Question 1

A monopolist

Accepted Answer

A) can charge whatever price it wants 
B) charges more than almost any consumer is willing to pay 
C) is constrained by marginal cost in setting price 
D) is constrained by demand in setting price 
E) always earns an economic profit 
A) can charge whatever price it wants 
B) charges more than almost any consumer is willing to pay 
C) is constrained by marginal cost in setting price 
D) is constrained by demand in setting price 
E) always earns an economic profit D

Question 2

Which of the following is not necessary for price discrimination to occur?

Accepted Answer

A) a downward-sloping demand curve facing the firm 
B) control over price by the firm 
C) the firm can easily distinguish groups with different price elasticities 
D) the firm can easily prevent resale of the good by lower-price customers 
E) economies of scale exist 
A) a downward-sloping demand curve facing the firm 
B) control over price by the firm 
C) the firm can easily distinguish groups with different price elasticities 
D) the firm can easily prevent resale of the good by lower-price customers 
E) economies of scale exist E

Question 3

Firms price discriminate because, by doing so, they obtain a higher profit than by charging a single price.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is not necessary in order for a firm to engage in price discrimination?

Accepted Answer

A) The producer must face an inelastic demand curve. 
B) The producer must face a downward-sloping demand curve. 
C) There must be at least two identifiable classes of consumers with different price elasticities of demand. 
D) The producer must be able, at little cost, to distinguish between the different classes of buyers. 
E) It must be impossible for one buyer to resell to another. 
A) The producer must face an inelastic demand curve. 
B) The producer must face a downward-sloping demand curve. 
C) There must be at least two identifiable classes of consumers with different price elasticities of demand. 
D) The producer must be able, at little cost, to distinguish between the different classes of buyers. 
E) It must be impossible for one buyer to resell to another.

Question 5

In order to sell an additional unit of its product, a monopolist must decrease price on all units.

Accepted Answer

A) True 
 B)False

Question 6

A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20.To maximize profit, a firm should

Accepted Answer

A) raise price and increase output 
B) raise price and decrease output 
C) maintain a constant price and increase output 
D) reduce price and increase output 
E) shut down 
A) raise price and increase output 
B) raise price and decrease output 
C) maintain a constant price and increase output 
D) reduce price and increase output 
E) shut down

Question 7

Exhibit 9-3   The total revenue for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is

Accepted Answer

A) $2, 574 
B) $2, 808 
C) $2, 100 
D) $1, 638 
E) $3, 300 
A) $2, 574 
B) $2, 808 
C) $2, 100 
D) $1, 638 
E) $3, 300

Question 8

Which of the following is true of perfect price discrimination compared to charging a single price?

Accepted Answer

A) Output is greater. 
B) Output is the same, but profit is higher. 
C) Output is lower, but profit is higher. 
D) Output is lower, and profit could be higher or lower. 
E) Output is the same, but profit is lower. 
A) Output is greater. 
B) Output is the same, but profit is higher. 
C) Output is lower, but profit is higher. 
D) Output is lower, and profit could be higher or lower. 
E) Output is the same, but profit is lower.

Question 9

Which of the following would not bar entry into a market?

Accepted Answer

A) control by a single firm of an essential resource 
B) the necessity of taking risks when starting a firm 
C) patents 
D) economies of scale 
E) government regulations limiting the number of firms in an industry 
A) control by a single firm of an essential resource 
B) the necessity of taking risks when starting a firm 
C) patents 
D) economies of scale 
E) government regulations limiting the number of firms in an industry

Question 10

Exhibit 9-2   The price elasticity of demand between P = $3 and P = $2 in Exhibit 9-2 is

Accepted Answer

A) 9/5 
B) $1.80 
C) 5/9 
D) $0.56 
E) 1 
A) 9/5 
B) $1.80 
C) 5/9 
D) $0.56 
E) 1

Question 11

Suppose that the demand for my new book, Spatulas From Around the World, is such that the demand curve lies everywhere below the average variable cost of producing it.To maximize profits or minimize losses, I should

Accepted Answer

A) raise price 
B) lower price to increase demand 
C) shut down the presses printing my book 
D) lower price until demand is inelastic 
E) charge the highest price I can 
A) raise price 
B) lower price to increase demand 
C) shut down the presses printing my book 
D) lower price until demand is inelastic 
E) charge the highest price I can

Question 12

Exhibit 9-2   In Exhibit 9-2, the marginal revenue of the fourth unit is

Accepted Answer

A) $12 
B) $3 
C) $4 
D) -$4 
E) $0 
A) $12 
B) $3 
C) $4 
D) -$4 
E) $0

Question 13

If a monopolist engages in perfect price discrimination,

Accepted Answer

A) the marginal revenue curve becomes steeper 
B) the demand curve also becomes the marginal revenue curve 
C) the demand curve is steeper than the marginal revenue curve 
D) the demand curve is not as steep as the marginal revenue curve 
E) there is no way to define its marginal revenue 
A) the marginal revenue curve becomes steeper 
B) the demand curve also becomes the marginal revenue curve 
C) the demand curve is steeper than the marginal revenue curve 
D) the demand curve is not as steep as the marginal revenue curve 
E) there is no way to define its marginal revenue

Question 14

If a monopolist is producing a rate of output at which market demand is inelastic,

Accepted Answer

A) it may or may not be maximizing its short-run profit 
B) reducing output would reduce both total revenue and total cost 
C) reducing output would increase both total revenue and total cost 
D) reducing output would increase total revenue and reduce total cost 
E) increasing output will increase its short-run economic profit 
A) it may or may not be maximizing its short-run profit 
B) reducing output would reduce both total revenue and total cost 
C) reducing output would increase both total revenue and total cost 
D) reducing output would increase total revenue and reduce total cost 
E) increasing output will increase its short-run economic profit

Question 15

When compared to firms in perfect competition, monopolists tend to charge __________ prices and offer __________ quantities of output.

Accepted Answer

A) lower; lower 
B) higher; lower 
C) lower; higher 
D) higher; higher 
E) higher; the same 
A) lower; lower 
B) higher; lower 
C) lower; higher 
D) higher; higher 
E) higher; the same

Question 16

Suppose the only professional hockey team within 500 miles is the Salt Lake City Slappers team.If the State of Utah imposes a profits tax on sports teams, the Slappers will

Accepted Answer

A) raise ticket prices 
B) lower ticket prices to boost sales 
C) maintain ticket prices and suffer a loss in profits 
D) expand the number of home hockey games 
E) reduce the number of home hockey games 
A) raise ticket prices 
B) lower ticket prices to boost sales 
C) maintain ticket prices and suffer a loss in profits 
D) expand the number of home hockey games 
E) reduce the number of home hockey games

Question 17

The demand curve a monopolist uses in making an output decision is

Accepted Answer

A) the same as the demand curve facing a perfectly competitive firm 
B) vertical because there are no close substitutes for its product 
C) horizontal because there are no close substitutes for its product 
D) the same as the market demand curve 
E) perfectly inelastic 
A) the same as the demand curve facing a perfectly competitive firm 
B) vertical because there are no close substitutes for its product 
C) horizontal because there are no close substitutes for its product 
D) the same as the market demand curve 
E) perfectly inelastic

Question 18

A perfectly discriminating monopolist converts every dollar of producer surplus into economic profit.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following does a monopoly control, that a perfectly competitive firm does not control?

Accepted Answer

A) how much to produce 
B) technology 
C) what price to charge 
D) what inputs to use 
E) plant size 
A) how much to produce 
B) technology 
C) what price to charge 
D) what inputs to use 
E) plant size

Question 20

The demand curve facing a single-price monopolist

Accepted Answer

A) is the same as its average revenue curve 
B) is the same as its marginal revenue curve 
C) is the same as the perfect competitor's demand curve 
D) lies above its average revenue curve 
E) lies below its marginal revenue curve 
A) is the same as its average revenue curve 
B) is the same as its marginal revenue curve 
C) is the same as the perfect competitor's demand curve 
D) lies above its average revenue curve 
E) lies below its marginal revenue curve

Exam 9: A--Monopoly

A monopolist

Which of the following is not necessary for price discrimination to occur?

Firms price discriminate because, by doing so, they obtain a higher profit than by charging a single price.

Which of the following is not necessary in order for a firm to engage in price discrimination?

In order to sell an additional unit of its product, a monopolist must decrease price on all units.

A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20.To maximize profit, a firm should

Exhibit 9-3 The total revenue for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is

Which of the following is true of perfect price discrimination compared to charging a single price?

Which of the following would not bar entry into a market?

Exhibit 9-2 The price elasticity of demand between P = $3 and P = $2 in Exhibit 9-2 is

Suppose that the demand for my new book, Spatulas From Around the World, is such that the demand curve lies everywhere below the average variable cost of producing it.To maximize profits or minimize losses, I should

Exhibit 9-2 In Exhibit 9-2, the marginal revenue of the fourth unit is

If a monopolist engages in perfect price discrimination,

If a monopolist is producing a rate of output at which market demand is inelastic,

When compared to firms in perfect competition, monopolists tend to charge __________ prices and offer __________ quantities of output.

Suppose the only professional hockey team within 500 miles is the Salt Lake City Slappers team.If the State of Utah imposes a profits tax on sports teams, the Slappers will

The demand curve a monopolist uses in making an output decision is

A perfectly discriminating monopolist converts every dollar of producer surplus into economic profit.

Which of the following does a monopoly control, that a perfectly competitive firm does not control?

The demand curve facing a single-price monopolist

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

When compared to firms in perfect competition, monopolists tend to charge prices and offer quantities of output.