local water company.
E)  Taco Bell.F) All of the above
G) D) and E)

Question 5

One of the tendencies that is common among firms regulated using rate of return regulation is to

Accepted Answer

A)  increase production to an inefficient level.
B)  inflate the costs of production.
C)  incur an economic loss.
D)  understate the costs of production.
E)  overstate their total revenue.F) A) and E)
G) A) and D)

Question 6

-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; $30F) B) and C)
G) All of the above

Question 7

Which of the following would create a natural monopoly?

Accepted Answer

A)  ownership of all the available units of a necessary input
B)  an exclusive right granted to supply a good or service
C)  requirement of a government license before the firm can sell the good or service
D)  technology enabling a single firm to produce at a lower average total cost than two or more firms
E)  a patent granted the producer of the good or serviceF) A) and B)
G) C) and E)

Question 8

A monopoly market has

Accepted Answer

A)  a few firms.
B)  a single firm.
C)  two dominating firms in the market.
D)  only two firms in it.
E)  some unspecified number of firms in it.F) A) and B)
G) D) and E)

Question 9

A price-discriminating monopoly is a monopoly that

Accepted Answer

A)  sells its output at a single price to all of its customers.
B)  sells different units of a good or service at different prices.
C)  has control over the resources used to produce the product.
D)  has a license to sell the product.
E)  illegally charges different customers different prices for the good it produces.F) B) and E)
G) B) and C) B

Question 10

The table below gives a monopoly's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.
 $$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { (dollars) }
\end{array} \
\hline 6 & 1 & - & - \
5 & 2 & - & - \
4 & 3 & - & - \
3 & 4 & - & - \
2 & 5 & - & - \
1 & 6 & - & - \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { c c c c }
\begin{arra...

Question 11

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 iiF) None of the above
G) A) and E)

Question 12

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

Accepted Answer

Marginal revenue is less than price.

Question 13

A single-price monopoly

Accepted Answer

A)  sets a single, different price for each consumer.
B)  sets a single price for all consumers.
C)  asks each consumer what single price they would be willing to pay.
D)  sets a single, different price for each of two different groups.
E)  sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay.F) D) and E)
G) C) and E)

Question 14

A single-price monopoly is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This monopoly is

Accepted Answer

A)  not maximizing its profit and should decrease output to increase its profit.
B)  not maximizing its profit and should increase output to increase its profit.
C)  maximizing its profit but should shut down.
D)  maximizing its profit and should not shut down.
E)  maximizing its profit but still should decrease output to earn even more profit.F) B) and C)
G) B) and D)

Question 15

If a natural monopoly is told to set price equal to average cost, then the firm

Accepted Answer

A)  is not able to set marginal revenue equal to marginal cost.
B)  automatically also sets price equal to marginal cost.
C)  will make a substantial economic profit.
D)  will incur an economic loss.
E)  sets a price that is lower than its marginal cost.F) C) and E)
G) A) and C)

Question 16

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect?
 Explain your answer.

Accepted Answer

The statement is correct. A si...

Question 17

If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the

Accepted Answer

A)  government might have to provide a subsidy to the firm to keep it in business.
B)  price is the same as the unregulated monopoly price.
C)  firm makes an economic profit, though not the maximum economic profit.
D)  firm makes the maximum economic profit.
E)  firm makes zero economic profit.F) A) and C)
G) A) and B)

Question 18

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

Accepted Answer

A)  medical doctor
B)  taxi cab driver
C)  the local pizza parlor
D)  the local telephone company
E)  the local Honda dealershipF) A) and E)
G) A) and C)

Question 19

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.F) B) and D)
G) All of the above

Question 20

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.F) A) and E)
G) C) and E) A

Exam 12: Monopoly

When a firm is able to engage in perfect price discrimination, its marginal revenue curve

Correct Answer
verified

To maximize its profit, a single-price monopoly produces the amount of output so that its marginal revenue

Correct Answer
verified

A monopoly is a market with

Correct Answer
verified

An example of a monopoly would be

Correct Answer
verified

One of the tendencies that is common among firms regulated using rate of return regulation is to

Correct Answer
verified

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

Correct Answer
verified

Which of the following would create a natural monopoly?

Correct Answer
verified

A monopoly market has

Correct Answer
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A price-discriminating monopoly is a monopoly that

Correct Answer
verified
B

Correct Answer
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\[\begin{array} { c c c c }
\begin{arra...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified
Marginal revenue is less than price.

A single-price monopoly

Correct Answer
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A single-price monopoly is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This monopoly is

Correct Answer
verified

If a natural monopoly is told to set price equal to average cost, then the firm

Correct Answer
verified

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer.

Correct Answer
verified
The statement is correct. A si...
View Answer

If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the

Correct Answer
verified

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

Correct Answer
verified

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

Correct Answer
verified

A single-price monopoly transfers

Correct Answer
verified
A

Exam 12: Monopoly

When a firm is able to engage in perfect price discrimination, its marginal revenue curve

Correct AnswerverifiedShow Answer

To maximize its profit, a single-price monopoly produces the amount of output so that its marginal revenue

Correct AnswerverifiedShow Answer

A monopoly is a market with

Correct AnswerverifiedShow Answer

An example of a monopoly would be

Correct AnswerverifiedShow Answer

One of the tendencies that is common among firms regulated using rate of return regulation is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would create a natural monopoly?

Correct AnswerverifiedShow Answer

A monopoly market has

Correct AnswerverifiedShow Answer

A price-discriminating monopoly is a monopoly that

Correct AnswerverifiedB

Correct Answerverified\[\begin{array} { c c c c } \begin{arra...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedMarginal revenue is less than price.

A single-price monopoly

Correct AnswerverifiedShow Answer

A single-price monopoly is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This monopoly is

Correct AnswerverifiedShow Answer

If a natural monopoly is told to set price equal to average cost, then the firm

Correct AnswerverifiedShow Answer

"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer.

Correct AnswerverifiedThe statement is correct. A si...View AnswerShow Answer

If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the

Correct AnswerverifiedShow Answer

Which of the following is an example of a person or firm that is most likely to have been granted a public franchise?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A single-price monopoly transfers

Correct AnswerverifiedA

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

Correct Answer
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B

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\[\begin{array} { c c c c }
\begin{arra...
View Answer

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Correct Answer
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Marginal revenue is less than price.

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The statement is correct. A si...
View Answer

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A