Learning Curve- Chapter 13: Monopoly

Given the graph, if the monopolist perfectly price discriminates, consumer surplus will be _____ dollars.

0

The graph shows the revenue curves and cost curves for a monopoly. At the profit-maximizing output, total revenue is the area: 0ILH. 0GAD. 0ECD. EGAC.

0GAD.

The table shows the demand, marginal revenue, and costs schedules for barrels of spring water sold by James, a monopolist. The profit-maximizing price is _____ dollars.

10

The table shows the demand curve for barrels of spring water sold by James, a monopolist. If James's marginal and average cost is $8, the profit-maximizing price is _____ dollars.

12

Price regulation may be used in cases of natural monopoly with the goal of: shifting the demand curve for the product. setting a price equal to average variable cost. setting a price equal to average total cost. minimizing the amount of consumer surplus.

setting a price equal to average total cost.

Given the graph, if the monopolist maximizes profit, he will earn profit of: $20,000. $40,000. $10,000. $30,000.

$20,000.

The table shows the demand curve for barrels of spring water sold by James. If James' marginal and average costs are $10, and his firm is in a perfectly competitive industry, James' maximum profit in the long run is _____ dollars.

0

• The table shows the demand curve for barrels of spring water sold by James, a monopolist. If James' marginal and average costs are $10, James will maximize profit by charging a price of:

13

The table shows the demand, marginal revenue, and cost schedules for barrels of spring water sold by James, a monopolist. The profit-maximizing output is _____ barrels.

6

• The table shows the demand, marginal revenue, and cost schedules for barrels of spring water sold by James, a monopolist. The profit-maximizing output is _____ barrels.

6

If the monopolist perfectly price discriminates, it will produce _____ units.

8

• Goods that are different but considered somewhat substitutable by consumers are called _____ goods

DIFFERENTIATED

True or False: If a monopolized industry is not a natural monopoly, the best policy is for the government to avoid intervening and let the free market work. This is _____. True False

False

True or False: Most goods purchased by American consumers are made by perfectly competitive firms. This is _____.

False

True or False: Patents give monopoly protection for the full length of the inventor's lifetime. This is _____. True False

False

True or False: The marginal revenue curve for a monopolist is perfectly elastic. This is _____.

False

The graph shows the revenues and costs for a natural monopoly. If the monopoly is unregulated, it will produce an output of: zero. G. H. F.

G

The graph shows the revenues and costs for a natural monopoly. If regulators want to maximize total surplus, they will establish a price ceiling at _____.

J

The graph shows the revenues and costs for a natural monopoly. If regulators allow the monopolist to cover average total cost, the price that the monopolist will be allowed to charge is _____.

J

• The profit-maximizing rule for the perfectly competitive firm is that it will choose output such that

MR=MC

Which of the following is a strategy for dealing with a natural monopoly?

Public Ownership

• True or False: A volume discount is a form of price discrimination. This is _____.

TRUE

• True or False: An individual firm's demand curve in a perfectly competitive market is perfectly elastic.

TRUE

• True or False: An industry with many producers of identical products is perfect competition. This is _____.

TRUE

• True or False: In order to successfully practice price discrimination, different groups of a monopolist's customers must have different sensitivities to price. This is _____.

TRUE

• True or False: Monopoly produces a net welfare loss for society. This is _____

TRUE

• True or False: Monopoly produces a net welfare loss for society. This is _____.

TRUE

The price elasticity of demand of students for an iPhone is 0.7. The price elasticity of demand of senior citizens for an iPhone is 1.8. True or False: If Apple wishes to practice price discrimination, it should charge a higher price to the students. This is _____.

True

True or False: A monopolist engaging in perfect price discrimination will be more efficient than a single-price monopolist. This is _____. True False

True

True or False: The De Beers diamond monopoly is a natural monopoly. This is ____.

false

Compared to a perfectly competitive firm, a monopolist in a retail market: produces more. has less market power. makes less profit. has higher prices.

has higher prices.

In practicing price discrimination, the monopolist should charge _____ to consumers with inelastic demand. higher prices a price equal to marginal cost lower prices the same prices

higher prices

When a monopolist practices price discrimination, the monopolist:

increases profits by capturing consumer surplus.

• When a monopolist practices price discrimination, the monopolist:

increases profits by capturing consumer surplus.

The ability of a monopolist to raise its selling price above the competitive level by reducing output is known as: market power. strategic pricing. quantity control. natural monopoly.

market power.

A pharmaceutical with a patent is an example of a: Please choose the correct answer from the following choices, and then select the submit answer button. natural monopoly. monopoly protected by a government-created barrier. network externality. good produced with technological superiority.

monopoly protected by a government-created barrier.

A _____ occurs when the value to the consumer of a software package rises as there are more people who also use the same software package. natural monopoly network externality copyright shortage

network externality

Given the graph, the monopolist will maximize profit at an output: of 2000. of 1000. more than 2000. between 1000 and 2000.

of 1000.

In the market for soft drinks, there are a small number of firms selling differentiated products. This is an example of: monopoly. oligopoly. perfect competition. monopolistic competition.

oligopoly

True or False: There are monopolies in the pharmaceutical industry. This is _____.

true

If this monopolist practices perfect price discrimination, some consumers who would NOT buy the good from a single-price monopolist will now be able to buy the good. These are the consumers who are: not willing to pay enough to cover the marginal cost of producing the good. willing to pay more than $12. willing to pay less than $8. willing to pay between $8 and $12.

willing to pay between $8 and $12.

• Price regulation may be used in cases of natural monopoly with the goal of:

SETTING A PRICE EQUAL TO AVAERAGE TOTAL COST

: An industry with many producers of identical products is perfect competition. This is _____.

TRUE

• True or False: A single-price monopolist offers its product to all consumers at the same price. This is _____.

TRUE

True or False: A perfectly price-discriminating monopolist in this graph would earn more profit than a single-price monopolist. This is _____. True False

True

True or False: A single-price monopolist offers its product to all consumers at the same price. This is _____.

True

True or False: A volume discount is a form of price discrimination. This is _____.

True

True or False: A volume discount is a form of price discrimination. This is _____. True False

True

True or False: An individual firm's demand curve in a perfectly competitive market is perfectly elastic. This is _____.

True

True or False: An industry with many producers of identical products is perfect competition. This is _____.

True

True or False: An industry with many producers of identical products is perfect competition. This is _____. False True

True

True or False: Facebook is a social network that is subject to network externalities. This is _____. True False

True

True or False: Monopoly produces a net welfare loss for society. This is _____.

True

Firms in the package-delivery industry are characterized by increasing returns to scale if: marginal cost always exceeds average total cost. average total cost falls as output increases. average total cost rises as output increases. fixed costs are zero.

average total cost falls as output increases.

A monopolist who practices price discrimination: can increase profits above what would be earned without price discrimination. charges more to those customers with more elastic demand. charges all customers the same price. increases consumer surplus as compared to a nonprice-discriminating monopolist.

can increase profits above what would be earned without price discrimination.

• A monopolist who practices price discrimination.

can increase profits above what would be earned without price discrimination.

A natural monopoly is an industry: characterized by increasing returns to scale. protected by patents. protected by copyrights. involved in mining natural resources.

characterized by increasing returns to scale.

Goods that are different but considered somewhat substitutable by consumers are called _____ goods. differentiated normal identical inferior

differentiated

The graph shows the revenues and costs for a natural monopoly. The fact that it is a natural monopoly is revealed by the: horizontal marginal cost curve. downward-sloping average total cost curve. downward-sloping marginal revenue curve. downward-sloping demand curve.

downward-sloping average total cost curve.

A pharmaceutical with a patent is an example of a: natural monopoly. monopoly protected by a government-created barrier. network externality. good produced with technological superiority.

monopoly protected by a government-created barrier.

The graph shows the revenue curves and cost curves for a monopoly. At the profit-maximizing output, total cost is:. 0ECD. EFKC . 0IKL. IGAL.

0ECD

The table shows the demand curve for barrels of spring water sold by James, a monopolist. If James' marginal and average costs are $10, James will maximize profit by charging a price of:

13

Given the graph, if the market is a perfectly competitive market, consumer surplus is the area: A + B + D. B + D. C. B.

A + B + D.

The graph shows the revenues and costs for a natural monopoly. If the monopoly is unregulated, consumer surplus will be: ALBK. DIMJ. HGM0. ABC.

ABC

The graph shows the revenues and costs for a natural monopoly. If the monopoly is unregulated, it will earn a profit of the area: ALKB. ABC. HGM0. DIMJ.

ALKB

Given the graph, a single-price monopolist would earn a profit of area: B. A. C. D.

B.

Given the graph, if the market is a monopoly, the monopolist's profit is the area: A. B. C. D.

B.

Given the graph, if the market is a monopoly, the monopolist's profit is the area: A. B. C. D.

B.

• Conditions that protect a monopoly by preventing other firms from entering profitable industries are called:

BARRIERS TO ENTRY

Conditions that protect a monopoly by preventing other firms from entering profitable industries are called:

Barriers to entry

Given the graph, if the market is a monopoly, deadweight loss is the area: A. B. D. C.

D.

Given the graph, if the market is a monopoly, deadweight loss is the area: A. B. D. C.

D.

• By 1889, De Beers controlled almost all of the world's production of:

DIAMONDS

By 1889, De Beers controlled almost all of the world's production of:

Diamonds

Goods that are different but considered somewhat substitutable by consumers are called _____ goods

Differentiated

The graph shows the revenue curves and cost curves for a monopoly. True or False: A monopolist who price discriminates perfectly will produce at the point where ATC is minimized. This is _____.

False

True or False: A patent gives the creator a literary or artistic work sole right to profit from that work. This is _____.

False

True or False: Both perfectly competitive firms and monopolies earn economic profits in the long run. This is _____.

False

True or False: Cecil Rhodes was able to establish the De Beers monopoly because of patents he received. This is _____.

False

The profit-maximizing rule for the perfectly competitive firm is that it will choose output such that:

MR = MC

The profit-maximizing rule for the monopolist is that it will choose output such that: MR = ATC. MR = MC. P = ATC. P = MC.

MR = MC.

• The table shows the demand curve for barrels of spring water sold by James, a monopolist. If James lowers his price from $11 to $10, the net effect of the quantity effect and the price effect is:

POSITIVE MARGINAL REVENUE OF $5

• Which of the following is a strategy for dealing with a natural monopoly?

PUBLIC OWNERSHIP

The table shows the demand curve for barrels of spring water sold by James, a monopolist. If James lowers his price from $11 to $10, the net effect of the quantity effect and the price effect is:

Positive Marginal revenue of $5

• True or False: The best policy towards a monopoly depends on whether the industry is a natural monopoly. This is _____.

TRUE

• True or False: The marginal revenue curve for a perfectly competitive firm is horizontal. This is _____.

TRUE

• True or False: There are monopolies in the pharmaceutical industry. This is _____.

TRUE

True or False: A copyright typically gives an author the sole right to profits from his or her work for a period of 15 years. This is _____.

True

True or False: In order to successfully practice price discrimination, different groups of a monopolist's customers must have different sensitivities to price. This is _____. True False

True

True or False: The best policy towards a monopoly depends on whether the industry is a natural monopoly. This is _____.

True

True or False: The marginal revenue curve for a perfectly competitive firm is horizontal. This is _____.

True

True or False: The marginal revenue curve for a perfectly competitive firm is horizontal. This is _____. True False

True

True or False: The profit-maximizing level of output for a monopolist is the output which generates the greatest difference between total revenue and total cost. This is _____.

True

If the DeBeers diamond monopoly lowers the price of a diamond from $800 to $750 and sales increase from 4 to 5 diamonds, the quantity effect is a(n): increase in total revenue of $3750. increase in total revenue of $50. increase in total revenue of $750. decrease in total revenue of $50.

increase in total revenue of $750.

If the DeBeers diamond monopoly lowers the price of a diamond from $800 to $750 and sales increase from 4 to 5 diamonds, the marginal revenue of the fifth diamond is: greater than $800. greater than $750, but less than $800. equal to $750. less than $750.

less than $750.

Compared to a perfectly competitive firm, a monopolist produces _____ and charges a _____ price. more; lower more; higher less; higher less; lower

less; higher

In the fast food industry, there are many firms producing a differentiated product. This is an example of which market structure? monopoly monopolistic competition perfect competition oligopoly

monopolistic competition

The tuna fishing industry is an example of which market structure? perfect competition monopoly oligopoly monopolistic competition

perfect competition

In the market for wheat, there are many farmers selling exactly the same type of wheat. This is an example of: perfect competition. monopoly. monopolistic competition. oligopoly.

perfect competition.

The market structure with many firms producing identical products is: monopoly. perfect competition. oligopoly. monopolistic competition.

perfect competition.

Compared to a perfectly competitive firm, a monopolist in a retail market: produces more output. hires more workers. hires fewer workers. produces less output.

produces less output.

The advantage of patents on pharmaceuticals is that they: make it possible for consumers to pay lower prices for medications that are protected by patents. reward pharmaceutical researchers with profits and give them the incentive to develop new medications. allow patients to know the potential side effects of a medication. increase consumer surplus.

reward pharmaceutical researchers with profits and give them the incentive to develop new medications.

Price regulation may be used in cases of natural monopoly with the goal of:

setting a price equal to avaerage total cost

True or False: In order to successfully practice price discrimination, different groups of a monopolist's customers must have different sensitivities to price. This is _____.

true

• True or False: Most goods purchased by American consumers are made by perfectly competitive firms. This is _____.

FALSE

• True or False: Patents give monopoly protection for the full length of the inventor's lifetime. This is _____.

FALSE

• True or False: The De Beers diamond monopoly is a natural monopoly. This is ____.

FALSE

• True or False: The marginal revenue curve for a monopolist is perfectly elastic. This is _____.

FALSE

The price elasticity of demand of students for an iPhone is 0.7. The price elasticity of demand of senior citizens for an iPhone is 1.8. True or False: If Apple wishes to practice price discrimination, it should charge a higher price to senior citizens. This is _____.

False

True or False: A price ceiling imposed on a natural monopoly will result in a shortage. This is _____. True False

False

True or False: A single-price monopolist in this graph would not earn any profit. This is _____. True False

False

True or False: If a monopolized industry is not a natural monopoly, the best policy is for the government to avoid intervening and let the free market work. This is _____.

False

Given the graph, a profit-maximizing firm in a perfectly competitive industry would produce an output of: less than 1000. between 1000 and 2000. 2000 1000.

2000

The graph shows the demand, marginal revenue, and cost schedules for barrels of spring water sold by James. If James' firm operates in a perfectly competitive market, consumer surplus is _____ dollars.

32

The table shows the demand curve for barrels of spring water sold by James. If James' marginal and average costs are $8, and his firm is in a perfectly competitive industry, James' output is _____ barrels more than if the firm is a monopoly.

4

The table shows the demand curve for barrels of spring water sold by James. If James' marginal and average costs is $8, and his firm is in a perfectly competitive industry, James' price is _____ dollars less than if the firm is a monopoly.

4

The table shows the demand curve for barrels of spring water sold by James, a monopolist. Total revenue at the profit-maximizing output is _____ dollars.

48

If the DeBeers diamond monopoly lowers the price of a diamond from $800 to $750 and sales increase from 4 to 5 diamonds, the marginal revenue of the fifth diamond is _____ dollars.

550

The graph shows the demand, marginal revenue and cost schedules for barrels of spring water sold by James. If James' firm is a monopoly, consumer surplus is _____ dollars.

8

The graph shows the demand, marginal revenue, and cost schedules for barrels of spring water sold by James. If James' firm is a monopoly, deadweight loss is _____ dollars.

8

• The graph shows the revenue curves and cost curves for a monopoly. True or False: A monopolist who price discriminates perfectly will produce at the point where ATC is minimized. This is _____.

FALSE

• True or False: A copyright typically gives an author the sole right to profits from his or her work for a period of 15 years. This is _____.

FALSE

• True or False: A patent gives the creator a literary or artistic work sole right to profit from that work. This is _____.

FALSE

• True or False: A price ceiling imposed on a natural monopoly will result in a shortage. This is _____.

FALSE

• True or False: Both perfectly competitive firms and monopolies earn economic profits in the long run. This is _____.

FALSE

• True or False: Cecil Rhodes was able to establish the De Beers monopoly because of patents he received. This is _____.

FALSE

• True or False: If a monopolized industry is not a natural monopoly, the best policy is for the government to avoid intervening and let the free market work. This is _____.

FALSE