Quiz 13: Monopoly

Market structures are categorized by: A)the number and size of the firms. B)whether products are differentiated and the extent of advertising. C)the number of firms and whether products are differentiated. D)the size of the firms and the extent of advertising.

Which statement about the differences between monopoly and perfect competition is INCORRECT? A)A monopolist has market power,while a perfect competitor does not. B)Unlike a perfectly competitive firm,a monopoly can make positive economic profits in the long run. C)A monopoly will charge a higher price and produce a smaller quantity than will a competitive market with the same demand and cost structure. D)Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than does a comparable perfectly competitive industry.

Which statement concerning monopoly is TRUE? A)Monopoly firms are always larger than are perfectly competitive firms. B)A monopoly has no rivals. C)Barriers to entry do not prevent other firms from entering a monopolized industry. D)Monopolists produce more output than does a competitive market with the same demand and cost structure.

_____ firms have the MOST market power. A)Monopoly B)Duopoly C)Oligopoly D)Monopolistic competition

An industry with a single producer that sells a single product with no substitutes is a: A)perfectly competitive industry. B)monopoly. C)oligopoly. D)monopolistically competitive industry.

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is: A)a duopoly. B)a monopoly. C)an oligopoly. D)perfect competition.

A monopoly is a market characterized by a: A)single seller. B)product with many close substitutes. C)large number of small firms. D)small number of large firms.

A monopoly: A)produces a product with no close substitutes. B)is composed of a single buyer and several sellers. C)is composed of a large number of small firms. D)is composed of a small number of large firms.

Diamond rings are relatively scarce because: A)according to geologists,diamonds are less common than is any other gem-quality stone. B)the demand for diamonds is so high. C)diamond producers limit the quantity supplied to the market. D)of monopolistic competition.

De Beers became a monopoly by: A)establishing control over diamond mines. B)use of economies of scale. C)use of technological superiority. D)ownership of a patent.

A monopolist is likely to produce _____ and charge _____ than is a comparable perfectly competitive firm. A)more;more B)less;more C)more;less D)less;less

In contrast with perfect competition,a monopolist: A)produces more at a lower price. B)produces where MR > MC,and a perfectly competitively firm produces where P = MC. C)may have economic profits in the long run. D)earns zero economic profits in the long run.

Because of monopoly,consumers experience _____ than they do with perfect competition. A)more choices B)larger quantities C)higher quality D)higher prices

The ability of a monopolist to raise the price of a product above the competitive level by reducing the output is known as: A)product differentiation. B)barrier to entry. C)market power. D)patents and copyrights.

Most electric,gas,and water companies are examples of _____ monopolies. A)unregulated B)natural C)restricted-input D)sunk-cost

Suppose that you build a high-speed,magnetically powered transportation system from New York to Los Angeles,and you are the only firm providing this service.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly is the result of your: A)control of a scarce resource or input. B)technological superiority. C)increasing returns to scale. D)use of government-set barriers.

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts,your monopoly would result from: A)control of a scarce resource or input. B)technological superiority. C)increasing returns to scale. D)government-set barriers.

If you had an official license for the exclusive right to sell breakfast bagels in your community,your monopoly would result from: A)control of a scarce resource or input. B)technological superiority. C)increasing returns to scale. D)government-set barriers.

The De Beers company is described as a monopolist in the production of: A)diamonds. B)software. C)oil. D)beer.

You own a lemonade stand in a competitive market,and as such,you are a price-taking firm.Which event would MOST likely increase your market power? A)The government abolishes the system of patents and copyrights. B)A booming economy increases the demand for lemonade and attracts entry into the market. C)The average total cost curve for firms in the industry becomes horizontal. D)You acquire exclusive rights to harvest lemons from all domestic citrus orchards.

Conditions that keep new firms out of a monopoly market are: A)barriers to entry. B)terms of sale. C)labor market stipulations. D)production controls.

A natural monopoly exists whenever a single firm: A)is owned and operated by the government. B)is investor owned but has been granted the exclusive right by the government to operate in a market. C)has economies of scale over the entire range of production that is relevant to its market. D)has gained control over a strategic input of an important production process.

Natural monopolies are NOT likely to include: A)a diamond-mining company. B)a gas company. C)an electricity company. D)railways.

Suppose that you build a new jumbo jet that can carry five times more passengers than can any other competitor.You have high fixed costs due to the quantity of capital used to build the jets,and average cost is decreasing for all levels of demand.In this case,your monopoly would result from: A)sunk costs. B)location. C)economies of scale. D)government restrictions.

A firm that has economies of scale: A)at low output and diseconomies of scale at high output is a natural monopoly. B)over the entire range of output demanded is a natural monopoly. C)at any particular level of output is a natural monopoly. D)has a continually rising long-run average cost curve.

The land you own has the only known source of aloe needed to make anti-itch lotion.In this case,your monopoly results from: A)government restrictions. B)location. C)sunk costs. D)ownership of scarce inputs.

If the state government gave you the exclusive right to sell cement to municipalities,your monopoly would result from: A)sunk costs. B)government restrictions to entry. C)economies of scale. D)location.

A monopoly is MOST likely to be temporary if the monopoly power is derived from: A)high barriers to entry. B)a fundamental lack of substitutes for the monopolist's product. C)economies of scale. D)technological change.

If a product's usefulness increases with the number of users,it: A)has network externalities. B)is a monopoly. C)is a conglomerate. D)has an exclusive franchise.

Which factor is NOT a barrier to entry? A)control of scarce resources B)economies of scale C)patents and copyrights D)diseconomies of scale

Critics of the National Collegiate Athletic Association (NCAA)argue that the NCAA monopolizes college athletics and prevents student athletes from earning money while in college.If this is true,what type of entry barrier does the NCAA have? A)a patent B)a copyright C)control of a scarce resource or input D)economies of scale

Lenoia runs a natural monopoly producing electricity for a small mountain village.The barrier preventing other firms from competing with her is: A)her control of scarce natural resources. B)the existence of economies of scale. C)her technological superiority. D)a government-set barrier.

Which factor is NOT a barrier to entry? A)control of an input essential for production B)government-set barriers such as patents C)a ban on certain kinds of advertising D)the existence of significant economies of scale

Microsoft and its operating system are often cited as an example of a company that grew into a monopolist through: A)ownership of a resource. B)patents. C)network externalities. D)large economies of scale.

Network externalities exist when a good's value to the consumer rises as: A)the number of people who use the good increases. B)the number of people who use the good decreases. C)the number of people who use the good remains constant. D)technology improves.

A monopoly is an industry structure characterized by: A)a single buyer and several sellers. B)a product with many close substitutes. C)a large number of small firms. D)barriers to entry and exit.

Large barriers to entry are one reason that a monopoly: A)earns an economic profit in the long run. B)produces at the minimum average total cost in the long run. C)produces with no fixed costs in the long run. D)maximizes its profits by producing where P = MC.

The demand curve facing a monopolist is: A)horizontal,the same as that facing a perfectly competitive firm. B)downward sloping,the same as that facing a perfectly competitive firm. C)upward sloping,the same as that facing a perfectly competitive firm. D)downward sloping,unlike the horizontal demand curve facing a perfectly competitive firm.

Which statement is TRUE? A)A monopoly firm is a price taker. B)MR > P if the demand curve is downward sloping. C)MR = MC is a profit-maximizing rule for any firm. D)In monopoly,P = MC when profits are maximized.

The demand curve for a monopoly is: A)the sum of the supply curves of all of the firms in the monopoly's industry. B)the industry demand curve. C)horizontal because no one can enter. D)perfectly elastic.

A firm that faces a downward-sloping demand curve is a: A)price setter. B)quantity minimizer. C)quantity taker. D)price taker.

Because monopoly firms are price setters,they: A)can sell more only by lowering the price. B)sell more at higher prices than at lower prices. C)take the market-determined price as given and sell all they can at that price. D)charge the highest possible price.

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can charge only $20,000 each.The quantity effect of selling the sixth motor home is: A)$20,000. B)$10,000. C)$15,000. D)$21,000.

Wendy has a monopoly in the retailing of motor homes.She can sell five per week at $21,000 each.If she wants to sell six,she can only charge $20,000 each.The price effect of selling the sixth motor home is: A)$20,000. B)-$15,000. C)-$5,000. D)$25,000.

After the first unit sold,the marginal revenue a monopolist receives from selling one more unit of a good is less than the price of that unit because of: A)diminishing marginal returns. B)increasing marginal cost. C)a downward-sloping demand curve. D)declining average fixed cost.

Mr.Porter sells 10 bottles of champagne per week at $50 per bottle.He can sell 11 bottles per week if he lowers the price to $45 per bottle.The quantity and the price effects on total revenue would be,respectively,an increase of _____ and a decrease of _____. A)$450;$500 B)$495;$550 C)$45;$5 D)$45;$50

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _____ demand curve,while the purely competitive firm has a _____ demand curve. A)downward-sloping;perfectly elastic B)perfectly inelastic;perfectly elastic C)downward-sloping;perfectly inelastic D)perfectly elastic;downward-sloping

The demand curve for a monopoly is: A)the MR curve above the AVC curve. B)the MR curve above the horizontal axis. C)the entire MR curve. D)above the MR curve.

Suppose that a monopoly computer chip maker increases production from 10 microchips to 11 microchips.If the market price declines from $30 per unit to $29 per unit,marginal revenue for the eleventh unit is: A)$1. B)$9. C)$19. D)$29.

Marginal revenue for a monopolist is: A)equal to price. B)greater than price. C)less than price. D)equal to average revenue.

A downward-sloping demand curve will ensure that _____ is TRUE for a monopoly. A)P = MR B)P > MR C)P < MR D)P = MC

Which statement is TRUE? A)Instead of applying the marginal decision rule,monopoly firms just set the price as high as possible. B)If demand is downward sloping,P = MR. C)If demand is downward sloping,P = ATC. D)If demand is downward sloping,P > MR.

The demand curve for a monopoly is: A)above the marginal revenue curve. B)below the marginal revenue curve. C)horizontal because of economies of scale. D)infinitely elastic.

The demand curve facing a monopolist is: A)downward sloping. B)vertical. C)horizontal. D)upward sloping.

The demand curve facing a monopolist is always: A)the same as the industry's demand curve. B)perfectly elastic. C)unit-elastic. D)perfectly inelastic.

The demand curve facing a monopolist is: A)vertical,the same as that facing a perfectly competitive firm. B)perfectly inelastic,the same as that facing a perfectly competitive firm. C)upward sloping,the same as that facing a perfectly competitive firm. D)downward sloping,like the industry demand curve in perfect competition.

The demand curve for a monopoly is: A)the MC curve above the AVC curve. B)the MR curve above the horizontal axis. C)identical to the MR curve. D)also the industry demand curve.

Marginal revenue for a monopolist is: A)equal to price. B)greater than price. C)less than price. D)the change in total revenue plus the change in output.

If a firm faces a downward-sloping demand curve,it will ensure that: A)P = ATC. B)P > MR. C)P < MC. D)P = MC.

A monopolist's marginal cost curve shifts up,but the firm's demand curve remains the same and the firm does not shut down.Compared with the condition before the increase in marginal costs,the monopolist will _____ its price and _____ its level of production. A)raise;decrease B)not change;decrease C)raise;increase D)lower;increase

Suppose a monopoly is producing output so that marginal revenue equals marginal cost.If the monopolist reduces output,it: A)can charge a higher price. B)will increase profits. C)will decrease marginal revenue. D)can't change the price because it is a price taker.

At a monopoly's profit-maximizing level of output: A)marginal revenue equals marginal cost. B)marginal revenue is greater than marginal cost. C)marginal revenue is less than marginal cost. D)price is less than marginal cost.

A monopoly is producing output so that average total cost is $30,marginal revenue is $40,and the price is $50.If ATC is at its minimum level and the ATC curve is U-shaped,to maximize profits,this firm should: A)increase output. B)reduce output. C)do nothing;it is already maximizing profits. D)shut down.

If a monopolist is producing a quantity where MC = P,then profit: A)is maximized. B)is maximized only if MR = P. C)can be increased by increasing production. D)can be increased by decreasing production.

If a monopolist is producing a quantity where MC > MR,then profit: A)is maximized. B)is maximized only if MC = P. C)can be increased by increasing production. D)can be increased by decreasing production.

Which statement is TRUE? A)Profit-maximizing behavior occurs only in perfectly competitive markets. B)Additional units of a good should be produced as long as MR < MC. C)The profit-maximizing solution occurs where MR = MC. D)The profit-maximizing solution occurs where MR > MC.

A monopolist responds to an increase in demand by _____ price and _____ output. A)increasing;decreasing B)increasing;increasing C)decreasing;increasing D)decreasing;decreasing

A monopolist responds to a decrease in demand by _____ price and _____ output. A)increasing;decreasing B)increasing;increasing C)decreasing,increasing D)decreasing;decreasing

A monopolist responds to an increase in marginal cost by _____ price and _____ output. A)increasing;decreasing B)increasing;increasing C)decreasing;increasing D)decreasing;decreasing

A monopoly responds to a decrease in marginal cost by _____ price and _____ output. A)increasing;decreasing B)increasing;increasing C)decreasing;increasing D)decreasing;decreasing

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.The firm sells its pennants for $10 each.We can conclude that GoSports is producing a level of output at which: A)average total cost equals $10. B)average total cost is greater than $10. C)marginal revenue equals $10. D)marginal cost equals marginal revenue.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total economic profit will: A)fall. B)remain unchanged. C)rise. D)It is not possible to make a determination from the information given.

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total output will: A)rise. B)fall. C)remain unchanged. D)It is not possible to make a determination from the information given.

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning.In response to the increase in fees,the firm will: A)raise its price by less than the amount of the license fee. B)raise its price by the amount of the license fee. C)raise its price by somewhat more than amount of the license fee. D)not change its price.

An increase in the fixed costs of a monopoly firm would _____ price and _____ quantity in the short run. A)increase;decrease B)increase;increase C)not change;not change D)decrease;decrease

If a monopolist is producing a quantity that generates MC > MR,then profit: A)is maximized. B)is maximized only if MC = P. C)can be increased by increasing price. D)can be increased by decreasing price.

If a monopolist is producing a quantity that generates MC < MR,then profit: A)is maximized. B)is maximized only if MC = P. C)can be increased by increasing production. D)can be increased by decreasing production.

If a monopolist is producing a quantity that generates MC = MR,then profit: A)is maximized. B)is maximized only if MC = P. C)can be increased by increasing production. D)can be increased by decreasing production.

Suppose that the Yankee Cap Company is a profit-maximizing firm with a monopoly in the production of baseball caps.The firm sells its baseball caps for $25 each.From this information,we can assume that the Yankee Cap Company is producing a level of output at which: A)marginal revenue equals $25. B)marginal cost is less than $25. C)average total cost equals $25. D)average total cost is greater than $25.

Use the following to answer questions 80-83: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing rule is satisfied by the intersection at point: A)G. B)H. C)J. D)L.

Use the following to answer questions 80-83: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing quantity of output is quantity: A)Q. B)R. C)S. D)T.

Use the following to answer questions 80-83: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The profit-maximizing price is price: A)N. B)O. C)P. D)Q.

Use the following to answer questions 80-83: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly)Use Figure: Short-Run Monopoly.The marginal cost of producing the profit-maximizing quantity is cost: A)N. B)O. C)P. D)Q.

Use the following to answer questions 80-83: Figure: Short-Run Monopoly -The monopoly firm's profit-maximizing price is: A)given by the point on the ATC curve for the profit-maximizing quantity. B)given by the point on the demand curve for the profit-maximizing quantity. C)determined for the quantity of output at which MR > MC by the greatest amount. D)found where MR > MC at the monopolist's profit-maximizing quantity of output.

A monopolist generally _____ than does a perfectly competitive industry with the same market demand. A)produces a larger quantity B)charges a higher price C)charges a lower price D)earns less profit in the long run

Bob owns a trout farm with monopoly power in North Carolina.Bob's optimal output occurs where marginal revenue _____ marginal cost.Because of monopoly power,Bob's supply curve _____. A)equals;does not exist B)exceeds;does not exist C)equals;is upward sloping D)exceeds;is perfectly inelastic

Which statement about monopoly equilibrium and perfectly competitive equilibrium is INCORRECT? A)Price is greater than marginal cost in monopoly,and price equals marginal cost in perfect competition. B)When a monopoly exists,the consumer surplus from the market is less than it would be if the same market were perfectly competitive. C)Monopoly output will be less than will the output of a comparable perfectly competitive industry. D)In the long run,economic profits are driven to zero in both a monopoly and a perfectly competitive market.

Which statement BEST reflects an evaluation of monopoly firms? A)They are economically inefficient. B)They have little or no market power. C)Consumers are given more choices,lower costs,and higher quality. D)Competition should replace all monopolies.

In perfect competition,the firm produces the output such that _____,and in monopoly,the firm produces the output such that _____. A)P > MR = MC;P = MR = MC B)P = MR = MC;P < MR = MC C)P = MR = MC;P > MR = MC D)P = MR = MC;P = MR = MC

Which statement is TRUE? A)A monopoly firm is a price maker. B)MR = P if the demand curve is downward sloping. C)MR = MC is a profit-maximizing rule for firms in perfect competition only. D)Monopolies tend to charge lower prices than do perfectly competitive firms.

The profit-maximizing rule MR = MC is: A)followed by a monopoly but not by a perfectly competitive firm. B)followed by a perfectly competitive firm but not by a monopoly. C)followed by all types of firms. D)not followed by a monopoly because it would reduce economic profit to zero.

Assume that a monopoly is currently earning economic profits.If a permanent change in fixed cost raises average total cost above the demand curve: A)price and output will increase. B)more monopolies will enter. C)the monopoly will go out of business. D)marginal cost will be greater than marginal revenue.

Use the following to answer questions 93-96: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.The firm in this figure will produce _____ units of output per week. A)150 B)200 C)250 D)300

Use the following to answer questions 93-96: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's cost per unit at its profit-maximizing quantity is: A)$8. B)$15. C)$18. D)$20.

Use the following to answer questions 93-96: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's price per unit is: A)$20. B)$25. C)$30. D)$35.

Use the following to answer questions 93-96: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm)Use Figure: A Profit-Maximizing Monopoly Firm.This firm's profit per unit is: A)$5. B)$12. C)$15. D)$20.

Use the following to answer questions 93-96: Figure: A Profit-Maximizing Monopoly Firm -In the short run,a monopoly will stop producing if: A)P < ATC. B)P < AVC. C)P > MR. D)P > ATC.

In a monopoly in the long run: A)economic profits will be eliminated by the entry of rival firms. B)economic profits will be reduced but not eliminated by the entry of rival firms. C)entry by other firms will not occur. D)the price will be the same as if the market were perfectly competitive.

Use the following to answer questions 99-103: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The price effect of increasing production from 3 megawatts to 4 megawatts is: A)-$150. B)$500. C)$450. D)-$50.

Use the following to answer questions 99-103: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.To maximize profits,Lenoia should charge a price of: A)$350. B)$400. C)$450. D)$500.

Use the following to answer questions 99-103: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The marginal revenue of the fourth unit of production is: A)$200. B)$250. C)$450. D)$500.

Use the following to answer questions 99-103: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The profit-maximizing quantity of electricity for her to produce is _____ megawatts. A)2 B)3 C)4 D)5

Use the following to answer questions 99-103: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The maximum profit Lenoia can make is: A)$225. B)$425. C)$400. D)$1,800.

Use the following to answer questions 99-103: -If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output,at that level of output,demand is: A)price-elastic. B)price-inelastic. C)perfectly price-inelastic. D)price unit-elastic.

In 1999,a judge declared that Microsoft was a monopolist.Assuming that Microsoft has a linear demand curve and that it is maximizing its profits at its current level of output,we may conclude that,if Microsoft were to increase its price,its total revenue would: A)rise. B)fall. C)remain unchanged. D)There is insufficient information to make a determination.

Use the following to answer questions 106-109: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.The profit-maximizing price is _____ and will generate total economic profit of _____. A)P₂;EF B)P₃;the rectangle P₁P₂FG C)P₃;the rectangle P₂P₃EF D)P₃;EF

Use the following to answer questions 106-109: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.Producing at point N would: A)result in MR = MC. B)result in positive economic profits. C)never be profit-maximizing since,at this output,MR < 0 and MC > 0. D)result in the firm breaking even.

Use the following to answer questions 106-109: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.At the profit-maximizing output,total cost is: A)P₁0QG. B)P₃0QE. C)P₂0QF. D)FQ₂.

Use the following to answer questions 106-109: Figure: Computing Monopoly Profit -(Figure: Computing Monopoly Profit)Use Figure: Computing Monopoly Profit.To obtain maximum profits,the monopoly should produce the output determined by point: A)G. B)N. C)H. D)K.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.The profit-maximizing quantity is at point: A)W. B)J. C)K. D)L.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.The profit-maximizing price is: A)Z. B)P. C)S. D)I.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total cost is the area of rectangle: A)0PDJ. B)0IHJ. C)IPDH. D)0SBJ.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total revenue is the area of rectangle: A)SPDB. B)IPDH. C)0SBJ. D)0PDJ.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its profit is the area of rectangle: A)SPDB. B)IPDH. C)ISBH. D)0PDJ.

Use the following to answer questions 110-115: Figure: Monopoly Model -(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its total cost is the area of rectangle _____ and its total revenue is the area of rectangle _____. A)0PDJ;SPDB B)0IHJ;IPDH C)IPDH;0SBJ D)0SBJ;0PDJ

Use the following to answer questions 110-115: Figure: Monopoly Model -Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive.We would expect the _____ surplus to increase and _____ surplus to decrease after the breakup. A)producer;consumer and total B)consumer;producer and total C)consumer and total;producer D)producer and total;consumer

If the government allowed only one airline to serve the entire U.S.market,there would be a _____ loss associated with _____ output in the airline industry. A)marginal;reduced B)deadweight;reduced C)total;increased D)deadweight;increased

In contrast with perfect competition,a monopoly: A)produces more at a lower price. B)produces where MR > MC. C)may have lower economic profits in the long run. D)produces less at a higher price.

In monopoly: A)a basic condition for efficiency is violated because P > MC. B)consumers are confronted with a price that is lower than marginal cost. C)consumers will buy more of the good than is economically efficient. D)consumers are confronted with a price that is lower than average total cost.

The pricing in monopoly prevents some mutually beneficial trades.The value of these unrealized mutually beneficial trades is called: A)sunk costs. B)opportunity costs. C)deadweight loss. D)inequity.

Which statement is TRUE? A)Monopolies produce too much and charge too much from the standpoint of efficiency. B)Monopolies usually are economically efficient because they have economic profits with which to work. C)Monopolies produce too little and charge too much from the standpoint of efficiency. D)Monopolies cause an efficiency problem but are not associated with a deadweight loss.

Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market.We would expect price to _____,output to _____,consumer surplus to _____,producer surplus to _____,and deadweight loss to _____. A)rise;fall;rise;rise;fall B)rise;fall;fall;fall;rise C)rise;fall;fall;rise;rise D)fall;rise;rise;fall;fall

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry.We can assume that monopoly output will be _____ than will the competitive output and that _____. A)higher;deadweight loss will emerge B)lower;consumer surplus will increase C)lower;deadweight loss will emerge D)higher;consumer surplus will decrease

When a monopoly maximizes profit,the loss of surplus by consumers is _____ the monopolist's gain in profit. A)less than B)equal to C)more than D)sometimes more than and sometimes less than

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much will it produce? A)2 B)4 C)6 D)8

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,what price will it charge? A)$20 B)$40 C)$60 D)$100

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much consumer surplus is there when the monopolist maximizes profit? A)$20 B)$40 C)$80 D)$160

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much producer surplus is there when the monopolist maximizes profit? A)$0 B)$20 C)$80 D)$160

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much deadweight loss is there when the monopolist maximizes profit? A)$0 B)$20 C)$80 D)$160

Use the following to answer questions 125-130: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $20.If the cable company is a monopoly,how much total surplus is there when the monopolist maximizes profit? A)$240 B)$160 C)$100 D)$320

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is one of many firms in a competitive industry,how many lunches will the market produce in the long run? A)0 B)20 C)40 D)60

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.If Joe owns one of many firms in a competitive industry,what price will he charge for a lunch in the long run? A)$10 B)$8 C)$6 D)$4

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.What is consumer surplus in this market in the long run? A)$4 B)$10 C)$180 D)$360

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.What is producer surplus in this market in the long run? A)$0 B)$4 C)$180 D)$360

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: figure Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.What is deadweight loss in this market in the long run? A)$0 B)$4 C)$180 D)$360

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,how many lunches will he produce in the long run? A)0 B)10 C)20 D)30

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what price will he charge for a lunch in the long run? A)$9 B)$7 C)$5 D)$3

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is consumer surplus in the long run? A)$45 B)$90 C)$180 D)$360

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is producer surplus in the long run? A)$45 B)$90 C)$180 D)$360

Use the following to answer questions 131-140: -(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is deadweight loss in the long run? A)$45 B)$90 C)$180 D)$360

Use the following to answer questions 131-140: -In general,economists are critical of monopoly where there is/are: A)no natural monopoly. B)a natural monopoly. C)only a few firms. D)persistent economies of scale.

Public policies toward monopoly in the United States often consist of: A)laws outlawing all of them. B)the regulation of natural monopolies. C)government takeover if monopoly profit exceeds a certain level. D)forcing monopoly industries to become perfectly competitive.

Amtrak is a publicly owned company that provides rail service.This means that Amtrak's prices tend to be _____ than if it were a private company,and the quality of service tends to be _____ than if it were a private company. A)higher;worse B)higher;better C)lower;worse D)lower;better

In an industry characterized by extensive economies of scale: A)small companies are more profitable than are large companies. B)large companies are more profitable than are small companies. C)small and large companies are equally profitable. D)small companies will drive out large companies.

A natural monopoly is one that: A)monopolizes a natural resource such as a mineral spring. B)is based on control of something occurring in nature (such as diamonds). C)has increasing returns to scale over the entire relevant range of output. D)typically has low fixed costs,making it easy and "natural" for it to shut out competitors.

One government policy for dealing with natural monopoly is to: A)impose a price floor to eliminate the deadweight loss. B)impose a price ceiling to reduce economic profit. C)break it up into smaller firms. D)impose fines on the monopolist.

The natural monopoly: A)would incur an economic profit if regulated to produce where price is less than marginal cost. B)would incur an economic profit if regulated to charge a price equal to average total cost. C)generates more consumer surplus than would an unregulated monopolist if regulated to produce where price equals average total cost. D)generates more consumer surplus than would an unregulated monopolist if regulated to produce where marginal cost equals marginal revenue.

If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost: A)the firm can still make an economic profit. B)the firm will earn only a zero economic profit. C)efficiency in allocation will be less. D)the firm will need subsidies to stay in business.

In the short run,if a monopoly is forced to charge a price equal to marginal cost: A)output will fall. B)the deadweight loss will decrease. C)consumer surplus will decrease. D)other firms will enter the industry.

Use the following to answer questions 150-153: Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.Figglenuts-R-Us will sell _____ figglenuts and set a price of _____ to maximize profits. A)70;$65 B)100;$50 C)120;$40 D)150;$46

Use the following to answer questions 150-153: Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.If the government wanted to regulate Figglenuts-R-Us such that the entire deadweight loss would be eliminated in the short run,it would impose a price ceiling of: A)$40. B)$46. C)$50. D)$65.

Use the following to answer questions 150-153: Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.If the government wanted to regulate Figglenuts-R-Us such that it would minimize the deadweight loss while allowing the firm to break even,it would impose a price ceiling of: A)$40. B)$46. C)$50. D)$65.

Use the following to answer questions 150-153: Figure: Demand,Revenue,and Cost Curves -(Figure: Demand,Revenue,and Cost Curves)Use Figure: Demand,Revenue,and Cost Curves.Figglenuts-R-Us is a monopolist in the figglenut market.If the government regulated the figglenut market by setting a price ceiling of $40,Figglenuts-R-Us might: A)produce 60 figglenuts to maximize profits. B)produce 120 figglenuts in the long run to maximize profits. C)exit in the long run. D)increase the price to $60.

Use the following to answer questions 150-153: Figure: Demand,Revenue,and Cost Curves -The practice of charging different prices to different customers for the same good or service,even though the cost of supplying those customers is the same,is: A)privatization. B)monopolization. C)output competition. D)price discrimination.

Price discrimination is the practice of: A)charging different prices to buyers of the same good. B)paying different prices to suppliers of the same good. C)equating price to marginal cost. D)equating price to marginal revenue.

The practice of selling the same product at different prices to different consumers,without corresponding differences in costs,is: A)price discrimination. B)privatizing. C)monopolizing. D)output prioritizing.

If a firm wants to charge different customers different prices,it must be: A)a price taker. B)in perfect competition. C)a price setter. D)operating in the long run only.

_____ is the practice of selling _____ product(s)at different prices to different consumers,without corresponding differences in costs. A)Price discrimination;the same B)Privatizing;the same C)Monopolizing;similar D)Price fixing;different

The market structure in which price discrimination CANNOT occur is: A)perfect competition. B)monopolistic competition. C)oligopoly. D)monopoly.

Price discrimination can occur if: A)there are many firms in the industry,all producing the same identical good. B)producers are price takers. C)all consumers have the same willingness to pay for the good. D)the market structure is monopolistic competition.

When price discrimination occurs,the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost. A)the same as;marginal B)greater than;marginal C)less than;marginal D)the same as;average total

A monopolist or an imperfectly competitive firm practices price discrimination primarily to: A)increase profits. B)expand plant size. C)lower total costs. D)reduce marginal costs.

To engage in price discrimination,a firm must be: A)a price taker. B)one of many firms in an industry. C)unable to identify consumers whose elasticities differ. D)a price setter and able to identify consumers whose elasticities differ.

The MAIN reason a monopoly engages in price discrimination is that: A)it wants to discriminate against a particular ethnic group. B)doing so increases its profits. C)it wants to discourage potential competitors. D)by charging a lower price to some people,it may succeed in discouraging efforts to regulate it.

When a monopolist practices price discrimination,compared with a single-price monopolist,consumer surplus will: A)remain the same. B)increase. C)decrease. D)increase initially and then return to its original level.

When a monopolist practices price discrimination,compared with a single-price monopolist,producer surplus will: A)remain the same. B)increase. C)decrease. D)increase initially and then return to its original level.

When a monopolist practices price discrimination,compared with a single-price monopolist,monopoly profits will: A)remain the same. B)increase. C)decrease. D)increase initially and then return to their original level.

When a monopolist practices price discrimination,compared with a single-price monopolist,deadweight loss will: A)remain the same. B)increase. C)decrease. D)increase initially and then return to its original level.

Price discrimination leads to a _____ price for consumers with a _____ demand. A)higher;less elastic B)higher;more elastic C)higher;perfectly elastic D)lower;less elastic

Price discrimination leads to a _____ price for consumers with a _____ demand. A)higher;more elastic B)higher;perfectly elastic C)lower;more elastic D)lower;less elastic

Price-discriminating firms will impose a price structure that offers customers with a _____ demand a _____ price and offers customers with a(n)_____ demand a _____ price. A)less elastic;lower;more elastic;higher B)less elastic;higher;more elastic;lower C)lower;higher;higher;lower D)seasonal;lower;unchanging;higher

Because tourist demand for airline flights is relatively _____,small _____ in ticket price will result in relatively _____ in additional tourists. A)inelastic;reductions;small increases B)elastic;reductions;large increases C)inelastic;increases;small decreases D)elastic;increases;small increases

A price-discriminating firm will adjust prices so that customers with more _____ demand pay _____ customers with _____ elastic demand. A)inelastic;less than;less B)elastic;less than;less C)elastic;the same as;more D)elastic;more than;less

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system,we can conclude that senior citizens must have a _____ demand for bus service than do other passengers. A)greater B)lower C)more elastic D)less elastic

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents.Assuming that this pricing strategy increases the profits of the pool,we can conclude that nonresidents must have a _____ demand for swimming at the pool than do residents. A)greater B)lower C)more elastic D)less elastic

To practice effective price discrimination,a monopolist must be able to: A)estimate its own production and cost functions. B)avoid charging too low a price. C)prevent the resale of goods among groups of buyers. D)calculate the income level of each buyer in the market.

To maximize profits,an airline will offer _____ prices to customers with _____ demand. A)higher;inelastic B)higher;elastic C)lower;inelastic D)the lowest;the least

Because business travelers' demand for airline flights is relatively _____,large increases in price will result in relatively _____ decreases in additional business travelers. A)price-inelastic;small B)price-elastic;large C)price-inelastic;large D)price-elastic;small

A firm that can price-discriminate should adjust prices so that customers with _____ demand pay _____ prices than/as do those with _____ demand. A)price-inelastic;lower;elastic B)price-inelastic;the same;elastic C)price-elastic;lower;inelastic D)price-elastic;higher;inelastic

Amtrak charges lower fares to students than to its other passengers.This pricing strategy increases Amtrak's profits.From this information,we can conclude that students must have a _____ demand for Amtrak train service than do other passengers. A)more price-elastic B)lower C)greater D)less price-elastic

A community college charges lower tuition fees to town residents than to nonresidents.This pricing strategy increases the profits of the community college.Using this information,we can conclude that nonresidents must have a _____ demand for attending the community college than do residents. A)less price-elastic B)greater C)lower D)more price-elastic

Suppose the price elasticity of demand for coffee at the Coffee Barn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to _____ prices for men and _____ prices for women _____. A)lower;lower;in any circumstances B)lower;higher;in any circumstances C)lower;higher;as long as men can't resell drinks to women D)higher;lower;as long as women can't resell drinks to men

Suppose a monopoly can separate its customers into two groups.If the monopoly practices price discrimination,it will charge the lower price to the group with: A)the higher price elasticity of demand. B)the lower price elasticity of demand. C)the fewer close substitutes. D)The answer cannot be determined with the information given.

A Japanese steel firm sells steel in the United States and in Japan.Since the United States buys steel from a number of sources,the U.S.demand for Japanese steel is more price-elastic than is the Japanese demand for Japanese steel.If the Japanese steel firm wishes to maximize its profits,it should: A)charge the same price in both countries (after adjusting for transportation costs). B)charge a higher price in the United States and a lower price in Japan;otherwise,it would be accused of unfair trade practices. C)charge a lower price in the United States and a higher price in Japan. D)figure out which market is more profitable and sell only in that market.

Airlines that engage in price discrimination charge higher prices to business travelers because their _____ is more _____ than that of other travelers. A)demand;elastic B)demand;inelastic C)supply;elastic D)supply;inelastic

Airlines that engage in price discrimination charge lower prices to vacation travelers because their _____ is more _____ than that of other travelers. A)demand;elastic B)demand;inelastic C)supply;elastic D)supply;inelastic

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge higher prices to _____ because their demand is more _____. A)men;elastic than that of women B)men;inelastic than that of women C)women;elastic than that of men D)women;inelastic than that ofmen

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women.To use price discrimination to increase profits,the producers should charge lower prices to _____ because their demand is more _____. A)men;elastic than that of women B)men;inelastic than that of women C)women;elastic than that of men D)women;inelastic than that of men

Which statement is NOT an example of price discrimination? A)Students receive a discount at the ice cream store when they show their college ID cards. B)Women receive free admission to a nightclub,while men must pay a cover charge. C)A country club requires members to pay annual dues,but members receive discounted prices to golf (relative to nonmembers). D)Street vendors increase the price of umbrellas when it is raining.

Many hotel chains offer discounts to senior citizens.This is an example of _____ that is _____ in the United States. A)market power;illegal B)single-price monopoly power;legal C)price discrimination;illegal D)price discrimination;legal

If a monopolist can engage in perfect price discrimination: A)it produces at the socially efficient level. B)consumer surplus is maximized. C)producer surplus is minimized. D)the government will impose fines on the monopolist.

Use the following to answer question 192: -(Table: Prices and Demand)Use Table: Prices and Demand.Professor Dumbledore has a monopoly on magic hats.The marginal cost of producing a hat is $18.Suppose Dumbledore can perfectly price-discriminate.How many hats will he produce? A)3 B)4 C)5 D)6

Use the following to answer question 192: -Sadia wants to practice price discrimination in her bakery.Which strategy should Sadia NOT use? A)discounts for people who buy a large volume of bread B)higher prices for people who buy bread on the day it is baked and lower prices for people who place advance orders C)an annual fee for customers who want to shop at a discount in her store D)the same price for all consumers for freshly baked goods

The strategy that is NOT an example of price discrimination is: A)discounts for senior citizens at the movies. B)discounts for families with young children at motels. C)generally lower prices at Walmart than at Target. D)cheaper air fares if the traveler stays over a Saturday.

Which strategy is NOT an example of price discrimination? A)a Fourth of July sale B)a coupon in the newspaper offering a 10% discount on a product C)a higher price for front row seats at a concert than for seats at the back D)a lower price charged to the grandfather who bought his airline ticket to Chicago three weeks in advance and will stay over a Saturday night than to the businesswoman who bought her ticket the day of the flight and will not stay over Saturday night

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company is a single-price monopoly,to maximize profit it will sell _____ subscriptions and charge _____ per subscription. A)8;$20 B)6;$40 C)3;$70 D)2;$80

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company is a single-price monopoly and maximizes profit,consumer surplus will be: A)$0. B)$45. C)$70. D)$90.

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company is a single-price monopoly and maximizes profit,producer surplus will be: A)$0. B)$45. C)$70. D)$90.

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company is a single-price monopoly and maximizes profit,deadweight loss will be: A)$0. B)$45. C)$60. D)$90.

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,then it will sell _____ subscriptions. A)10 B)8 C)6 D)0

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,consumer surplus will be: A)$180. B)$100. C)$40. D)$0.

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,producer surplus will be: A)$180. B)$100. C)$40. D)$0.

Use the following to answer questions 196-203: Figure: PPV -(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,deadweight loss will be: A)$180. B)$100. C)$40. D)$0.

Use the following to answer questions 204-206: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will sell _____ pairs of shoes at _____ per pair. A)Q₂;P₁ B)Q₂;P₅ C)Q₃;P₂ D)Q₄;P₃

Use the following to answer questions 204-206: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to: A)(P₁ - P₅)× Q₂. B)(P₁ - P₄)× Q₂. C)(P₄ - P₅)× Q₂. D)(P₂ - P₃)× Q₃.

Use the following to answer questions 204-206: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm is regulated such that it earns zero economic profit,the firm will sell _____ pairs of shoes at a price of _____ per pair. A)Q₁;P₁ B)Q₂;P₁ C)Q₄;P₃ D)Q₃;P₂

Use the following to answer questions 207-210: -(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny increases the quantity sold from 5 cups to 6,his marginal revenue will be: A)$4. B)$24. C)-$1. D)$5.

Use the following to answer questions 207-210: -(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.Lenny is selling 2 cups of coffee.If he lowers the price and sells 3 cups of coffee,the _____ effect will dominate the _____ effect,and total revenue will _____. A)quantity;price;decrease B)price;quantity;increase C)price;quantity;decrease D)quantity;price;increase

Use the following to answer questions 207-210: -(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny's marginal cost of selling coffee is a constant $2,his profit-maximizing level of output is _____ cups at _____ per cup. A)4;$6 B)8;$3 C)5;$5 D)3;$7

Use the following to answer questions 207-210: -(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny's marginal cost of selling coffee is a constant $2 and he has no fixed costs,and the government forces Lenny to charge a price that eliminates deadweight loss,Lenny will charge _____ per cup and sell _____ cups. A)$0;10 B)$2;8 C)$4;6 D)$5;5

Use the following to answer questions 211-219: -(Table: Prices and Demand)Use Table: Prices and Demand.The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.The Saints should produce _____ hats and charge _____ to maximize its profits. A)1;$28 B)2;$26 C)3;$24 D)4;$22

Use the following to answer questions 211-219: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,their total revenue changes from _____ to _____. A)$88;$100 B)$22;$20 C)$88;$80 D)$110;$100

Use the following to answer questions 211-219: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,the quantity effect is a(n)_____ in total revenue of _____. A)decrease;$20 B)increase;$20 C)decrease;$8 D)increase;$8

Use the following to answer questions 211-219: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,the price effect is a(n)_____ in total revenue of _____. A)decrease;$20 B)increase;$20 C)decrease;$8 D)increase;$8

Use the following to answer questions 211-219: -(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,marginal revenue is: A)$20. B)$22. C)$8. D)$12.

Use the following to answer questions 211-219: -(Table: Prices and Demand)Use Table: Prices and Demand.The New Orleans Saints have a monopoly on Saints logo baseball hats.The Saints sell at most 1 hat to each customer,and the table shows each customer's willingness to pay.The marginal cost of producing a hat is $18,and there are no fixed costs.How much is the Saints' profit at the profit-maximizing output? A)$24 B)$18 C)$12 D)$30

Use the following to answer questions 211-219: -(Table: Prices and Demand)Use Table: Prices and Demand.The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.How much is consumer surplus at the Saint's profit-maximizing output? A)$24 B)$18 C)$12 D)$9

Use the following to answer questions 211-219: -(Table: Prices and Demand)Use Table: Prices and Demand.The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.How much is producer surplus at the Saint's profit-maximizing output? A)$24 B)$18 C)$12 D)$9

Use the following to answer questions 211-219: -(Table: Prices and Demand)Use Table: Prices and Demand.The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.How much is deadweight loss at the Saint's profit-maximizing output? A)$24 B)$18 C)$12 D)$9

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume there are no fixed costs and AC = MC.At the profit-maximizing quantity of production for the monopolist,total revenue is _____,total cost is _____,and profit is _____. A)$600;$200;$400 B)$1,600;$3,200;$1,600 C)$4,800;$3,200;$1,600 D)$4,800;$1,600;$3,200

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Under perfect competition,the price of the good would be _____ and _____ units would be produced. A)$600;8 B)$200;8 C)$200;16 D)$600;16

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.The profit-maximizing price for a monopolist is: A)$800. B)$200. C)$600. D)$1,000.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a monopolist,consumer surplus is: A)$0. B)$600. C)$1,000. D)$1,600.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a monopolist,producer surplus is: A)$3,200. B)$6,400. C)$1,000. D)$1,600.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a monopolist,deadweight loss is: A)$3,200. B)$6,400. C)$1,000. D)$1,600.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a monopolist,total surplus is: A)$3,200. B)$4,800 C)$1,000. D)$1,600.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a perfectly competitive industry,economic profit for the firms in the industry is: A)$0. B)$200. C)$1,600. D)$3,200.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If this were a perfectly competitive industry,consumer surplus would be: A)$0. B)$6,400. C)$1,600. D)$3,200.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If this were a perfectly competitive industry,producer surplus would be: A)$0. B)$200. C)$1,600. D)$3,200.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If this were a perfectly competitive industry,deadweight loss would be: A)$0. B)$200. C)$1,600. D)$3,200.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.If this were a perfectly competitive industry,total surplus would be: A)$6,400. B)$1,600. C)$3,200. D)$4,800.

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.The monopolist who can perfectly price discriminate will produce an output of _____ diamonds. A)0 B)6 C)16 D)20

Use the following to answer questions 220-233: Figure: The Profit-Maximizing Output and Price -Of the four market structures,the only one that is characterized by product differentiation is oligopoly.

A producer is a monopoly if it is the sole supplier of a good that has no close substitutes.

A monopoly increases price by limiting the quantity supplied to a market.

To maintain profits in the long run,a monopoly must be protected by barriers to the entry of other firms into the industry.

A monopoly may continue to make economic profits in the long run because of the barriers to entry in its industry.

The government can reduce the inefficiency associated with a monopoly through a system of patents and copyrights.

A natural monopoly has small fixed costs,which allows it to produce at lower cost than can potential competitors.

Suppose a monopolist reduces its price in an effort to expand output.If the price effect equals the quantity effect,then the marginal revenue will be zero.

The marginal revenue curve for a monopolist is always less than the price because of the price effect.

If a firm has market power,the marginal revenue curve always lies below the demand curve.

A monopoly can choose the price or it can choose the quantity,but it cannot choose price and quantity independent of each other.

A monopoly's short-run supply curve is upward sloping because of diminishing marginal returns.

A monopoly's short-run supply curve is its marginal cost curve above the minimum average variable cost.

A monopoly's short-run marginal cost is constant at $10.This implies that its average variable cost is also constant and equal to $10.

A profit-maximizing monopoly will never set price in the inelastic region of the demand curve.

Monopoly is inefficient because some consumer surplus is transferred to producer surplus.

Compared with perfect competition,monopoly produces a net welfare gain for society.

Consumer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

Producer surplus in monopoly is smaller than it is in the same industry operating under perfect competition.

Deadweight loss in monopoly is smaller than it is in the same industry operating under perfect competition.

When regulating a natural monopoly,the government always sets a price ceiling where marginal cost intersects the demand curve.

When a natural monopoly is regulated to charge a price equal to average total cost,consumer surplus increases,but total surplus decreases.

When a natural monopoly is regulated to charge a price equal to average total cost,producer surplus decreases,but total surplus increases.

A natural monopoly has increasing returns to scale so that a large producer has a relatively low average total cost.

Usually when a monopoly that isn't a natural monopoly is broken up,the losses to the producer outweigh the gains to consumers.

The advantage of public ownership of a monopoly is that prices can be based on efficiency and total surplus,rather than profit maximization.

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

A monopolist that charges each customer a different price based on the customer's individual willingness to pay is called a single-price monopolist.

Monopolists are engaging in price discrimination when they charge all customers the same price.

Price discrimination can never occur in perfect competition.

Price discrimination may occur in monopoly.

Price discrimination can never occur in oligopoly.

Although price discrimination never occurs in perfect competition,it may occur in monopolistic competition.

To practice price discrimination,the producer must have some control over the price of the product.

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would result from a single price being set (using the intersection of marginal revenue and marginal cost).

For a monopolist to practice price discrimination successfully,its customers must all have the same willingness to pay for the good.

To increase profits with price discrimination,different groups of an oligopolist's customers must respond differently to prices of the good.

When a monopolist practices price discrimination,consumer surplus will be higher than the consumer surplus in a single-price monopoly.

When a monopolist practices price discrimination,producer surplus will be higher than it is in a single-price monopoly.

When a monopolist practices price discrimination,the monopolist's profits will be lower than it is in a single-price monopoly.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist increases its profits by capturing consumer surplus.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist increases its profits by decreasing producer surplus.

When a monopolist practices price discrimination as opposed to setting a single price,deadweight loss decreases.

When a monopolist practices price discrimination as opposed to setting a single price,efficiency decreases.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist sells less but increases profits.

When a monopolist practices price discrimination as opposed to setting a single price,the monopolist sells more and increases profits.

An oligopoly that engages in price discrimination will charge higher prices to customers with the most elastic demand.

An oligopoly that engages in price discrimination will charge higher prices to customers with the most inelastic demand.

Children's price elasticity of demand for hot chocolate is 0.5.Adults' price elasticity of demand for hot chocolate is 1.5.If the concession stand selling the hot chocolate wants to practice price discrimination,it should charge higher prices to adults.

Children's price elasticity of demand for hot chocolate is 0.5.Adults' price elasticity of demand for hot chocolate is 1.5.If the concession stand selling the hot chocolate wants to practice price discrimination,it should charge higher prices to children.

A monopolist who engages in perfect price discrimination charges each consumer a price equal to that consumer's willingness to pay.

In perfect price discrimination,consumer surplus is larger than it is in a single-price monopoly.

Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.

If the local phone company,a monopolist,perfectly price-discriminated,there would be a lower total surplus than if the company did not price discriminate.

If a monopoly can engage in perfect price discrimination,then its marginal revenue is equal to price,in contrast to the usual situation for a monopoly,in which price is higher than is marginal revenue.

An oligopoly is characterized as an industry in which: A)there are few firms,each producing a differentiated or similar product. B)there are many firms,each producing a similar product. C)all market participants are price takers. D)only one firm produces a very differentiated product.

A monopolistically competitive industry is made up of: A)a few firms,each producing a very differentiated good. B)one firm that produces a standardized good. C)market participants who are all price takers. D)many firms producing a slightly differentiated product.

Entry barriers: A)exist in all market structures. B)exist in perfect competition and monopolistically competitive markets. C)do not exist in any market structures;otherwise nothing would be produced. D)exist in monopoly and oligopoly markets.

Control of a scarce resource or input,economies of scale,technological superiority,and government-set rules and regulations are forms of: A)market structure. B)pricing behavior. C)barriers to entry. D)public policy.

When a firm finds that its ATC of production decreases as it increases production,this firm is said to be experiencing: A)profit maximization. B)economic profit. C)economies of scale. D)a barrier to entry.

If large fixed costs result in ATC falling as output increases and this occurs over the relevant range of output,this industry is a: A)constant-cost industry. B)natural monopoly. C)network externality. D)profit maximizer.

A natural monopoly exists when: A)a few firms collude to make one large firm. B)economies of scale provide large cost advantages to having one firm produce the industry's output. C)firms naturally maximize profit regardless of market structure. D)firms enter the industry as a result of profit incentives.

Goods that are subject to network externalities tend to be ones: A)for which the value of the good to an individual is lower when more people use it. B)that are land-intensive. C)for which the value of the good to an individual is higher when more people use it. D)for which one person owning the good enhances its value because it's the only one.

Temporary monopolies via the provision of sole ownership rights to profit from the production,use,or sale of a good are provided by: A)patents and copyrights. B)natural monopolies. C)profit-maximizing behavior. D)network externalities.

For a monopolist,the market demand curve: A)is also the demand for the monopolist's product. B)is equal to the monopolist's MR curve. C)must be horizontal. D)is not important since the monopolist is the only producer.

For a monopolist with a downward-sloping demand curve,the quantity effect is MOST likely to dominate the price effect at: A)low levels of production. B)all levels of production. C)high levels of production. D)levels at which elasticity is unit-elastic.

At the profit-maximizing level of production,a perfectly competitive industry will produce an _____ amount of output,and a monopolist produces an _____ amount of output. A)efficient;efficient B)inefficient;efficient C)inefficient;inefficient D)efficient;inefficient

Use the following to answer questions 311-313: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.If this monopolist profit-maximizes,it will produce _____ units and sell them at _____. A)Q₁;P₁ B)Q₂;P₄ C)Q₂;P₂ D)Q₃;P₃

Use the following to answer questions 311-313: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.At the profit-maximizing level,this monopolist will: A)incur a loss equal to the area (P₁ - P₄)Q₁. B)earn a profit equal to the area (P₂ - P₄)Q₂. C)earn a profit equal to the area (P₂ - P₃)Q₂. D)break even.

Use the following to answer questions 311-313: Figure: The Monopolist -(Figure: The Monopolist)Use Figure: The Monopolist.If this market became perfectly competitive,total market production in the long run would be _____ units and the market price would be _____. A)Q₁;P₁ B)Q₂;P₂ C)Q₃;P₃ D)Q₂;P₄

Use the following to answer questions 311-313: Figure: The Monopolist -(Scenario: Monopolist)Use Scenario: Monopolist.The MR curve is: Scenario: Monopolist The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50. A)MR = 150 - 0.5Q. B)MR = 75 - Q. C)MR = 150 - Q. D)MR = 225 - Q.

Use the following to answer questions 311-313: Figure: The Monopolist -(Scenario: Monopolist)Use Scenario: Monopolist.The profit-maximizing output is _____ units,and the profit-maximizing price is _____. Scenario: Monopolist The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50. A)25;$75.00 B)20;$62.50 C)25;$75.50 D)25;$62.50

Use the following to answer questions 311-313: Figure: The Monopolist -(Scenario: Monopolist)Use Scenario: Monopolist.At the profit-maximizing level of output,the profit per unit is: Scenario: Monopolist The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50. A)$62.50. B)$0.00 C)$75.00. D)$50.00.

Use the following to answer questions 311-313: Figure: The Monopolist -(Scenario: Monopolist)Use Scenario: Monopolist.The deadweight loss from this monopolist's production is: Scenario: Monopolist The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50. A)$31.25. B)$12.50. C)$0.00. D)$30.00.

Use the following to answer questions 311-313: Figure: The Monopolist -If a monopolist knows its price elasticity of demand is greater than one,then a(n)_____ in price will _____ total revenue. A)increase;increase B)decrease;increase C)decrease;decrease D)increase;not change

A monopolist with a linear demand curve will: A)not produce in the inelastic portion of its demand curve. B)produce regardless of elasticity,since it is a monopolist. C)not produce in the elastic portion of its demand curve. D)produce only at the unit price-elastic portion of its demand curve.

If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _____ and output will _____. A)fall;fall B)fall;increase C)increase;increase D)increase;fall

(Figure: The Monopolist II)Use Figure: The Monopolist II.The deadweight loss associated with this monopoly can be measured as the area: Figure: The Monopolist II A)0.5(P₁ - P₂)(Q₂ - Q₁). B)0.5 (P₂ - P₄)(Q₄ - Q₂). C)0.5 (P₁ - P₃)Q₃. D)0.5 (P₁ - P₃)Q₂.