Exam 13: Monopoly

-The above figure illustrates the market for electric power that is served by the one utility in Alberta, Canada. a) If the government did not regulate this utility, what would be the price of a kilowatt hour in this region and how much power would be generated? b) If the government regulates the utility and chooses an average cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated? c) If the government regulates the utility and chooses a marginal cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?

-In the above figure, if the natural monopoly is regulated using a marginal cost pricing rule, then the firm will

If a monopolist was operating in a price range where marginal revenue was negative, it would be

Why will a profit-maximizing, single-price monopolist NOT produce the amount of output that maximizes its total revenue?

Compared to a single-price monopolist, a price-discriminating monopolist

-The creation of a monopoly results in gains to

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

-Which area in the above figure shows the producer surplus at the price and quantity that would be attained if the industry were perfectly competitive?

When an average total cost pricing rule is enforced, average total cost equals ________.

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

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

If economies of scale allow one cable TV firm to supply the entire market at the lowest possible cost, then this company is

Which of the following is true for a single-price monopolist?

-For the single-price monopoly shown in the figure above, the deadweight loss is

A natural monopoly is a firm that owns a key natural resource.

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. If the new company was a natural monopoly, which of the following would be a regulation to ensure an efficient quantity of satellite radio service?

-In the above figure, what price will a single-price monopoly set?

The social interest theory of regulation assumes that

If the price elasticity of demand is less than 1, a monopoly's

-The unregulated, single-price monopoly shown in the figure above makes a total economic profit of