Monopoly and Market Regulation Quiz

Where does a monopoly produce in an unregulated market?

• Where marginal cost equals demand

• Where marginal revenue equals marginal cost

• Where average total cost is minimized

• Where total revenue is maximized

What is the profit per unit if the price is $24 and the average total cost is $18?

• $6

• $8

• $12

• $18

Why is a monopoly not allocatively efficient at the profit-maximizing quantity?

• Because demand does not equal marginal cost

• Because average total cost is minimized

• Because demand equals marginal cost

• Because marginal revenue equals marginal cost

Between prices $16 and $18, what is the elasticity of demand?

• Inelastic

• Unit elastic

• Perfectly elastic

• Elastic

What happens to economic profit when the government regulates output to 11 units?

• Economic profit is positive

• Economic profit is negative

• There is no economic profit

• Economic profit is maximized

What is the effect of a price ceiling set at $22 on marginal revenue?

• Marginal revenue becomes $20

• Marginal revenue becomes $22

• Marginal revenue becomes $24

• Marginal revenue becomes $18

At what quantity does a monopoly produce under a price ceiling of $22?

• 8 units

• 9 units

• 10 units

• 11 units

What is the output quantity when a monopoly practices perfect price discrimination?

• 10 units

• 11 units

• 8 units

• 9 units

What happens to consumer surplus under perfect price discrimination?

• Consumer surplus is minimized

• Consumer surplus is unchanged

• Consumer surplus is zero

• Consumer surplus is maximized

Why is there no consumer surplus with perfect price discrimination?

• Because prices are fixed by the government

• Because consumers pay more than their willingness to pay

• Because consumers pay exactly their willingness to pay

• Because consumers pay less than their willingness to pay