Question 1

One way the government could regulate a natural monopoly at the marginal cost level would be to

Accepted Answer

A)  allow the natural monopoly to produce at the profit-maximizing point. 
B)  tax the monopoly. 
C)  place a tariff on the monopoly. 
D)  give the monopoly a patent. 
E)  subsidize the monopoly. 
A)  allow the natural monopoly to produce at the profit-maximizing point. 
B)  tax the monopoly. 
C)  place a tariff on the monopoly. 
D)  give the monopoly a patent. 
E)  subsidize the monopoly. E

Question 2

Which statement about rent seeking is INCORRECT?

Accepted Answer

A)  It may not involve rent in the sense of payment for the use of property. 
B)  It is a form of beneficial competition. 
C)  It aims at securing monopoly rights. 
D)  It is motivated by a desire for increased profits. 
E)  It is often associated with lobbying of policymakers. 
A)  It may not involve rent in the sense of payment for the use of property. 
B)  It is a form of beneficial competition. 
C)  It aims at securing monopoly rights. 
D)  It is motivated by a desire for increased profits. 
E)  It is often associated with lobbying of policymakers. B

Question 3

Which provision in the U.S.Constitution blocks the erection of trade barriers between neighboring states?

Accepted Answer

A)  "No State shall,without the consent of Congress,lay any imposts or duties on imports or exports." 
B)  "...nor shall private property be taken for public use,without just compensation." 
C)  "The Congress shall have power to lay and collect taxes,duties,imposts and excises." 
D)  "The judicial power of the United States shall not ...extend to any suit in law or equity,commenced or prosecuted against one of the United States by citizens of another state." 
E)  "The powers not delegated to the United States by the Constitution ...are reserved to the States respectively." 
A)  "No State shall,without the consent of Congress,lay any imposts or duties on imports or exports." 
B)  "...nor shall private property be taken for public use,without just compensation." 
C)  "The Congress shall have power to lay and collect taxes,duties,imposts and excises." 
D)  "The judicial power of the United States shall not ...extend to any suit in law or equity,commenced or prosecuted against one of the United States by citizens of another state." 
E)  "The powers not delegated to the United States by the Constitution ...are reserved to the States respectively." A

Question 4

The point of the 1890 Sherman Act was to

Accepted Answer

A)  nationalize industries where economies of scale were especially important. 
B)  prevent monopoly practices and promote commercial competition. 
C)  make rent seeking through lobbying of public officials illegal. 
D)  forbid states from imposing import tariffs on other states. 
E)  establish patents and copyrights as ways to protect creative activity. 
A)  nationalize industries where economies of scale were especially important. 
B)  prevent monopoly practices and promote commercial competition. 
C)  make rent seeking through lobbying of public officials illegal. 
D)  forbid states from imposing import tariffs on other states. 
E)  establish patents and copyrights as ways to protect creative activity.

Question 5

Why are barriers to entry so important to obtaining monopoly power in a market?

Accepted Answer

Barriers to entry make it difficult for

Question 6

When a town has a single cable provider

Accepted Answer

A)  the cable company usually offers many different cable packages to satisfy customers' wants. 
B)  customers must buy some cable channels they don't want in order to get the channels they do want. 
C)  the government regulates the cable provider's offerings. 
D)  the cable provider is a price taker. 
E)  the consumers experience no consumer surplus. 
A)  the cable company usually offers many different cable packages to satisfy customers' wants. 
B)  customers must buy some cable channels they don't want in order to get the channels they do want. 
C)  the government regulates the cable provider's offerings. 
D)  the cable provider is a price taker. 
E)  the consumers experience no consumer surplus.

Question 7

Which pricing rule generates the greatest welfare for society?

Accepted Answer

A)  marginal cost 
B)  average cost 
C)  total cost 
D)  fixed cost 
E)  variable cost 
A)  marginal cost 
B)  average cost 
C)  total cost 
D)  fixed cost 
E)  variable cost

Question 8

Answer the following questions based on the accompanying graph.
   
a.What are the profit-maximizing price and quantity?
b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

Accepted Answer

a.The profit-maximizing price and quanti

Question 9

Taxi medallions are an example of

Accepted Answer

A)  perfect competition. 
B)  a naturally created barrier to entry. 
C)  a government-created barrier to entry. 
D)  rent seeking. 
E)  economies of scale. 
A)  perfect competition. 
B)  a naturally created barrier to entry. 
C)  a government-created barrier to entry. 
D)  rent seeking. 
E)  economies of scale.

Question 10

Economies of scale exist

Accepted Answer

A)  only for monopolists. 
B)  when long-run average total costs increase. 
C)  when long-run average total costs decrease. 
D)  when long-run average total costs are constant. 
E)  when governments create barriers to entry. 
A)  only for monopolists. 
B)  when long-run average total costs increase. 
C)  when long-run average total costs decrease. 
D)  when long-run average total costs are constant. 
E)  when governments create barriers to entry.

Question 11

Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions.
  
-When a monopolist lowers its price from $80 to $70,the quantity it is able to sell increases from 100 to 150.The change in revenue associated with the output effect is equal to

Accepted Answer

A)  $3,500. 
B)  -$3,500. 
C)  $500. 
D)  -$500. 
E)  $4,000. 
A)  $3,500. 
B)  -$3,500. 
C)  $500. 
D)  -$500. 
E)  $4,000.

Question 12

Breaking up a company that has a natural monopoly would

Accepted Answer

A)  result in higher production costs. 
B)  result in lower production costs. 
C)  benefit society. 
D)  result in lower prices for consumers. 
E)  increase government tax revenue. 
A)  result in higher production costs. 
B)  result in lower production costs. 
C)  benefit society. 
D)  result in lower prices for consumers. 
E)  increase government tax revenue.

Question 13

Refer to the accompanying figure to answer the following questions.
  
-The revenue received by the profit-maximizing monopolist is

Accepted Answer

A)  $900. 
B)  $150. 
C)  $300. 
D)  $100. 
E)  $450. 
A)  $900. 
B)  $150. 
C)  $300. 
D)  $100. 
E)  $450.

Question 14

What is the usual rationale for governments to issue monopoly-promoting licenses to firms providing services such as trash collection?

Accepted Answer

A)  lower risk for investors in the firms 
B)  increased customer choice 
C)  better-quality services 
D)  economies of scale 
E)  public safety 
A)  lower risk for investors in the firms 
B)  increased customer choice 
C)  better-quality services 
D)  economies of scale 
E)  public safety

Question 15

The typical result of monopoly is ________ prices and ________ output than we find in a competitive market.

Accepted Answer

A)  lower; lower 
B)  higher; higher 
C)  higher; lower 
D)  lower; higher 
E)  higher; the same 
A)  lower; lower 
B)  higher; higher 
C)  higher; lower 
D)  lower; higher 
E)  higher; the same

Question 16

Answer the following questions based on the accompanying graph.
   
a.What are the profit-maximizing price and quantity?
b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

Accepted Answer

a.The profit-maximizing price and quanti

Question 17

At the profit-maximizing output in a monopoly controlled market,the price a monopolist charges is ________ cost.

Accepted Answer

A)  below marginal 
B)  above marginal 
C)  above average total 
D)  below average total 
E)  equal to marginal 
A)  below marginal 
B)  above marginal 
C)  above average total 
D)  below average total 
E)  equal to marginal

Question 18

Two government-created barriers to entry are

Accepted Answer

A)  licensing and economies of scale. 
B)  economies of scale and patent system/copyright law. 
C)  licensing and patent system/copyright law. 
D)  economies of scale and control of resources. 
E)  licensing and control of resources. 
A)  licensing and economies of scale. 
B)  economies of scale and patent system/copyright law. 
C)  licensing and patent system/copyright law. 
D)  economies of scale and control of resources. 
E)  licensing and control of resources.

Question 19

When marginal revenue is negative,the

Accepted Answer

A)  lost revenues associated with the price effect outweigh the revenue gains created by the output effect. 
B)  lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect. 
C)  output effect is negative. 
D)  firm is maximizing revenues. 
E)  firm cannot be maximizing profits. 
A)  lost revenues associated with the price effect outweigh the revenue gains created by the output effect. 
B)  lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect. 
C)  output effect is negative. 
D)  firm is maximizing revenues. 
E)  firm cannot be maximizing profits.

Question 20

Draw graphs of a normal monopoly and a natural monopoly and discuss their differences.

Accepted Answer

@#IMG-DLM& A natural monopoly is different from a

One way the government could regulate a natural monopoly at the marginal cost level would be to

Which statement about rent seeking is INCORRECT?

Which provision in the U.S.Constitution blocks the erection of trade barriers between neighboring states?

The point of the 1890 Sherman Act was to

Why are barriers to entry so important to obtaining monopoly power in a market?

When a town has a single cable provider

Which pricing rule generates the greatest welfare for society?

Answer the following questions based on the accompanying graph. a.What are the profit-maximizing price and quantity? b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

Taxi medallions are an example of

Economies of scale exist

Breaking up a company that has a natural monopoly would

Refer to the accompanying figure to answer the following questions. -The revenue received by the profit-maximizing monopolist is

What is the usual rationale for governments to issue monopoly-promoting licenses to firms providing services such as trash collection?

The typical result of monopoly is prices and output than we find in a competitive market.

Answer the following questions based on the accompanying graph. a.What are the profit-maximizing price and quantity? b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

At the profit-maximizing output in a monopoly controlled market,the price a monopolist charges is ________ cost.

Two government-created barriers to entry are

When marginal revenue is negative,the

Draw graphs of a normal monopoly and a natural monopoly and discuss their differences.

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

Exam 10: Understanding Monopoly

One way the government could regulate a natural monopoly at the marginal cost level would be to

Which statement about rent seeking is INCORRECT?

Which provision in the U.S.Constitution blocks the erection of trade barriers between neighboring states?

The point of the 1890 Sherman Act was to

Why are barriers to entry so important to obtaining monopoly power in a market?

When a town has a single cable provider

Which pricing rule generates the greatest welfare for society?

Answer the following questions based on the accompanying graph. a.What are the profit-maximizing price and quantity? b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

Taxi medallions are an example of

Economies of scale exist

Breaking up a company that has a natural monopoly would

Refer to the accompanying figure to answer the following questions. -The revenue received by the profit-maximizing monopolist is

What is the usual rationale for governments to issue monopoly-promoting licenses to firms providing services such as trash collection?

The typical result of monopoly is ________ prices and ________ output than we find in a competitive market.

Answer the following questions based on the accompanying graph. a.What are the profit-maximizing price and quantity? b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

At the profit-maximizing output in a monopoly controlled market,the price a monopolist charges is ________ cost.

Two government-created barriers to entry are

When marginal revenue is negative,the

Draw graphs of a normal monopoly and a natural monopoly and discuss their differences.

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

The typical result of monopoly is prices and output than we find in a competitive market.