Question 1

The reason a monopolist has an incentive to price discriminate is that

Accepted Answer

A)  some consumers,who are unwilling to pay the uniform monopoly price,are willing to pay more than the marginal cost. 
B)  he can always use his market power to charge different prices. 
C)  his marginal cost will be lower when he price discriminates. 
D)  it causes demand to become more inelastic. 
E)  some consumers,who are willing to pay the uniform monopoly price,are unwilling to pay more than the marginal cost. 
A)  some consumers,who are unwilling to pay the uniform monopoly price,are willing to pay more than the marginal cost. 
B)  he can always use his market power to charge different prices. 
C)  his marginal cost will be lower when he price discriminates. 
D)  it causes demand to become more inelastic. 
E)  some consumers,who are willing to pay the uniform monopoly price,are unwilling to pay more than the marginal cost.

Question 2

Industries with large fixed cost and small,constant marginal cost will,over time,

Accepted Answer

A)  have more and more small firms. 
B)  see one firm,or a few large firms,emerge. 
C)  see no change in the average size of firms. 
D)  see no change in the average number of firms. 
E)  see the size of their market decline. 
A)  have more and more small firms. 
B)  see one firm,or a few large firms,emerge. 
C)  see no change in the average size of firms. 
D)  see no change in the average number of firms. 
E)  see the size of their market decline.

Question 3

-Refer to the graph above.At the level of output which maximized total economic surplus,the monopolist would earn

Accepted Answer

A)  a profit of $100.10. 
B)  a loss of $100.10. 
C)  a loss of $50.05. 
D)  a profit of $50.05. 
E)  a loss of $61.25. 
A)  a profit of $100.10. 
B)  a loss of $100.10. 
C)  a loss of $50.05. 
D)  a profit of $50.05. 
E)  a loss of $61.25.

Question 4

-Refer to the graph above.If this monopolist applies perfect price discrimination,the demand curve shown on the figure is also the

Accepted Answer

A)  marginal cost curve. 
B)  total cost curve. 
C)  long-run average cost curve. 
D)  marginal revenue curve. 
E)  total revenue curve. 
A)  marginal cost curve. 
B)  total cost curve. 
C)  long-run average cost curve. 
D)  marginal revenue curve. 
E)  total revenue curve.

Question 5

The demand curve of a perfectly competitive firm is __________,while the demand curve of a monopolist is __________.

Accepted Answer

A)  perfectly elastic;downward-sloping 
B)  vertical;downward-sloping 
C)  perfectly elastic;perfectly inelastic 
D)  perfectly inelastic;perfectly elastic 
E)  perfectly elastic;elastic 
A)  perfectly elastic;downward-sloping 
B)  vertical;downward-sloping 
C)  perfectly elastic;perfectly inelastic 
D)  perfectly inelastic;perfectly elastic 
E)  perfectly elastic;elastic

Question 6

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $110 in total revenue when it sells 11 units.The firm is a(n)

Accepted Answer

A)  pure monopolist. 
B)  oligopolist. 
C)  monopolistic competitor. 
D)  monopsonist. 
E)  perfect competitor. 
A)  pure monopolist. 
B)  oligopolist. 
C)  monopolistic competitor. 
D)  monopsonist. 
E)  perfect competitor.

Question 7

Advertising is used by

Accepted Answer

A)  both a monopolistically competitive firm and a perfectly competitive firm. 
B)  neither a monopolistically competitive firm nor a perfectly competitive firm. 
C)  a perfectly competitive firm but not by a monopolistically competitive firm. 
D)  a perfectly competitive firm occasionally,but never by a monopolistically competitive firm. 
E)  a monopolistically competitive firm but not by a perfectly competitive firm. 
A)  both a monopolistically competitive firm and a perfectly competitive firm. 
B)  neither a monopolistically competitive firm nor a perfectly competitive firm. 
C)  a perfectly competitive firm but not by a monopolistically competitive firm. 
D)  a perfectly competitive firm occasionally,but never by a monopolistically competitive firm. 
E)  a monopolistically competitive firm but not by a perfectly competitive firm.

Question 8

-Refer to the graph above.To maximize profit,the firm will choose to produce __________ units and charge a price of __________ per unit.

Accepted Answer

A)  3.5;$33.50 
B)  7;$19.30 
C)  7;$5 
D)  3.5;$5 
E)  3.5;$22.50 
A)  3.5;$33.50 
B)  7;$19.30 
C)  7;$5 
D)  3.5;$5 
E)  3.5;$22.50

Question 9

Market power measures a firm's ability to

Accepted Answer

A)  undercut its competitors. 
B)  resist union wage demands. 
C)  raise its price without losing all its sales. 
D)  influence the price its competitors charge. 
E)  force consumers to pay higher prices. 
A)  undercut its competitors. 
B)  resist union wage demands. 
C)  raise its price without losing all its sales. 
D)  influence the price its competitors charge. 
E)  force consumers to pay higher prices.

Question 10

-Refer to the diagram above.A regulatory agency can impose any of the following on the monopolist represented in this diagram EXCEPT

Accepted Answer

A)  providing a subsidy for the monopolist. 
B)  setting the quantity of output produced by the firm. 
C)  setting the price charged by the firm. 
D)  setting the price charged by the firm as well as the quantity produced by the firm,without paying any subsidies to the firm. 
E)  imposing cost-plus regulation. 
A)  providing a subsidy for the monopolist. 
B)  setting the quantity of output produced by the firm. 
C)  setting the price charged by the firm. 
D)  setting the price charged by the firm as well as the quantity produced by the firm,without paying any subsidies to the firm. 
E)  imposing cost-plus regulation.

Question 11

Suppose that a monopolist charges a uniform price of $10 based on profit maximization and has a constant marginal cost of $3.Beth is willing to pay $6 for the monopolist's output.Therefore,

Accepted Answer

A)  the monopolist should lower his price to $6 for all consumers. 
B)  the monopolist should ignore Beth's want;he is already maximizing profit. 
C)  if resale of the output is impossible,the monopolist should lower his price to $6 just for Beth. 
D)  if resale of the output is possible,he should lower his price to $6 just for Beth. 
E)  the monopolist will not be better off if he lowers his price to $6 just for Beth. 
A)  the monopolist should lower his price to $6 for all consumers. 
B)  the monopolist should ignore Beth's want;he is already maximizing profit. 
C)  if resale of the output is impossible,the monopolist should lower his price to $6 just for Beth. 
D)  if resale of the output is possible,he should lower his price to $6 just for Beth. 
E)  the monopolist will not be better off if he lowers his price to $6 just for Beth.

Question 12

Suppose that a regulated natural monopolist has $1 million in physical assets,produces 10,000 units and has total explicit costs of $100,000.If the monopolist is allowed a 10% return on his investment in capital,his cost-plus price will be

Accepted Answer

A)  $10.00. 
B)  $10.10. 
C)  $11.00. 
D)  $20.00. 
E)  $20.20. 
A)  $10.00. 
B)  $10.10. 
C)  $11.00. 
D)  $20.00. 
E)  $20.20.

Question 13

A firm is classified as a natural monopoly if

Accepted Answer

A)  there are few substitutes. 
B)  it is the only supplier of all-natural products. 
C)  its marginal cost is always less than its average cost. 
D)  it is the only producer. 
E)  it is regulated by government. 
A)  there are few substitutes. 
B)  it is the only supplier of all-natural products. 
C)  its marginal cost is always less than its average cost. 
D)  it is the only producer. 
E)  it is regulated by government.

Question 14

Pure monopoly exists when

Accepted Answer

A)  many firms produce a good with no close substitutes. 
B)  a single firm produces a good with no close substitutes. 
C)  a single firm is present in the market. 
D)  a single firm produces a good with many close substitutes. 
E)  a few firms dominate an industry. 
A)  many firms produce a good with no close substitutes. 
B)  a single firm produces a good with no close substitutes. 
C)  a single firm is present in the market. 
D)  a single firm produces a good with many close substitutes. 
E)  a few firms dominate an industry.

Question 15

Natural monopolies that require large expenditures on fixed capital equipment are

Accepted Answer

A)  well suited to exclusive contracting. 
B)  always owned by a provincial or municipal government. 
C)  never subjected to cost-plus regulation. 
D)  very profitable. 
E)  poorly suited to exclusive contracting. 
A)  well suited to exclusive contracting. 
B)  always owned by a provincial or municipal government. 
C)  never subjected to cost-plus regulation. 
D)  very profitable. 
E)  poorly suited to exclusive contracting.

Question 16

-Refer to the table above.The marginal revenue of the third unit of output is

Accepted Answer

A)  $8. 
B)  $6. 
C)  $4. 
D)  $2. 
E)  $0. 
A)  $8. 
B)  $6. 
C)  $4. 
D)  $2. 
E)  $0.

Question 17

A consumer goes to purchase a TV advertised for $300.As he is checking out,the clerk gives him a form for a $20 rebate for the TV.He fills out the form and receives the rebate in three months.One can infer that the consumer had

Accepted Answer

A)  a reservation price of at least $300 but jumped the hurdle anyway. 
B)  a reservation price of at most $280. 
C)  a reservation price of exactly $300. 
D)  a reservation price of at least $280. 
E)  obviously not done enough research on the price of the TV. 
A)  a reservation price of at least $300 but jumped the hurdle anyway. 
B)  a reservation price of at most $280. 
C)  a reservation price of exactly $300. 
D)  a reservation price of at least $280. 
E)  obviously not done enough research on the price of the TV.

Question 18

-Refer to the table above.Assuming the monopolist does not price-discriminate,he will produce __________ units and charge a price of __________.

Accepted Answer

A)  1;$17 
B)  2;$14 
C)  3;$11 
D)  4;$5 
E)  6;$2 
A)  1;$17 
B)  2;$14 
C)  3;$11 
D)  4;$5 
E)  6;$2

Question 19

For all firms,the extra revenue collected from the sale of one extra unit of output is

Accepted Answer

A)  price. 
B)  average revenue. 
C)  marginal profit. 
D)  marginal revenue. 
E)  marginal price. 
A)  price. 
B)  average revenue. 
C)  marginal profit. 
D)  marginal revenue. 
E)  marginal price.

Question 20

-Refer to the table above.If the monopolist were able to perfectly price discriminate,he would charge __________ for the first unit and __________ for the fifth unit.

Accepted Answer

A)  $5;$5 
B)  $17;$5 
C)  $5;$17 
D)  $15;$3 
E)  $17;$17 
A)  $5;$5 
B)  $17;$5 
C)  $5;$17 
D)  $15;$3 
E)  $17;$17

The reason a monopolist has an incentive to price discriminate is that

Industries with large fixed cost and small,constant marginal cost will,over time,

-Refer to the graph above.At the level of output which maximized total economic surplus,the monopolist would earn

-Refer to the graph above.If this monopolist applies perfect price discrimination,the demand curve shown on the figure is also the

The demand curve of a perfectly competitive firm is ,while the demand curve of a monopolist is .

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $110 in total revenue when it sells 11 units.The firm is a(n)

Advertising is used by

-Refer to the graph above.To maximize profit,the firm will choose to produce units and charge a price of per unit.

Market power measures a firm's ability to

-Refer to the diagram above.A regulatory agency can impose any of the following on the monopolist represented in this diagram EXCEPT

Suppose that a monopolist charges a uniform price of $10 based on profit maximization and has a constant marginal cost of $3.Beth is willing to pay $6 for the monopolist's output.Therefore,

Suppose that a regulated natural monopolist has $1 million in physical assets,produces 10,000 units and has total explicit costs of $100,000.If the monopolist is allowed a 10% return on his investment in capital,his cost-plus price will be

A firm is classified as a natural monopoly if

Pure monopoly exists when

Natural monopolies that require large expenditures on fixed capital equipment are

-Refer to the table above.The marginal revenue of the third unit of output is

A consumer goes to purchase a TV advertised for $300.As he is checking out,the clerk gives him a form for a $20 rebate for the TV.He fills out the form and receives the rebate in three months.One can infer that the consumer had

-Refer to the table above.Assuming the monopolist does not price-discriminate,he will produce units and charge a price of .

For all firms,the extra revenue collected from the sale of one extra unit of output is

-Refer to the table above.If the monopolist were able to perfectly price discriminate,he would charge for the first unit and for the fifth unit.

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 8: Monopoly and Other Forms of Imperfect Competition

The reason a monopolist has an incentive to price discriminate is that

Industries with large fixed cost and small,constant marginal cost will,over time,

-Refer to the graph above.At the level of output which maximized total economic surplus,the monopolist would earn

-Refer to the graph above.If this monopolist applies perfect price discrimination,the demand curve shown on the figure is also the

The demand curve of a perfectly competitive firm is __________,while the demand curve of a monopolist is __________.

Suppose that a firm is collecting $100 in total revenue when it sells 10 units and $110 in total revenue when it sells 11 units.The firm is a(n)

Advertising is used by

-Refer to the graph above.To maximize profit,the firm will choose to produce __________ units and charge a price of __________ per unit.

Market power measures a firm's ability to

-Refer to the diagram above.A regulatory agency can impose any of the following on the monopolist represented in this diagram EXCEPT

Suppose that a monopolist charges a uniform price of $10 based on profit maximization and has a constant marginal cost of $3.Beth is willing to pay $6 for the monopolist's output.Therefore,

Suppose that a regulated natural monopolist has $1 million in physical assets,produces 10,000 units and has total explicit costs of $100,000.If the monopolist is allowed a 10% return on his investment in capital,his cost-plus price will be

A firm is classified as a natural monopoly if

Pure monopoly exists when

Natural monopolies that require large expenditures on fixed capital equipment are

-Refer to the table above.The marginal revenue of the third unit of output is

A consumer goes to purchase a TV advertised for $300.As he is checking out,the clerk gives him a form for a $20 rebate for the TV.He fills out the form and receives the rebate in three months.One can infer that the consumer had

-Refer to the table above.Assuming the monopolist does not price-discriminate,he will produce __________ units and charge a price of __________.

For all firms,the extra revenue collected from the sale of one extra unit of output is

-Refer to the table above.If the monopolist were able to perfectly price discriminate,he would charge __________ for the first unit and __________ for the fifth unit.

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

The demand curve of a perfectly competitive firm is ,while the demand curve of a monopolist is .

-Refer to the graph above.To maximize profit,the firm will choose to produce units and charge a price of per unit.

-Refer to the table above.Assuming the monopolist does not price-discriminate,he will produce units and charge a price of .

-Refer to the table above.If the monopolist were able to perfectly price discriminate,he would charge for the first unit and for the fifth unit.