Question 1

-For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be

Accepted Answer

A)   4 units per year and the price will be $6.
B)   4 units per year and the price will be $4.
C)   6 units per year and the price will be $4.
D)   None of the above answers is correct.

Question 2

Which of the following statements regarding a marginal-cost pricing rule for a natural monopoly is WRONG?

Accepted Answer

A)   It maximizes total surplus in a regulated industry.
B)   The firm produces the efficient quantity.
C)   The firm's price equals its marginal cost.
D)   The firm makes an economic profit.

Question 3

For a monopoly, at the level of output where marginal revenue equals zero, then the

Accepted Answer

A)   firm earns no revenue.
B)   price elasticity of demand at this amount of output is zero.
C)   firm has maximized total revenue.
D)   firm is a price taker.

Question 4

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Accepted Answer

The monopoly charges a higher price and ...

Question 5

Which of the following is NOT necessary for a firm to engage in price discrimination?

Accepted Answer

A)   The firm must be able to identify different types of buyers.
B)   The firm must be able to separate buyers by preventing resales from one customer to another.
C)   The firm must produce output for different buyers at different costs.
D)   The firm must sell a product that cannot be resold.

Question 6

Price discrimination

Accepted Answer

A)   converts consumer surplus into producer surplus.
B)   converts producer surplus into economic profit.
C)   maximizes the difference between consumer surplus and producer surplus.
D)   converts deadweight loss into consumer surplus.

Question 7

-If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

Accepted Answer

A)   $2.
B)   $4.
C)   $5.
D)   $6.

Question 8

Which of the following statements regarding perfect price discrimination is FALSE?

Accepted Answer

A)   Only part of consumer surplus is captured by the firm as producer surplus.
B)   For the firm, the market demand curve becomes the firm's marginal revenue curve.
C)   The monopoly produces the output at which the marginal revenue equals the marginal cost.
D)   No deadweight loss is created.

Question 9

When comparing a single-price monopoly to a perfectly competitive market with the same costs

Accepted Answer

A)   both the monopoly's output and price are lower than the perfectly competitive market's output and price.
B)   both the monopoly's output and price are higher than the perfectly competitive market's output and price.
C)   the monopoly's output is higher and the monopoly's price is lower than the perfectly competitive market's output and price.
D)   the monopoly's output is smaller and the monopoly's price is higher than the perfectly competitive market's output and price.

Question 10

If a monopolist can perfectly price discriminate, it will

Accepted Answer

A)   charge the same price for each unit sold.
B)   produce until price elasticity of demand equals one.
C)   not be concerned with the market demand.
D)   charge a different price for every unit sold.

Question 11

-The unregulated, single-price monopolist illustrated in the figure above will set a price of

Accepted Answer

A)   $2.00 per unit.
B)   $6.00 per unit.
C)   $8.00 per unit.
D)   $10.00 per unit.

Question 12

-The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

Accepted Answer

A)   4 and 5
B)   3 and 4
C)   2 and 3
D)   1 and 2

Question 13

A single-price monopolist maximizes profits by producing the output at which

Accepted Answer

A)   price equals marginal cost.
B)   price equals marginal revenue.
C)   marginal revenue equals marginal cost.
D)   marginal cost equals average cost.

Question 14

-The motel whose costs are given in the table above has total fixed costs equal to

Accepted Answer

A)   $0.
B)   $100.
C)   $200.
D)   $201.

Question 15

If a marginal cost pricing rule is imposed on the firm in the figure above, the firm will produce

Accepted Answer

A)   5 units.
B)   20 units.
C)   30 units.
D)   40 units.

Question 16

-The demand schedule for a monopolist is given in the above table. Calculate the marginal revenue.

Accepted Answer

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Question 17

A monopolist maximizes its profit by producing the amount of output that sets

Accepted Answer

A)   total revenue equals total cost.
B)   marginal revenue equals marginal cost.
C)   marginal revenue equals zero.
D)   price equals marginal cost.

Question 18

Which of the following statements is TRUE?

Accepted Answer

A)   Perfectly competitive markets are efficient, but monopoly markets never are efficient.
B)   Perfectly competitive markets always reach equilibrium but monopoly markets never reach equilibrium.
C)   Perfect price discriminating monopolists can eliminate all deadweight losses and achieve efficiency.
D)   All the above statements are true.

Question 19

________ is defined as any attempt to capture consumer surplus, producer surplus or economic profit.

Accepted Answer

A)   Search
B)   Rent seeking
C)   Maximizing monopoly profits
D)   Price discrimination

Question 20

A monopoly can price discriminate between two groups of consumers if each group has

Accepted Answer

A)   a large consumer surplus.
B)   a different willingness to pay.
C)   the same willingness to pay.
D)   the ability to resell the good to the other group.

Exam 13: Monopoly

-The demand schedule for a monopolist is given in the above table. Calculate the marginal revenue.

Correct Answerverified The compl...View AnswerShow Answer

-The unregulated, single-price monopolist illustrated in the figure above will set a price of

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Which of the following statements regarding perfect price discrimination is FALSE?

Correct AnswerverifiedShow Answer

A monopolist maximizes its profit by producing the amount of output that sets

Correct AnswerverifiedShow Answer

________ is defined as any attempt to capture consumer surplus, producer surplus or economic profit.

Correct AnswerverifiedShow Answer

For a monopoly, at the level of output where marginal revenue equals zero, then the

Correct AnswerverifiedShow Answer

Compare the outcome in a market with a single-price monopoly to that in a perfectly competitive market.

Correct AnswerverifiedThe monopoly charges a higher price and ...View AnswerShow Answer

Which of the following is NOT necessary for a firm to engage in price discrimination?

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Price discrimination

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-The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

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-The motel whose costs are given in the table above has total fixed costs equal to

Correct AnswerverifiedShow Answer

Which of the following statements regarding a marginal-cost pricing rule for a natural monopoly is WRONG?

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Which of the following statements is TRUE?

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-If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

Correct AnswerverifiedShow Answer

-For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be

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If a monopolist can perfectly price discriminate, it will

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If a marginal cost pricing rule is imposed on the firm in the figure above, the firm will produce

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A single-price monopolist maximizes profits by producing the output at which

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A monopoly can price discriminate between two groups of consumers if each group has

Correct AnswerverifiedShow Answer

When comparing a single-price monopoly to a perfectly competitive market with the same costs

Correct AnswerverifiedShow Answer

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The monopoly charges a higher price and ...
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