Question 1

If government officials break a natural monopoly up into several smaller firms, then

Accepted Answer

A)   competition will force firms to attain economic profits rather than accounting profits.
B)   competition will force firms to produce surplus output, which drives up price.
C)   the average costs of production will increase.
D)   the average costs of production will decrease.E) B) and C)
F) All of the above

Question 2

For the monopolist, marginal revenue is always less than the price of the good.

Accepted Answer

A) True 
 B)False

Question 3

Most economists argue that the most efficient solution to the problem of monopoly is that the monopoly should be publicly owned.

Accepted Answer

A) True 
 B)False

Question 4

In many countries, the government chooses to "internalise" the monopoly by owning monopoly providers of goods and services. In some cases, these firms are "nationalised," and the government actually buys or confiscates firms that operate in monopoly markets. What would be the advantages and disadvantages of such an approach to ensure that the "best interest of society" is promoted in these markets? Explain your answer.

Accepted Answer

As long as the government "owner" pursues a production and pricing policy that approaches a competitive outcome, social well-being can be enhanced. In this case, the government ownership would benefit society. However, in most cases, government owners operate much like private sector monopolists. The political economy of government institutions does not ensure that government owners will pursue socially optimal policy. Also, governments have no incentive to reduce costs or innovate.

Question 5

Patent and copyright laws encourage

Accepted Answer

A)   creative activity.
B)   lower prices due to decreasing average total costs.
C)   competition among firms.
D)   All of the above are correct.E) B) and C)
F) A) and B) A

Question 6

Consider the following demand and cost information
  Quantity  Price  Total Cost 0 R40  R10 1 R30  R15 2 R20  R25 3 R10  R40 4 R0  R60 \begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Price } & 	ext { Total Cost } \\hline 0 & 	ext { R40 } & 	ext { R10 } \\hline 1 & 	ext { R30 } & 	ext { R15 } \\hline 2 & 	ext { R20 } & 	ext { R25 } \\hline 3 & 	ext { R10 } & 	ext { R40 } \\hline 4 & 	ext { R0 } & 	ext { R60 } \\hline\end{array} Quantity 01234​ Price  R40  R30  R20  R10  R0 ​ Total Cost  R10  R15  R25  R40  R60 ​​

-Refer to the table above. The marginal cost of the fourth unit is

Accepted Answer

A)   R60
B)   R40
C)   R20
D)   R10 E) C) and D)
F) A) and B)

Question 7

The task of economic regulation is to

Accepted Answer

A)   protect monopoly profits.
B)   approximate the results of the competitive market.
C)   replace competition with government ownership.
D)   increase competition within the market.E) B) and C)
F) A) and D)

Question 8

A monopolist maximises profit by producing the quantity at which

Accepted Answer

A)   marginal cost equals price.
B)   marginal revenue equals price.
C)   marginal revenue equals marginal cost.
D)   marginal cost equals demand.
E)   marginal cost is minimised.F) B) and C)
G) A) and D)

Question 9

Price discrimination is only possible if there is no arbitrage.

Accepted Answer

A) True 
 B)False

Question 10

Universities are engaging in price discrimination when they charge different levels of tuition to poor and wealthy students.

Accepted Answer

A) True 
 B)False

Question 11

Consider the following demand and cost information
  Quantity  Price  Total Cost 0 R40  R10 1 R30  R15 2 R20  R25 3 R10  R40 4 R0  R60 \begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Price } & 	ext { Total Cost } \\hline 0 & 	ext { R40 } & 	ext { R10 } \\hline 1 & 	ext { R30 } & 	ext { R15 } \\hline 2 & 	ext { R20 } & 	ext { R25 } \\hline 3 & 	ext { R10 } & 	ext { R40 } \\hline 4 & 	ext { R0 } & 	ext { R60 } \\hline\end{array} Quantity 01234​ Price  R40  R30  R20  R10  R0 ​ Total Cost  R10  R15  R25  R40  R60 ​​

-Refer to the table above. To maximise profit, the monopolist sets the price at

Accepted Answer

A)   R40
B)   R20
C)   R0
D)   R10 E) A) and D)
F) None of the above B

Question 12

Cengage is a monopolist in the production of your textbook because Cengage

Accepted Answer

A)   is a very large company.
B)   owns a key resource in the production of textbooks.
C)   is a natural monopoly.
D)   has a legally protected exclusive right to produce this textbook.E) A) and D)
F) A) and C)

Question 13

A monopoly

Accepted Answer

A)   can set the price it charges for its output and earn unlimited profits.
B)   takes the market price as given and earns small but positive profits.
C)   can set the price it charges for its output, but faces a downward sloping demand curve so it cannot earn unlimited profits.
D)   can set the price it charges for its output, but faces a horizontal demand curve so it can earn unlimited profits.E) A) and C)
F) A) and B)

Question 14

Which of the following statements about price and marginal cost in competitive and monopolised markets is true?

Accepted Answer

A)   In competitive markets, price equals marginal cost; in monopolised markets, price exceeds marginal cost.
B)   In competitive markets, price equals marginal cost; in monopolised markets, price equals marginal cost.
C)   In competitive markets, price exceeds marginal cost; in monopolised markets, price exceeds marginal cost.
D)   In competitive markets, price exceeds marginal cost; in monopolised markets, price equals marginal cost.E) None of the above
F) B) and D)

Question 15

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Accepted Answer

The private monopolist is governed by th...

Question 16

Explain how a profit-maximising monopolist chooses its level of output and the price of its goods.

Accepted Answer

A profit-maximising monopolist produces ...

Question 17

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A)   decrease its price below its competitors' prices.
B)   decrease production to increase demand for its product.
C)   make pricing decisions jointly with other firms.
D)   own a key resource.E) None of the above
F) B) and D)

Question 18

Assume that a monopolist decides to maximise revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you are a "benevolent" manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximise profits or maximise revenue? Explain your answer.

Accepted Answer

A revenue maximiser operates where MR = ...

Question 19

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Accepted Answer

A)   regulated monopoly.
B)   perfect competitor.
C)   government monopoly.
D)   natural monopoly.E) C) and D)
F) B) and C)

Question 20

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> A profit-maximising monopolist will cho...

Exam 14: Market Structures I: Monopoly

If government officials break a natural monopoly up into several smaller firms, then

Correct Answer
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For the monopolist, marginal revenue is always less than the price of the good.

Correct Answer
verified

Most economists argue that the most efficient solution to the problem of monopoly is that the monopoly should be publicly owned.

Correct Answer
verified

Patent and copyright laws encourage

Correct Answer
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A

Correct Answer
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The task of economic regulation is to

Correct Answer
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A monopolist maximises profit by producing the quantity at which

Correct Answer
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Price discrimination is only possible if there is no arbitrage.

Correct Answer
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Universities are engaging in price discrimination when they charge different levels of tuition to poor and wealthy students.

Correct Answer
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Correct Answer
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B

Cengage is a monopolist in the production of your textbook because Cengage

Correct Answer
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A monopoly

Correct Answer
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Which of the following statements about price and marginal cost in competitive and monopolised markets is true?

Correct Answer
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Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct Answer
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The private monopolist is governed by th...
View Answer

Explain how a profit-maximising monopolist chooses its level of output and the price of its goods.

Correct Answer
verified
A profit-maximising monopolist produces ...
View Answer

The simplest way for a monopoly to arise is for a single firm to

Correct Answer
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Correct Answer
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A revenue maximiser operates where MR = ...
View Answer

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Correct Answer
verified

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Correct Answer
verified
A profit-maximising monopolist will cho...
View Answer

Exam 14: Market Structures I: Monopoly

If government officials break a natural monopoly up into several smaller firms, then

Correct AnswerverifiedShow Answer

For the monopolist, marginal revenue is always less than the price of the good.

Correct AnswerverifiedShow Answer

Most economists argue that the most efficient solution to the problem of monopoly is that the monopoly should be publicly owned.

Correct AnswerverifiedShow Answer

Patent and copyright laws encourage

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

The task of economic regulation is to

Correct AnswerverifiedShow Answer

A monopolist maximises profit by producing the quantity at which

Correct AnswerverifiedShow Answer

Price discrimination is only possible if there is no arbitrage.

Correct AnswerverifiedShow Answer

Universities are engaging in price discrimination when they charge different levels of tuition to poor and wealthy students.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Cengage is a monopolist in the production of your textbook because Cengage

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

Which of the following statements about price and marginal cost in competitive and monopolised markets is true?

Correct AnswerverifiedShow Answer

Why might economists prefer private ownership of monopolies over public ownership of monopolies?

Correct AnswerverifiedThe private monopolist is governed by th...View AnswerShow Answer

Explain how a profit-maximising monopolist chooses its level of output and the price of its goods.

Correct AnswerverifiedA profit-maximising monopolist produces ...View AnswerShow Answer

The simplest way for a monopoly to arise is for a single firm to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA revenue maximiser operates where MR = ...View AnswerShow Answer

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a

Correct AnswerverifiedShow Answer

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Correct Answerverified A profit-maximising monopolist will cho...View AnswerShow Answer

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A

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B

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The private monopolist is governed by th...
View Answer

Correct Answer
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A profit-maximising monopolist produces ...
View Answer

Correct Answer
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Correct Answer
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A revenue maximiser operates where MR = ...
View Answer

Correct Answer
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Correct Answer
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A profit-maximising monopolist will cho...
View Answer