Deck 13: Monopoly

Question 1

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which are legal monopolies are

A)only Pfizer.
B)Canada Post, Pfizer, and Rogers Communications.
C)Canada Post and Pfizer.
D)only Canada Post.
E)only Rogers Communications.

Answer 1

C

Question 2

Suppose in an industry a firm realizes economies of scale over the entire length of its LRAC curve.In this situation, the firm is

A)a natural monopoly.
B)a fixed-cost monopoly.
C)an output-discriminating monopoly.
D)a perfect-price discriminating monopoly.
E)a constant total variable cost monopoly.

Answer 2

A

Question 3

Use the information below to answer the following questions.
Fact 13.1.1
The following statements give some information about seven markets.
1. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase its market share.
2. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
3. A barrier to entry exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
Refer to Fact 13.1.1.A monopoly might arise in the market described in

A)statement 5.
B)statement 1.
C)statements 2, 6, and 7.
D)statement 3.
E)statement 4.

Answer 3

C

Question 4

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR, a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which profit from price discrimination are

A)Canada Post and Rogers Communications.
B)only Pfizer.
C)only Canada Post.
D)Canada Post, Pfizer, and Rogers Communications.
E)only Rogers Communications.

Question 5

A natural monopoly exists when

A)the government protects the firm by granting an exclusive franchise.
B)production can take place with constant returns to scale.
C)there are no rivals in the market.
D)one firm can supply the entire market at a lower cost than two or more firms.
E)the average total cost curve is upward sloping.

Question 6

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus, the pizza firm is

A)implementing unfair pricing practices.
B)incurring a loss on on-campus sales.
C)eliminating all competition.
D)located close to the campus.
E)practising price discrimination.

Question 7

Which one of the following is most likely to be a natural monopoly?

A)sandwich shops
B)printing services
C)welding services
D)automotive service
E)electric utilities

Question 8

An exclusive right granted to a firm to supply a good or service is

A)a licence.
B)a patent.
C)a public franchise.
D)the essential characteristic of natural monopoly.
E)an economy of scale.

Question 9

Which one of the following is an example of a natural barrier to entry of new firms into an industry?

A)licensing of professions
B)economies of scale
C)issuing a patent
D)a public franchise
E)ownership of a significant portion of a key resource

Question 10

A monopoly is a market with a single firm that

A)produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service.
B)purchases its factors of production from only one supplier because of a barrier preventing it from buying from other suppliers.
C)produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service.
D)cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price.
E)produces its good or service using labour from a single source, which is usually a union.

Question 11

Which of the following is least likely to be a natural monopoly?

A)subway services
B)electric utilities
C)water and sewer services
D)taxicab service
E)cable television services

Question 12

To prevent monopoly from arising, there must be

A)a single supplier of a good in the market.
B)no close substitutes for the good.
C)barriers preventing entry of other firms.
D)freedom of entry into the market.
E)economies of scale.

Question 13

A monopoly arises for two key reasons, which are

A)barriers to entry and no close substitutes.
B)franchises and barriers to entry.
C)barriers to entry and close substitutes.
D)close substitutes and no barriers to entry.
E)natural and legal

Question 14

Use the information below to answer the following questions.
Fact 13.1.1
The following statements give some information about seven markets.
1. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase its market share.
2. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
3. A barrier to entry exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
Refer to Fact 13.1.1.The firm described in ________ can price discriminate if it can ________.

A)statements 2, 3, 6, and 7; eliminate the barriers to entry
B)statements 2, 3, 6, and 7; distinguish between different classes of consumers
C)statements 2 and 3; eliminate the current barriers to entry
D)statement 1; increase advertising
E)statement 1; decrease its costs

Question 15

Use the figure below to answer the following question.

Figure 13.2.1
Refer to Figure 13.2.1.This single-price monopoly produces ________ units per day and charges a price of $________ per unit.

A)zero; 0
B)20; 75
C)40; 50
D)20; 50
E)20; 20

Question 16

In a natural monopoly, the long-run average cost curve

A)is downward sloping in the relevant range of output levels.
B)is horizontal in the relevant range of output levels.
C)is upward sloping in the relevant range of output levels.
D)may be either upward sloping or downward sloping in the relevant range of output levels.
E)lies below the marginal cost curve.

Question 17

Use the figure below to answer the following question.

Figure 13.1.1
Refer to Figure 13.1.1.The quantity demanded by the market is 8 million cubic metres a month.This market is

A)a legal monopoly.
B)served by a perfect price discriminating monopoly.
C)served by many firms each making an economic profit.
D)served by many firms each incurring an economic loss.
E)a natural monopoly.

Question 18

A single-price monopoly is a firm that ________ each unit of its output ________.A ________ monopoly sells different units of a good or service for different prices.

A)produces; at a constant cost; discriminatory
B)must sell; for the same price to all its customers; price-discriminating
C)produces; at a constant cost; price-discriminating
D)must sell; for the same price to all its customers; discriminatory
E)must sell; at the same price as a perfectly competitive firm; price-discriminating

Question 19

Use the information below to answer the following questions.
Fact 13.1.1
The following statements give some information about seven markets.
1. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase its market share.
2. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
3. A barrier to entry exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
Refer to Fact 13.1.1.The firm described in statement ________ is a natural monopoly.The firm described in statement ________ is a legal monopoly.

A)7; 6
B)2; 7
C)6; 7
D)2; 6
E)1; 4

Question 20

Firms that can price discriminate between customers do so to

A)increase consumer surplus.
B)increase employment.
C)increase economic profit.
D)decrease the quantity they produce.
E)increase producer surplus and deadweight loss.

Question 21

For a single-price monopoly, marginal revenue is less than price because

A)the revenue gained from the last unit sold is offset by further gains in price on units not sold at all.
B)total revenue always decreases as output increases.
C)the revenue gained from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price.
D)the price does not need to be lowered on all previous units sold.
E)demand is perfectly elastic.

Question 22

If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue, it

A)should raise the price and decrease output.
B)should lower the price and increase output.
C)should lower the price and decrease output.
D)is incurring an economic loss.
E)is maximizing profit.

Question 23

Use the table below to answer the following question.
Table 13.2.1

Refer to Table 13.2.1.Minnie's Mineral Springs, a single-price monopoly, faces the market demand schedule given in the table.Minnie will not produce a quantity at which the market demand for water is inelastic because when demand is inelastic she can ________ the quantity produced, which ________.

A)increase; increases total revenue, decreases total cost, and increases economic profit
B)increase; increases total revenue and increases total cost, but the increase in total cost is less than the increase in total revenue
C)decrease; increases total revenue, decreases total cost, and increases economic profit
D)decrease; decreases total revenue and decreases total cost, but the decrease in total cost is less than the decrease in total revenue
E)decrease; increases total revenue, does not change total cost, and increases economic profit

Question 24

The marginal revenue curve for a single-price monopoly

A)is below its demand curve.
B)is the same as the demand curve.
C)lies above its demand curve.
D)is horizontal.
E)has a slope equal to the slope of the demand curve.

Question 25

Use the figure below to answer the following questions.

Figure 13.2.3
Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.How many tickets does this monopolist sell to maximize economic profit?

A)20 tickets
B)30 tickets
C)50 tickets
D)60 tickets
E)100 tickets

Question 26

A monopoly ________ make positive economic profit in the long run because ________.

A)can; barriers to entry prevent other firms from entering the market and sharing the profit
B)cannot; eventually demand will decrease and prices will fall
C)cannot; other firms will enter the market until all firms are making zero economic profit
D)can; new technology constantly lowers costs for the monopoly firm and for its competitors
E)can; demand constantly increases and price constantly rises

Question 27

If marginal revenue equals zero, then demand at this level of output is

A)perfectly inelastic.
B)inelastic.
C)unit elastic.
D)elastic.
E)perfectly elastic.

Question 28

If the demand for its good or service is elastic, a monopoly's

A)total revenue is unchanged when the firm lowers its price.
B)total revenue decreases when the firm lowers its price.
C)marginal revenue is positive.
D)marginal revenue is zero.
E)marginal revenue is negative.

Question 29

Use the figure below to answer the following questions.

Figure 13.2.2
For the single-price monopoly shown in Figure 13.2.2, when profit is maximized, quantity is

A)3 and price is $3.
B)3 and price is $6.
C)4 and price is $4.
D)4 and price is $5.
E)5 and price is $4.

Question 30

Use the figure below to answer the following questions.

Figure 13.3.1
Refer to Figure 13.3.1.If this market were perfectly competitive, the output level would exceed the single-price monopoly output level by

A)20 units.
B)40 units.
C)60 units.
D)30 units.
E)zero. The perfectly competitive firm and the single-price monopoly produce the same quantity because marginal cost is constant.

Question 31

Use the figure below to answer the following questions.

Figure 13.2.2
Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit, what is total economic profit?

A)$3
B)$4
C)$6
D)$9
E)$7

Question 32

Which of the following is a characteristic of a single-price monopoly?

A)Many substitutes for the firm's product exist.
B)Price exceeds marginal revenue.
C)Demand is perfectly elastic.
D)The firm is a price taker.
E)Marginal revenue is greater than marginal cost.

Question 33

For a single-price monopoly, the demand curve is

A)below the marginal revenue curve.
B)the same as the marginal revenue curve.
C)above the marginal revenue curve.
D)the same as the total revenue curve.
E)below the average total cost curve.

Question 34

A single-price monopolist

A)maximizes economic profit by producing the quantity at which marginal revenue equals marginal cost.
B)maximizes economic profit by producing the quantity at which marginal revenue equals average total cost.
C)can increase the price and the quantity sold simultaneously.
D)is not restricted by the law of demand.
E)can sell as much as it wants at a given price because it is the only seller.

Question 35

To increase sales from 7 units to 8 units, a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

A)$48
B)$6
C)$1
D)-$1
E)$7

Question 36

A single-price monopolist's demand curve

A)is its marginal revenue curve.
B)shows that demand for the good is perfectly elastic.
C)is the same as the market demand curve.
D)shows that demand for the good is perfectly inelastic.
E)is horizontal.

Question 37

Use the figure below to answer the following question.

Figure 13.2.4
Refer to Figure 13.2.4.Grannie's is the only cake bakery on Coastal Island.The graph shows Grannie's demand curve, marginal revenue curve, and marginal cost curve.Grannie's profit-maximizing price is ________ a cake and its profit-maximizing output is ________ cakes a week.

A)$28; 12
B)$16; 12
C)$36; 2
D)$16; 24
E)$24; 16

Question 38

Sue's Surfboards is the sole renter of surfboards on Big Wave Island.Sue does not price discriminate.For Sue's Surfboards, the change in total revenue from each additional surfboard rented is her

A)marginal revenue, which is less than the rental price of a surfboard.
B)marginal cost, which is constant regardless of how many surfboards are rented.
C)marginal revenue, which is equal to the rental price of a surfboard.
D)marginal cost, which is greater than the rental price of a surfboard.
E)marginal revenue, which is equal to average total cost in the long run.

Question 39

A monopoly

A)faces a perfectly elastic demand.
B)ignores the demand curve because it is the only seller.
C)can raise the price it charges only if it decreases the quantity that it sells.
D)can raise the price it charges only if it increases the quantity that it sells.
E)faces a perfectly inelastic demand.

Question 40

Use the figure below to answer the following questions.

Figure 13.2.3
Refer to Figure 13.2.3.Assume this firm is a single-price monopoly.What is the profit-maximizing price to charge for the tickets?

A)$5.00
B)$4.00
C)$3.00
D)$2.00
E)$3.50

Question 41

Use the figure below to answer the following questions.

Figure 13.3.1
Refer to Figure 13.3.1.The efficient quantity is

A)20 units.
B)40 units.
C)60 units.
D)80 units.
E)zero units.

Question 42

Consumer surplus is

A)positive in the case of a monopolist practising perfect price discrimination.
B)equal to price minus marginal cost.
C)less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
D)zero for a single-price monopolist.
E)greater in a single-price monopoly than in a perfectly competitive industry.

Question 43

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the revenue and cost curves in Figure 13.3.3.If this is a single-price monopoly, what is consumer surplus?

A)EADH
B)EABH
C)ABD
D)ACD
E)KEA

Question 44

Use the figure below to answer the following questions.

Figure 13.3.2
Consider Figure 13.3.2.Consider a perfectly competitive market.If the light grey area shows the consumer surplus, and the dark grey area shows the producer surplus, which graph correctly represents this market?

A)(a)
B)(b)
C)(c)
D)(d)
E)(b)and (d)

Question 45

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive, which area indicates consumer surplus?

A)AEK
B)DHK
C)DIK
D)DIH
E)ACD

Question 46

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the revenue and cost curves in Figure 13.3.3.What is the difference in producer surplus between a single-price monopoly and a perfectly competitive market?

A)EADH
B)EABH
C)ABD
D)ACD
E)EABH - BCD

Question 47

Use the figure below to answer the following questions.

Figure 13.3.1
Refer to Figure 13.3.1.If this market is a single-price monopoly, then

A)it is efficient because the monopoly is maximizing economic profit.
B)price is equal to marginal cost and the outcome is efficient.
C)price is less than marginal cost, and consumer surplus is less than in a perfectly competitive market.
D)price is greater than the marginal cost and the outcome is inefficient.
E)the outcome is inefficient because the monopoly's costs are too high.

Question 48

Use the figure below to answer the following questions.

Figure 13.3.2
Consider Figure 13.3.2.Consider a single-price monopoly.If the light grey area shows the consumer surplus, and the dark grey area shows the producer surplus, which graph correctly represents this firm?

A)(a)
B)(b)
C)(c)
D)(d)
E)(b)and (c)

Question 49

Methods of rent seeking include which of the following? I. Buying a monopoly
II. Creating a monopoly
III. Price discrimination

A)I and II
B)I and III
C)II and III
D)III only
E)II only

Question 50

Use the figure below to answer the following questions.

Figure 13.3.3
Refer to Figure 13.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly, as compared to a perfectly competitive market?

A)EADH
B)EABH
C)ABD
D)ACD
E)EABH - BCD

Question 51

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive, which area indicates the deadweight loss?

A)ABD
B)BCD
C)KDI
D)ADC
E)None of the above

Question 52

The creation of a monopoly results in gains to

A)producers at no expense to consumers.
B)consumers at no expense to producers.
C)producers at the expense of consumers.
D)consumers at the expense of producers.
E)producers and consumers at the expense of the government.

Question 53

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the cost and revenue curves in Figure 13.3.3.Which area indicates the deadweight loss from a single-price monopoly?

A)EACF
B)ACD
C)ABD
D)BCD
E)EADCF

Question 54

Rent seeking

A)is a variable cost and with rent seeking the monopoly becomes more efficient.
B)decreases average total cost and with rent seeking the monopoly becomes more efficient.
C)increases deadweight loss above the original monopoly deadweight loss, but the monopoly continues to produce the same inefficient quantity.
D)decreases consumer surplus and with rent seeking the monopoly becomes more efficient.
E)decreases deadweight loss.

Question 55

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive, which area indicates producer surplus?

A)AEK
B)DHK
C)DIK
D)DIH
E)ACD

Question 56

Taking competitive rent seeking activity into account, the social cost of monopoly is equal to the

A)deadweight loss from monopoly.
B)monopoly's producer surplus.
C)deadweight loss plus the monopoly's producer surplus.
D)deadweight loss minus the monopoly's producer surplus.
E)consumer surplus lost plus producer surplus lost.

Question 57

The pursuit of wealth by capturing economic rent

A)is rent seeking.
B)is illegal in Canada.
C)is price discrimination.
D)creates a legal monopoly.
E)creates a natural monopoly.

Question 58

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the revenue and cost curves in Figure 13.3.3.If this is a single-price monopoly, what area is producer surplus?

A)IHD
B)KHD
C)KEA
D)IEAC
E)None of the above

Question 59

Use the figure below to answer the following questions.

Figure 13.3.3
Consider the revenue and cost curves in Figure 13.3.3.What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?

A)EADH
B)EABH
C)ABD
D)ACD
E)FHDC

Question 60

Rent seeking is best defined as

A)an attempt by landlords to get tenants.
B)the pursuit of wealth by capturing economic rent.
C)an attempt by individuals to avoid paying taxes.
D)owners of a monopoly selling the firm at the highest possible price.
E)a means of eliminating deadweight loss.

Question 61

Use the table below to answer the following questions.
Table 13.4.1

Table 13.4.1 shows the demand schedule faced by a perfect price-discriminating monopoly.If 3 units are sold, total revenue is

A)$15.00.
B)$16.00.
C)$18.00.
D)$19.50.
E)$5.00.

Question 62

Use the figure below to answer the following question.

Figure 13.4.1
Which area in Figure 13.4.1 indicates the deadweight loss from a perfect price-discriminating monopoly?

A)EACF
B)ACD
C)ABD
D)BCD
E)None of the above

Question 63

Use the figure below to answer the following questions.

Figure 13.4.2
Refer to Figure 13.4.2.Assume this monopolist practises perfect price discrimination.How many tickets are sold?

A)20 tickets
B)60 tickets
C)40 tickets
D)100 tickets
E)80 tickets

Question 64

A perfect price-discriminating monopoly

A)has a demand curve that is also its marginal revenue curve.
B)maximizes total revenue.
C)is inefficient.
D)will produce the quantity at which the marginal cost curve intersects its demand curve.
E)both A and D

Question 65

Use the table below to answer the following questions.
Table 13.4.1

Refer to Table 13.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 13.4.1 and if marginal cost is constant at $3, output is

A)2 units.
B)3 units.
C)4 units.
D)5 units.
E)6 units.

Question 66

Use the figure below to answer the following questions.

Figure 13.4.2
Refer to Figure 13.4.2.Assume this monopolist practises perfect price discrimination.What is total revenue?

A)$110
B)$210
C)$310
D)$120
E)$105

Question 67

Use the information below to answer the following questions.
Fact 13.3.1 What the Apple-Samsung Verdict Means for Your Smartphone
A California jury found Samsung guilty of violating the majority of the patents in question, including software features like double-tap zooming and scrolling. It recommended that Apple be awarded more than $1 billion in damages. This verdict could significantly affect both smartphone users and producers.
Source: CNN Money, August 26, 2012
Refer to Fact 13.3.1.Suppose the smartphone market becomes perfectly competitive.Choose the statement that is incorrect when we compare the perfectly competitive market to a monopoly.

A)Society gains.
B)Producers of smartphones gain.
C)Consumers of smartphones gain.
D)Total surplus increases.
E)Deadweight loss is eliminated.

Question 68

When perfect price discrimination occurs, which one of the following statements is false?

A)Buyers cannot resell the product.
B)The firm can distinguish between buyers.
C)The firm sets prices.
D)The firm captures consumer surplus.
E)The outcome is less efficient than with single-price monopoly.

Question 69

The output of a (not perfect)price-discriminating monopoly is

A)less than a single-price monopoly.
B)more than a single-price monopoly but less than a perfectly competitive industry.
C)the same amount as a perfectly competitive industry.
D)more than a perfectly competitive industry.
E)less than a single-price monopoly but more than a perfectly competitive industry.

Question 70

Use the figure below to answer the following questions.

Figure 13.3.4
Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

A)Q₁ and price is P₁.
B)Q₁ and price is P₃.
C)Q₂ and price is P₂.
D)Q₃ and price is P₀.
E)Q₄ and price is 0.

Question 71

A monopoly can practise price discrimination when it

A)can segment the market according to the different prices the consumers are willing to pay.
B)is a price taker.
C)has different marginal costs of production for different output levels.
D)has decreasing average variables cost.
E)produces a good with close substitutes.

Question 72

Use the figure below to answer the following questions.

Figure 13.4.2
Refer to Figure 13.4.2.Assume this monopolist practises perfect price discrimination.What is the lowest price charged for tickets?

A)$0
B)$1.00
C)$3.50
D)$3.00
E)$2.00

Question 73

Use the table below to answer the following questions.
Table 13.4.1

Table 13.4.1 shows the demand schedule faced by a monopoly.If the monopoly is a perfect price-discriminating monopoly the marginal revenue from the sale of the 3rd unit of output is

A)$2.
B)$6.
C)$4.
D)$3.
E)$5.

Question 74

If a firm practises perfect price discrimination,

A)its marginal cost curve is horizontal.
B)it will maximize total revenue.
C)it does not produce the quantity at which marginal revenue equals marginal cost.
D)it will produce the quantity at which the marginal revenue curve intersects the average total cost curve.
E)it will produce the quantity at which the marginal cost curve intersects the demand curve.

Question 75

One difference between perfectly competitive markets and a single-price monopoly is that

A)marginal revenue equals marginal cost for perfectly competitive firms, but not for single-price monopolists.
B)marginal cost equals average variable cost for perfectly competitive firms but not for single-price monopolists.
C)price equals minimum average total cost for single-price monopolists but not for perfectly competitive firms.
D)marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists.
E)marginal revenue equals marginal cost for single-price monopolists but not for perfectly competitive firms.

Question 76

A perfect price-discriminating monopoly produces

A)less than a single-price monopoly.
B)more than a single-price monopoly but less than a perfectly competitive industry.
C)less than a monopoly that practices price discrimination but not perfect price discrimination.
D)more than a perfectly competitive industry.
E)the same amount as a perfectly competitive industry.

Question 77

Use the information below to answer the following questions.
Fact 13.3.1 What the Apple-Samsung Verdict Means for Your Smartphone
A California jury found Samsung guilty of violating the majority of the patents in question, including software features like double-tap zooming and scrolling. It recommended that Apple be awarded more than $1 billion in damages. This verdict could significantly affect both smartphone users and producers.
Source: CNN Money, August 26, 2012
Refer to Fact 13.3.1.Suppose Apple becomes a monopoly in the smartphone market.Choose the statement that is incorrect.

A)Samsung loses.
B)The government gains.
C)Consumers lose.
D)Apple gains.
E)The market for smartphones becomes less efficient.

Question 78

Which of the following markets will have the largest deadweight loss?

A)a single-price monopoly
B)a perfectly competitive market
C)a perfectly price discriminating monopoly
D)both B and C
E)both A and C

Question 79

Use the figure below to answer the following questions.

Figure 13.3.4
Consider the natural monopoly depicted in Figure 13.3.4.What area in the graph represents the deadweight loss arising from an unregulated monopoly?

A)ABD
B)DGF
C)DEF
D)ACF
E)CBDE

Question 80

Use the figure below to answer the following questions.

Figure 13.4.2
Refer to Figure 13.4.2.Assume this monopolist practises perfect price discrimination.This means that

A)the monopoly's behaviour is illegal.
B)one price is charged to young people and a different price to older people.
C)a different price can be charged to each buyer.
D)price will rise as the number of buyers increases.
E)the quantity sold will be less compared to the case of no price discrimination.