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Which of the following statements about a monopoly is FALSE?


A) Monopolies have no barriers to entry or exit.
B) The good produced by a monopoly has no close substitutes.
C) A monopoly is the only producer of the good.
D) None of the above; that is, all of the above answers are true statements about a monopoly.

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-The figure above shows the costs and demand curves for the Bigshow Cable Company. If the firm is required to set its price according to an average cost pricing rule, the price is ________ and the quantity produced is ________ million. A) $8; 1 B) $6; 1 C) $6; 2 D) $4; 3 -The figure above shows the costs and demand curves for the Bigshow Cable Company. If the firm is required to set its price according to an average cost pricing rule, the price is ________ and the quantity produced is ________ million.


A) $8; 1
B) $6; 1
C) $6; 2
D) $4; 3

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-If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the price will be A) $2. B) $4. C) $5. D) $6. -If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the price will be


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

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-If the above figure illustrated a perfectly competitive industry, the equilibrium market output would be equal to A) 7. B) 11. C) 13. D) 22. -If the above figure illustrated a perfectly competitive industry, the equilibrium market output would be equal to


A) 7.
B) 11.
C) 13.
D) 22.

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-Natural gas is a natural monopoly. The figure shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________. A) $30 and 20,000 household are served B) $10 and 40,000 household are served C) $25 and 20,000 household are served D) $20 and 30,000 households are served -Natural gas is a natural monopoly. The figure shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.


A) $30 and 20,000 household are served
B) $10 and 40,000 household are served
C) $25 and 20,000 household are served
D) $20 and 30,000 households are served

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-The above table gives a monopolist's demand schedule. Complete the table by calculating the total revenue and the marginal revenue. -The above table gives a monopolist's demand schedule. Complete the table by calculating the total revenue and the marginal revenue.

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blured image The compl...

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A single-price monopoly charges the same price


A) even if the demand curve shifts.
B) even if its cost curves shift.
C) to all customers for each unit of output they buy.
D) at all times, and that price equals the firm's marginal revenue.

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-The figure above shows a monopoly firm's demand curve. At point u in the figure, the demand facing the monopoly is A) elastic. B) unit elastic. C) inelastic. D) less than the supply. -The figure above shows a monopoly firm's demand curve. At point u in the figure, the demand facing the monopoly is


A) elastic.
B) unit elastic.
C) inelastic.
D) less than the supply.

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"A single-price monopolist will always charge a price that is on the elastic range of its demand." Explain why the previous statement is correct or incorrect.

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The statement is correct. Only when the ...

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The social interest theory of regulation assumes that


A) regulations promote the attainment of efficiency.
B) regulations promote the attainment of the maximum economic profit.
C) regulators will seek to maximize consumer surplus.
D) public officials seek their own gain through regulation.

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For a monopoly able to practice perfect price discrimination, the market


A) supply curve is the same as the marginal cost curve.
B) supply curve is the same as the marginal revenue curve.
C) demand curve is the same as the marginal cost curve.
D) demand curve is the same as the marginal revenue curve.

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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. Under the terms of the deal, the companies agreed not to raise prices for the next three years. Why would the FTC require prices not to increase for three years?


A) Compared to competition, monopolies are always worse for consumers.
B) Compared to competition, monopolies restrict output and charge higher prices.
C) Compared to competition, monopolies increase prices and output.
D) Compared to competition, monopolies restrict output and charge lower prices.

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How do the price, output, consumer surplus, economic profit, and total surplus for a single-price monopoly compare to that of a competitive industry?

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For the monopolist, price is h...

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-The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly. a) What was the competitive price and quantity? b) What is the monopoly price and quantity? c) What area represents consumer surplus under perfect competition? d) What area represents consumer surplus under monopoly? e) What area represents the deadweight loss of monopoly? -The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly. a) What was the competitive price and quantity? b) What is the monopoly price and quantity? c) What area represents consumer surplus under perfect competition? d) What area represents consumer surplus under monopoly? e) What area represents the deadweight loss of monopoly?

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a) The competitive price was P2 and the c...

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-In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does not inflate its costs, then the firm will produce A) 8 million units and set a price of $21 per unit. B) 12 million units and set a price of $18 per unit. C) 16 million units and set a price of $16 per unit. D) nothing unless the government provides subsidies to cover its losses. -In the above figure, if the natural monopoly is regulated with an average cost pricing rule and the firm does not inflate its costs, then the firm will produce


A) 8 million units and set a price of $21 per unit.
B) 12 million units and set a price of $18 per unit.
C) 16 million units and set a price of $16 per unit.
D) nothing unless the government provides subsidies to cover its losses.

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If an industry is a natural monopoly and regulators decide that the firm must price at marginal cost, then consumers will be ________ off than if the firm was unregulated and the firm's owners will be ________ off than if it was unregulated.


A) better; better
B) better; worse
C) worse; better
D) worse; worse

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-If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal A) $0. B) $4 million. C) $8 million. D) $12 million. -If a marginal cost pricing rule is imposed on the natural monopoly shown in the figure above, then the deadweight loss will equal


A) $0.
B) $4 million.
C) $8 million.
D) $12 million.

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-The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point u, the monopoly's A) total revenue will rise. B) total revenue will fall. C) total revenue will remain the same. D) marginal revenue will increase. -The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point u, the monopoly's


A) total revenue will rise.
B) total revenue will fall.
C) total revenue will remain the same.
D) marginal revenue will increase.

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If a monopolist can perfectly price discriminate, then


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.

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The demand curve facing the monopolist is


A) the same as the market demand curve.
B) more elastic than the market demand curve.
C) less elastic than the market demand curve.
D) upward sloping.

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