econ 16
when demand is elastic, marg revenue is
a positive
Once a monopoly has determined how much it produces, it will charge a price that
c is determined by its demand curve
Monopolies ____ fair and ____ efficient.
c might be, might be
if a perfectly competitive industry is taken over by a single firm that operates as a single price monopoly the price will __ and quantity will __
c rise, decrease
a single price monopoly can sell 1 unit for 9$ to see 2 units the price must be $8.50 per unit, the marg revenue from selling the second unit is
d $8
if the natural monopoly illustrated in figure 16.7 was regulated using a marg cost pricing rule the price would be
b between $100.01 and $200
in equilibrium, rent seeking eliminates the
b econ profit
to max it profits a single orice monopoly produces the quantity at which
b marg revenue equals marg cost
is a single monopoly efficient
b no bc it creates deadweight loss
price discrimination lowers a firms profit
f
the buyer of a monopoly always makes an econ profit
f
If a monopoly is able to perfectly price discriminate, then consumer surplus is
a equal to zero
For a single-price monopoly, price is
a greater than marg revenue
if a natural monopoly is told to set a price equal to its avg cost then the firm
a is not able to set the marg revenue equal to marg cost
The theory that regulation seeks an efficient use of resources is the
a social interest theory
figure 16.3 shows market for gas in a town. if the market is perfectly competitive, the quantity is __ million gallons a year and if the market is taken over by a firm that operates as a single price monopoly, the quantity is __ million gallons a year
c 30,20
which of the following are price discrimination
c II,III( charging business flyers a higher airline than tourist and charging more for the first pizza than second)
which of the following best describes the capture theory of regulation
c III only ( regulatio helps firms max econ profit)
if the natural monopoly illustrated in figure 16.7 was regulated using an avg total cost pricing rule the price would be
c between $200.01-$300
when a monopoly price is discriminates, it
c converts econ profit into econ profit
w perfect price discrimination the quantity of output produced by a monopoly is _ the quantity produced by a perfectly competitive market
c equal to but not greater than
when regulators require a natural monopoly to set a price that is equal to its marg cost, the firm
c incurs an econ loss
Comparing single-price monopoly to perfect competition, monopoly
d decreases the amount of consumer surplus
figure 16.3 shows the market for gas in a town. If the market is perfectly competitive the price is __ per gallon and if the market is taken over by a firm that operates as a single price monopoly the price is __
e $2,$3
which of the following must a firm be able to do to successfully price discriminate
e I,II,III
a monopoly redistributes consumer surplus so that consumers gain and producer loses
f
for a single price monopoly, a marg revenue exceeds price
f
marg revenue is always positive for a monopoly
f
price cap regulation is designed to give firms the incentive to raise the price of their output provided competition in the market increases
f
price disccrimination converts producer surplus into consumer surplus
f
a monopoly changes a higher price than a perfectly competitive industry
t
a regulated natural monopoly prodcues the efficient quantity of output when it is regulated to use a marg cost pricing rule
t
a single price monopoly maxs profit by producing the quantity at which marg revenue equals marg cost
t
social interest theory assumes that the political process introduces regulation that eliminates deadweight loss
t
w perfect price discrimination the firm produces the efficient quantity of output and has a larger profit than it would if price didt discrimate
t
