Question 1

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is correct.Competition amo...

Question 2

For a natural monopoly,the efficient quantity is produced when the firm is regulated so that

Accepted Answer

A)  P = ATC.
B)  P > ATC.
C)  P = MC.
D)  P > MC.
E)  P < MC.F) A) and B)
G) C) and E)

Question 3

Which of the following is always true for a single-price monopolist?

Accepted Answer

A)  P > MR
B)  P 
C)  P = MR
D)  P = elasticity of demand
E)  None of the above answers is correct because none of them is always true.F) B) and D)
G) None of the above

Question 4

The above figure shows a market.
-If the market was a monopoly,the quantity would be ________ and the price would be ________;if the market tis perfectly competitive,the quantity would be ________ and the price would be ________.

Accepted Answer

A)  Q1;P1;Q2;P2
B)  Q2;P1;Q1;P2
C)  Q1;P1;Q2;P1
D)  Q1;P2;Q2;P1
E)  Q1;P2;Q1;P1F) B) and D)
G) A) and E)

Question 5

A monopoly

Accepted Answer

A)  is not protected by barriers to entry.
B)  produces a good with no close substitutes.
C)  faces a downward-sloping demand curve.
D)  Both answers A and B are correct.
E)  Both answers B and C are correct.F) D) and E)
G) B) and E)

Question 6

-The above figure represents the demand and marginal revenue curves for Sue's Seafood,a seller of fresh fish.
a.Over what range of output is demand elastic?
b.Over what range of output is demand inelastic?
c.What price maximizes total revenue?
d.What is the price elasticity of demand at the revenue maximizing price?

Accepted Answer

a.Demand is elastic from 0 to 20 pounds ...

Question 7

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Accepted Answer

A)  total revenue is at its maximum when 100 units are produced.
B)  marginal revenue is positive at 100 units.
C)  marginal revenue is negative at 100 units.
D)  Both answers A and B are correct.
E)  Both answers A and C are correct.F) A) and E)
G) B) and C)

Question 8

To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Accepted Answer

A)  MR = MC;MR > MC
B)  MR > MC;MR = MC
C)  MR = MC;MR = MC
D)  MR > MC;MR > MC
E)  P = ATC;P = ATCF) D) and E)
G) A) and B)

Question 9

A major characteristic of monopoly is

Accepted Answer

A)  a single seller of a product.
B)  multiple sellers of a product.
C)  two sellers of a product.
D)  a few sellers of differentiated products.
E)  a few sellers of an identical product.F) C) and E)
G) None of the above

Question 10

When a natural monopoly is regulated using a marginal cost pricing rule,what can you say about the firm's profit and the market's efficiency?

Accepted Answer

Using a marginal cost pricing ...

Question 11

Electric utilities are often considered natural monopolies and are regulated.When would the price be highest: when the utility is not regulated,when it is regulated using an average cost pricing rule,or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Accepted Answer

The price would be highest if ...

Question 12

One of the tendencies that is common among firms regulated using rate of return regulation is to

Accepted Answer

A)  increase production to an inefficient level.
B)  inflate the costs of production.
C)  incur an economic loss.
D)  understate the costs of production.
E)  overstate their total revenue.F) B) and E)
G) B) and D)

Question 13

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is incorrect.The capture t...

Question 14

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

Accepted Answer

The point where MR = MC maximizes any fi...

Question 15

Competition keeps prices lower for consumers.So why do we have patent laws?

Accepted Answer

Patent laws are necessary to promote inn...

Question 16

Natural barriers to entry arise when,over the relevant range of output,there

Accepted Answer

A)  are diseconomies of scale.
B)  are constant returns to scale.
C)  are several firms who produce at the lowest average cost.
D)  are economies of scale.
E)  is one firm that owns a key natural resource.F) C) and E)
G) C) and D)

Question 17

Which of the following is NOT correct about a single-price monopoly?

Accepted Answer

A)  Maximum profit is found where demand is the most inelastic.
B)  Marginal revenue is negative when demand is inelastic.
C)  Marginal revenue is positive when demand is elastic.
D)  To sell more output,the firm must lower its price.
E)  To maximize its profit,the firm produces so that marginal revenue equals marginal cost.F) B) and C)
G) A) and B)

Question 18

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air ________ operate on the ________ portion of its demand curve when total revenue is ________.

Accepted Answer

A)  will always;elastic;increasing
B)  will usually;elastic;decreasing
C)  will never;elastic;increasing
D)  will always;inelastic;increasing
E)  will never;inelastic;increasingF) A) and B)
G) A) and C)

Question 19

Which of the following statements is FALSE?

Accepted Answer

A)  A perfectly competitive market produces more output and charges a lower price than a monopoly.
B)  A perfectly competitive firm produces where MR = MC but a monopoly produces where MR > MC.
C)  In a perfectly competitive market,the price is equal to the marginal cost,but in a market with a single-price monopoly,price exceeds marginal cost.
D)  The consumer surplus is smaller for a market with a monopoly than for a perfectly competitive market.
E)  In the long run,a monopoly can earn a larger economic profit than can a perfectly competitive firm.F) A) and C)
G) B) and D)

Question 20

Which of the following must exist for a firm to engage in price discrimination?

Accepted Answer

A)  The firm must be able to identify and separate its buyers into different classes,and the low-price buyers cannot resell the product to the high-price buyers.
B)  The firm must face an inelastic demand.
C)  The firm must be able to realize economies of scale.
D)  The firm must have no more than one class of buyer.
E)  The firm must be a natural monopoly.F) B) and E)
G) All of the above

Exam 12: Monopoly

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Correct Answer
verified
The statement is correct.Competition amo...
View Answer

Which of the following is always true for a single-price monopolist?

Correct Answer
verified

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Correct Answer
verified

Correct Answer
verified
a.Demand is elastic from 0 to 20 pounds ...
View Answer

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect? Explain your answer.

Correct Answer
verified
The statement is incorrect.The capture t...
View Answer

For a natural monopoly,the efficient quantity is produced when the firm is regulated so that

Correct Answer
verified

When a natural monopoly is regulated using a marginal cost pricing rule,what can you say about the firm's profit and the market's efficiency?

Correct Answer
verified
Using a marginal cost pricing ...
View Answer

Which of the following must exist for a firm to engage in price discrimination?

Correct Answer
verified

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air operate on the portion of its demand curve when total revenue is .

Correct Answer
verified

Electric utilities are often considered natural monopolies and are regulated.When would the price be highest: when the utility is not regulated,when it is regulated using an average cost pricing rule,or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Correct Answer
verified
The price would be highest if ...
View Answer

Competition keeps prices lower for consumers.So why do we have patent laws?

Correct Answer
verified
Patent laws are necessary to promote inn...
View Answer

To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Correct Answer
verified

A monopoly

Correct Answer
verified

Which of the following is NOT correct about a single-price monopoly?

Correct Answer
verified

Natural barriers to entry arise when,over the relevant range of output,there

Correct Answer
verified

One of the tendencies that is common among firms regulated using rate of return regulation is to

Correct Answer
verified

A major characteristic of monopoly is

Correct Answer
verified

The above figure shows a market. -If the market was a monopoly,the quantity would be and the price would be ;if the market tis perfectly competitive,the quantity would be and the price would be .

Correct Answer
verified

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

Correct Answer
verified
The point where MR = MC maximizes any fi...
View Answer

Which of the following statements is FALSE?

Correct Answer
verified

Exam 12: Monopoly

"Because of rent seeking,a monopoly may end up earning a normal profit." Is the previous statement correct or incorrect? Why?

Correct AnswerverifiedThe statement is correct.Competition amo...View AnswerShow Answer

Which of the following is always true for a single-price monopolist?

Correct AnswerverifiedShow Answer

Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Demand is elastic from 0 to 20 pounds ...View AnswerShow Answer

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect? Explain your answer.

Correct AnswerverifiedThe statement is incorrect.The capture t...View AnswerShow Answer

For a natural monopoly,the efficient quantity is produced when the firm is regulated so that

Correct AnswerverifiedShow Answer

When a natural monopoly is regulated using a marginal cost pricing rule,what can you say about the firm's profit and the market's efficiency?

Correct AnswerverifiedUsing a marginal cost pricing ...View AnswerShow Answer

Which of the following must exist for a firm to engage in price discrimination?

Correct AnswerverifiedShow Answer

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air ________ operate on the ________ portion of its demand curve when total revenue is ________.

Correct AnswerverifiedShow Answer

Electric utilities are often considered natural monopolies and are regulated.When would the price be highest: when the utility is not regulated,when it is regulated using an average cost pricing rule,or when it is regulated using a marginal cost pricing rule? When would its price be lowest?

Correct AnswerverifiedThe price would be highest if ...View AnswerShow Answer

Competition keeps prices lower for consumers.So why do we have patent laws?

Correct AnswerverifiedPatent laws are necessary to promote inn...View AnswerShow Answer

To maximize its profit,a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

Which of the following is NOT correct about a single-price monopoly?

Correct AnswerverifiedShow Answer

Natural barriers to entry arise when,over the relevant range of output,there

Correct AnswerverifiedShow Answer

One of the tendencies that is common among firms regulated using rate of return regulation is to

Correct AnswerverifiedShow Answer

A major characteristic of monopoly is

Correct AnswerverifiedShow Answer

The above figure shows a market. -If the market was a monopoly,the quantity would be ________ and the price would be ________;if the market tis perfectly competitive,the quantity would be ________ and the price would be ________.

Correct AnswerverifiedShow Answer

A monopoly can set any price it wants.So why does it still produce at a point where MR = MC,just like a perfectly competitive firm?

Correct AnswerverifiedThe point where MR = MC maximizes any fi...View AnswerShow Answer

Which of the following statements is FALSE?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The statement is correct.Competition amo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Demand is elastic from 0 to 20 pounds ...
View Answer

Correct Answer
verified
The statement is incorrect.The capture t...
View Answer

Correct Answer
verified

Correct Answer
verified
Using a marginal cost pricing ...
View Answer

Correct Answer
verified

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States.Allegiant Air operate on the portion of its demand curve when total revenue is .

Correct Answer
verified

Correct Answer
verified
The price would be highest if ...
View Answer

Correct Answer
verified
Patent laws are necessary to promote inn...
View Answer

To maximize its profit,a perfectly competitive firm produces so that and a single-price monopoly produces so that .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The above figure shows a market. -If the market was a monopoly,the quantity would be and the price would be ;if the market tis perfectly competitive,the quantity would be and the price would be .

Correct Answer
verified

Correct Answer
verified
The point where MR = MC maximizes any fi...
View Answer

Correct Answer
verified