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Exam 24: Monopoly

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Question 21

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Your school pays one rate for the first one million kilowatts of electricity and a lower rate for any power it uses over one million kilowatts.What is occurring here?

A) perfect price discrimination
B) second-degree price discrimination
C) third-degree price discrimination
D) economies of scale

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Question 22

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The Townsend Acts

A) are anti-trust laws passed in the U.S. in the 1930's to limit monopoly power.
B) allow district attorneys the opportunity to plea bargain with accused criminals.
C) were British laws enacted in the 1760's that imposed taxes on products imported to the American colonies, leading (in part) to the Boston Tea Party.
D) were enacted in the late 1800's to permit regulation of natural monopolies.

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Question 23

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Exhibit 24-6 -Refer to Exhibit 24-6.The price and quantity of a single-price monopolist producing good X are P₀ and qB,respectively.The marginal revenue curve is represented by

A monopolist practicing (perfect) price discrimination has

If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves,then the competitive firm will produce a

A monopolist can sell 7,000 units at a price of $5 per unit.Lowering price to all buyers by $1 raises the quantity demanded by 500 units.What is the change in total revenue resulting from this price change?

Arbitrage is

Exhibit 24-7 -Refer to Exhibit 24-7.If D represents the demand curve facing a perfectly price-discriminating monopolist,the price it charges for the last unit sold exceeds the marginal cost of the last unit by

Exhibit 24-7 -Competition is legally prohibited when barriers to entry take the form of

A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.

The monopolist's demand curve is perfectly inelastic.

Exhibit 24-1 -Refer to Exhibit 24-1.According to economist Gordon Tullock,what area is subject to rent seeking activity?

Individuals who spend resources to influence public policy in a way that will redistribute income to themselves are

Describe the circumstance under which profit maximization is the same as revenue maximization. Use a hypothetical numerical example to help explain why this is so.

X-inefficiency occurs when a monopolist produces output at a cost that is greater than the lowest possible cost.

If the monopoly firm's marginal cost curve is either horizontal or upward sloping,it follows that its marginal revenue curve will cut its marginal cost curve at a __________ level of output than where its demand curve cuts its marginal cost curve.It also follows that if the firm were to produce the quantity of output consistent with where its demand curve cut its marginal cost curve,the firm would be __________.

By definition,monopolists sell a product for which there are absolutely no substitutes.

Exhibit 24-4 -Refer to Exhibit 24-4.The profit-maximizing single-price monopolist's maximum profit is

Suppose Johnny,seven years old,is selling lemonade and he sells each of his buyers the refreshment for the maximum price that each buyer is willing to pay.Johnny is practicing

Exhibit 24-7 -Refer to Exhibit 24-7.Let D be the demand curve facing a perfectly price-discriminating monopolist.The lowest price this monopolist will charge is