Question 1

For a monopoly able to perfectly price discriminate, the marginal revenue curve coincides with the demand curve.

Accepted Answer

A) True 
 B)False

Question 2

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Accepted Answer

A)   zero.
B)   $8.00 per day.
C)   $16.00 per day.
D)   $32.00 per day.E) B) and D)
F) C) and D)

Question 3

The use of a two-part price in a regulated natural monopoly

Accepted Answer

A)   maximizes the deadweight loss.
B)   allows the firm to maximize profits.
C)   may make it possible for the firm to obey a marginal cost pricing rule and not go out of business.
D)   All of the above answers are correct.E) B) and C)
F) B) and D)

Question 4

Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's long-run average cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4. If Gene was regulated using a marginal cost pricing rule, the price he would be allowed to charge to wash 100 cars is

Accepted Answer

A)   $10.
B)   $8.
C)   $6.
D)   $4.E) B) and C)
F) B) and D)

Question 5

Which of the following is true of a natural monopoly?

Accepted Answer

A)   Its long-run average cost curve slopes upward as it intersects the demand curve.
B)   Economies of scale exist to only a very low level of output.
C)   Economies of scale allow one firm to supply the entire market at the lowest possible cost.
D)   The firm is not protected by any barrier to entry.E) B) and D)
F) None of the above

Question 6

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Accepted Answer

A) True 
 B)False

Question 7

-The figure above shows the demand curve (D)  faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR) , marginal cost (MC) , and average cost (LRAC)  curves. If Visual is regulated using rate of return regulation, and the regulator knows the firm's costs curves, the company will serve ________ million households and set a price of ________ per household per month.

Accepted Answer

A)   2.5; $30
B)   3; $24
C)   4; $12
D)   2; $36E) C) and D)
F) B) and D)

Question 8

Why are water companies considered a natural monopoly?

Accepted Answer

Once one water company incurs the cost o...

Question 9

A price cap regulation ________.

Accepted Answer

A)   is illegal
B)   is a price floor
C)   is a price ceiling
D)   encourages a firm to operate inefficientlyE) None of the above
F) C) and D)

Question 10

-In the above figure, if this natural monopoly is not regulated the deadweight loss to society is

Accepted Answer

A)   ecf.
B)   ebc.
C)   gac.
D)   gde.E) None of the above
F) B) and C)

Question 11

-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 ________.

Accepted Answer

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 servedE) A) and B)
F) All of the above

Question 12

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

Accepted Answer

A)   0 units of output.
B)   5 units of output.
C)   15 units of output.
D)   20 units of output.E) B) and D)
F) A) and B)

Question 13

-Natural gas is a natural monopoly. The figure above 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 ________.

Accepted Answer

A)   $20 and 30,000 households are served
B)   $40 and 40,000 households are served
C)   $40 and 30,000 households are served
D)   $60 and 20,000 households are servedE) A) and C)
F) B) and C)

Question 14

A monopolist that operates along the elastic range of its demand will find that

Accepted Answer

A)   total revenue increases when price decreases.
B)   total revenue decreases when price decreases.
C)   marginal revenue is negative.
D)   it is more profitable to operate along the inelastic range of the demand curve.E) None of the above
F) A) and B)

Question 15

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output.

Accepted Answer

A)   raise; decrease
B)   lower; increase
C)   lower; decrease
D)   raise; increaseE) B) and D)
F) All of the above

Question 16

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will raise the price by

Accepted Answer

A)   $2.00 per unit.
B)   $4.00 per unit.
C)   $6.00 per unit.
D)   $8.00 per unit.E) A) and D)
F) None of the above

Question 17

It is easier for a monopolist to price discriminate between groups for a service than for a good because

Accepted Answer

A)   it is easier to calculate average willingness to pay for services.
B)   it is easier to distinguish between groups of customers for services than customers for goods.
C)   it is easier for consumers to resell goods than resell services.
D)   customers for goods usually do not differ with respect to their average willingness to pay.E) B) and C)
F) A) and D)

Question 18

What are the characteristics of a market that allow a monopolist to successfully price discriminate between groups?

Accepted Answer

A monopolist can price discriminate betw...

Question 19

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

Accepted Answer

In regulating a natural monopoly, a pric...

Question 20

-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.E) All of the above
F) B) and C)

Exam 13: Monopoly

Correct Answer
verified

The use of a two-part price in a regulated natural monopoly

Correct Answer
verified

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will raise the price by

Correct Answer
verified

Why are water companies considered a natural monopoly?

Correct Answer
verified
Once one water company incurs the cost o...
View Answer

Correct Answer
verified

A monopolist that operates along the elastic range of its demand will find that

Correct Answer
verified

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

Correct Answer
verified
In regulating a natural monopoly, a pric...
View Answer

What are the characteristics of a market that allow a monopolist to successfully price discriminate between groups?

Correct Answer
verified
A monopolist can price discriminate betw...
View Answer

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

Correct Answer
verified

-In the above figure, if this natural monopoly is not regulated the deadweight loss to society is

Correct Answer
verified

-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 ________.

Correct Answer
verified

Which of the following is true of a natural monopoly?

Correct Answer
verified

A price cap regulation ________.

Correct Answer
verified

-Natural gas is a natural monopoly. The figure above 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 ________.

Correct Answer
verified

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will its price and its output.

Correct Answer
verified

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Correct Answer
verified

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

Correct Answer
verified

It is easier for a monopolist to price discriminate between groups for a service than for a good because

Correct Answer
verified

For a monopoly able to perfectly price discriminate, the marginal revenue curve coincides with the demand curve.

Correct Answer
verified

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Correct Answer
verified

Exam 13: Monopoly

Correct AnswerverifiedShow Answer

The use of a two-part price in a regulated natural monopoly

Correct AnswerverifiedShow Answer

-In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will raise the price by

Correct AnswerverifiedShow Answer

Why are water companies considered a natural monopoly?

Correct AnswerverifiedOnce one water company incurs the cost o...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A monopolist that operates along the elastic range of its demand will find that

Correct AnswerverifiedShow Answer

Explain the difference between price cap regulation in a natural monopoly and the effect of a price ceiling in a competitive market.

Correct AnswerverifiedIn regulating a natural monopoly, a pric...View AnswerShow Answer

What are the characteristics of a market that allow a monopolist to successfully price discriminate between groups?

Correct AnswerverifiedA monopolist can price discriminate betw...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

-In the above figure, if this natural monopoly is not regulated the deadweight loss to society is

Correct AnswerverifiedShow Answer

-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 ________.

Correct AnswerverifiedShow Answer

Which of the following is true of a natural monopoly?

Correct AnswerverifiedShow Answer

A price cap regulation ________.

Correct AnswerverifiedShow Answer

-Natural gas is a natural monopoly. The figure above 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 ________.

Correct AnswerverifiedShow Answer

-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will ________ its price and ________ its output.

Correct AnswerverifiedShow Answer

The airline and trucking industries are two examples of industries that were regulated because they were natural monopolies.

Correct AnswerverifiedShow Answer

-The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces

Correct AnswerverifiedShow Answer

It is easier for a monopolist to price discriminate between groups for a service than for a good because

Correct AnswerverifiedShow Answer

For a monopoly able to perfectly price discriminate, the marginal revenue curve coincides with the demand curve.

Correct AnswerverifiedShow Answer

-In the figure above, the redistribution from the consumers to the producer if the firm is a single-price, unregulated monopoly rather than a perfectly competitive industry is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified
Once one water company incurs the cost o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In regulating a natural monopoly, a pric...
View Answer

Correct Answer
verified
A monopolist can price discriminate betw...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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-If a monopoly is producing an amount of output level at which marginal revenue exceeds marginal cost, in order to increase its profit the monopoly will its price and its output.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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