Question 1

An exclusive right granted to a firm to supply a good or service is

Accepted Answer

A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale. 
A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale. C

Question 2

A monopolist under rate of return regulation has an incentive to

Accepted Answer

A) pad costs. 
B) produce more than the efficient quantity of output. 
C) charge a price equal to marginal cost. 
D) maximize consumer surplus. 
E) maximize shareholder profits 
A) pad costs. 
B) produce more than the efficient quantity of output. 
C) charge a price equal to marginal cost. 
D) maximize consumer surplus. 
E) maximize shareholder profits A

Question 3

If a monopolist can perfectly price discriminate,then

Accepted Answer

A) price equals average cost for each unit sold. 
B) price equals marginal cost for each unit sold. 
C) price equals marginal cost for the last unit sold. 
D) the firm can ignore the marginal cost curve. 
E) price is greater than marginal revenue for each unit sold. 
A) price equals average cost for each unit sold. 
B) price equals marginal cost for each unit sold. 
C) price equals marginal cost for the last unit sold. 
D) the firm can ignore the marginal cost curve. 
E) price is greater than marginal revenue for each unit sold. C

Question 4

Use the figure below to answer the following questions.
   Figure 13.3.2
-Consider Figure 13.3.2.Consider a single-price monopoly.If the light grey area shows the consumer surplus,and the dark grey area shows the producer surplus,which graph correctly represents this firm?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (b)and (c) 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (b)and (c)

Question 5

Use the figure below to answer the following questions.
   Figure 13.4.4
-Refer to Figure 13.4.4.Consider a market with a perfect price-discriminating monopolist.If the light grey area shows the consumer surplus and the dark grey area shows the producer surplus,which graph correctly represents this firm?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) none of the graphs 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) none of the graphs

Question 6

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Accepted Answer

A) licensing of professions 
B) economies of scale 
C) issuing a patent 
D) a public franchise 
E) all of the above 
A) licensing of professions 
B) economies of scale 
C) issuing a patent 
D) a public franchise 
E) all of the above

Question 7

Use the figure below to answer the following questions.
   Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3.If this is a single-price monopoly,what area is producer surplus?

Accepted Answer

A) IHD 
B) KHD 
C) KEA 
D) IEAC 
E) None of the above. 
A) IHD 
B) KHD 
C) KEA 
D) IEAC 
E) None of the above.

Question 8

A perfect price-discriminating monopoly

Accepted Answer

A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A & D are correct. 
A) has a demand curve that is also its marginal revenue curve. 
B) maximizes total revenue. 
C) is inefficient. 
D) will produce the quantity at which the marginal cost curve intersects its demand curve. 
E) both A & D are correct.

Question 9

When perfect price discrimination occurs,which one of the following statements is false ?

Accepted Answer

A) Buyers cannot resell the product. 
B) The firm can distinguish between buyers. 
C) The firm sets prices. 
D) The firm captures consumer surplus. 
E) The outcome is less efficient than with single-price monopoly. 
A) Buyers cannot resell the product. 
B) The firm can distinguish between buyers. 
C) The firm sets prices. 
D) The firm captures consumer surplus. 
E) The outcome is less efficient than with single-price monopoly.

Question 10

Use the figure below to answer the following question.
   Figure 13.2.1
-Refer to Figure 13.2.1.This single-price monopoly produces ________ units per day and charges a price of $________ per unit.

Accepted Answer

A) zero;0 
B) 20;75 
C) 40;50 
D) 20;50 
E) 20;20 
A) zero;0 
B) 20;75 
C) 40;50 
D) 20;50 
E) 20;20

Question 11

Firms that can price discriminate between customers do so to ________.

Accepted Answer

A) increase consumer surplus 
B) increase employment 
C) increase economic profit 
D) decrease the quantity they produce 
E) increase producer surplus and deadweight loss 
A) increase consumer surplus 
B) increase employment 
C) increase economic profit 
D) decrease the quantity they produce 
E) increase producer surplus and deadweight loss

Question 12

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus,the pizza firm is

Accepted Answer

A) implementing unfair pricing practices. 
B) incurring a loss on on-campus sales. 
C) eliminating all competition. 
D) located close to the campus. 
E) practising price discrimination. 
A) implementing unfair pricing practices. 
B) incurring a loss on on-campus sales. 
C) eliminating all competition. 
D) located close to the campus. 
E) practising price discrimination.

Question 13

The output of a (not perfect)price-discriminating monopoly is

Accepted Answer

A) less than a single-price monopoly. 
B) more than a single-price monopoly but less than a perfectly competitive industry. 
C) the same amount as a perfectly competitive industry. 
D) more than a perfectly competitive industry. 
E) less than a single-price monopoly but more than a perfectly competitive industry. 
A) less than a single-price monopoly. 
B) more than a single-price monopoly but less than a perfectly competitive industry. 
C) the same amount as a perfectly competitive industry. 
D) more than a perfectly competitive industry. 
E) less than a single-price monopoly but more than a perfectly competitive industry.

Question 14

Social interest theory predicts that the political process will seek to minimize

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) total surplus. 
D) deadweight loss. 
E) average total cost. 
A) producer surplus. 
B) consumer surplus. 
C) total surplus. 
D) deadweight loss. 
E) average total cost.

Question 15

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) None of the above. 
A) $3 
B) $4 
C) $6 
D) $9 
E) None of the above.

Question 16

To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

Accepted Answer

A) $48 
B) $6 
C) $1 
D) -$1 
E) None of the above. 
A) $48 
B) $6 
C) $1 
D) -$1 
E) None of the above.

Question 17

Use the figure below to answer the following questions.
   Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3.What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?

Accepted Answer

A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) FHDC 
A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) FHDC

Question 18

Use the figure below to answer the following questions.
   Figure 13.3.3
-Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive,which area indicates producer surplus?

Accepted Answer

A) AEK 
B) DHK 
C) DIK 
D) DIH 
E) None of the above. 
A) AEK 
B) DHK 
C) DIK 
D) DIH 
E) None of the above.

Question 19

Use the information below to answer the following questions.
Fact 13.5.1
Cascade Springs Inc.is a natural monopoly that bottles water from a spring high in the Rocky Mountains.The total fixed cost it incurs is $80,000,and its marginal cost is 10 cents a bottle.The demand curve for Cascade Springs bottled water is shown in the following figure:
   Figure 13.5.1
-Refer to Figure 13.5.1.Suppose the government regulates the firm with average cost pricing.What is the price?

Accepted Answer

A) $0 a bottle 
B) $0.50 a bottle 
C) $0.30 a bottle 
D) $0.10 a bottle 
E) $0.20 a bottle 
A) $0 a bottle 
B) $0.50 a bottle 
C) $0.30 a bottle 
D) $0.10 a bottle 
E) $0.20 a bottle

Question 20

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

An exclusive right granted to a firm to supply a good or service is

A monopolist under rate of return regulation has an incentive to

If a monopolist can perfectly price discriminate,then

Use the figure below to answer the following questions. Figure 13.3.2 -Consider Figure 13.3.2.Consider a single-price monopoly.If the light grey area shows the consumer surplus,and the dark grey area shows the producer surplus,which graph correctly represents this firm?

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the revenue and cost curves in Figure 13.3.3.If this is a single-price monopoly,what area is producer surplus?

A perfect price-discriminating monopoly

When perfect price discrimination occurs,which one of the following statements is false ?

Use the figure below to answer the following question. Figure 13.2.1 -Refer to Figure 13.2.1.This single-price monopoly produces units per day and charges a price of $ per unit.

Firms that can price discriminate between customers do so to ________.

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus,the pizza firm is

The output of a (not perfect)price-discriminating monopoly is

Social interest theory predicts that the political process will seek to minimize

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?

To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the revenue and cost curves in Figure 13.3.3.What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive,which area indicates producer surplus?

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?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities,preferences,and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 13: Monopoly

An exclusive right granted to a firm to supply a good or service is

A monopolist under rate of return regulation has an incentive to

If a monopolist can perfectly price discriminate,then

Use the figure below to answer the following questions. Figure 13.3.2 -Consider Figure 13.3.2.Consider a single-price monopoly.If the light grey area shows the consumer surplus,and the dark grey area shows the producer surplus,which graph correctly represents this firm?

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the revenue and cost curves in Figure 13.3.3.If this is a single-price monopoly,what area is producer surplus?

A perfect price-discriminating monopoly

When perfect price discrimination occurs,which one of the following statements is false ?

Use the figure below to answer the following question. Figure 13.2.1 -Refer to Figure 13.2.1.This single-price monopoly produces ________ units per day and charges a price of $________ per unit.

Firms that can price discriminate between customers do so to ________.

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus,the pizza firm is

The output of a (not perfect)price-discriminating monopoly is

Social interest theory predicts that the political process will seek to minimize

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?

To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the revenue and cost curves in Figure 13.3.3.What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive,which area indicates producer surplus?

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?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities,preferences,and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Use the figure below to answer the following question. Figure 13.2.1 -Refer to Figure 13.2.1.This single-price monopoly produces units per day and charges a price of $ per unit.