Question 1

A monopolist that practises perfect price discrimination

Accepted Answer

A)  creates no deadweight loss. 
B)  charges one group of buyers a higher price than another group, such as offering a student discount. 
C)  produces the same monopoly level of output as when a single price is charged. 
D)  charges some customers a price below marginal cost because costs are covered by the high-priced buyers. 
A)  creates no deadweight loss. 
B)  charges one group of buyers a higher price than another group, such as offering a student discount. 
C)  produces the same monopoly level of output as when a single price is charged. 
D)  charges some customers a price below marginal cost because costs are covered by the high-priced buyers. A

Question 2

Which of the following is not a barrier to entry in a monopolized market?

Accepted Answer

A)  A single firm is very large. 
B)  The government gives a single firm the exclusive right to produce some good. 
C)  The costs of production make a single producer more efficient than a large number of producers. 
D)  A key resource is owned by a single firm. 
A)  A single firm is very large. 
B)  The government gives a single firm the exclusive right to produce some good. 
C)  The costs of production make a single producer more efficient than a large number of producers. 
D)  A key resource is owned by a single firm. A

Question 3

Which of the following statements about price discrimination is not true?

Accepted Answer

A)  Price discrimination increases a monopolist's profits. 
B)  Price discrimination can raise economic welfare. 
C)  Price discrimination requires that the seller be able to separate buyers according to their willingness to pay. 
D)  Perfect price discrimination generates a deadweight loss. 
E)  For a monopolist to engage in price discrimination, buyers must be unable to engage in arbitrage. 
A)  Price discrimination increases a monopolist's profits. 
B)  Price discrimination can raise economic welfare. 
C)  Price discrimination requires that the seller be able to separate buyers according to their willingness to pay. 
D)  Perfect price discrimination generates a deadweight loss. 
E)  For a monopolist to engage in price discrimination, buyers must be unable to engage in arbitrage. D

Question 4

A monopolist's profits with price discrimination will be

Accepted Answer

A)  lower than if the firm charged a single, profit-maximizing price 
B)  the same as if the firm charged a single, profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower. 
A)  lower than if the firm charged a single, profit-maximizing price 
B)  the same as if the firm charged a single, profit-maximizing price. 
C)  higher than if the firm charged just one price because the firm will capture more consumer surplus. 
D)  higher than if the firm charged a single price because the costs of selling the good will be lower.

Question 5

Patent and copyright laws encourage

Accepted Answer

A)  creative activity. 
B)  lower prices due to decreasing average total costs. 
C)  competition among firms. 
D)  All of the above are correct. 
A)  creative activity. 
B)  lower prices due to decreasing average total costs. 
C)  competition among firms. 
D)  All of the above are correct.

Question 6

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost 
A)  low fixed costs as a portion of total costs 
B)  free entry and exit 
C)  barriers to entry 
D)  declining marginal cost

Question 7

A benefit of a monopoly is

Accepted Answer

A)  efficient production. 
B)  decreasing long-run marginal costs. 
C)  profit that can be invested in research and development. 
D)  All of the above are correct. 
A)  efficient production. 
B)  decreasing long-run marginal costs. 
C)  profit that can be invested in research and development. 
D)  All of the above are correct.

Question 8

Give some examples of the benefits and costs of competition laws.

Accepted Answer

Competition laws act against cartels and

Question 9

Cengage is a monopolist in the production of your textbook because Cengage:

Accepted Answer

A)  is a very large company. 
B)  owns a key resource in the production of textbooks. 
C)  is a natural monopoly. 
D)  has a legally protected exclusive right to produce this textbook. 
A)  is a very large company. 
B)  owns a key resource in the production of textbooks. 
C)  is a natural monopoly. 
D)  has a legally protected exclusive right to produce this textbook.

Question 10

If government officials break a natural monopoly up into several smaller firms, then

Accepted Answer

A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease. 
A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease.

Question 11

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will

Accepted Answer

A)  improve efficiency. 
B)  cause the monopolist to exit the market. 
C)  raise the price of good. 
D)  attract additional firms to enter the market. 
A)  improve efficiency. 
B)  cause the monopolist to exit the market. 
C)  raise the price of good. 
D)  attract additional firms to enter the market.

Question 12

Consider the following demand and cost information ?

$\begin{array}{|c|c|c|}
\hline \underline{\text { Quantity }} & \underline{\text { Price }} & \underline{\text { Total Cost }} \
\hline 0 & € 40 & € 10 \
\hline 1 & € 30 & € 15 \
\hline 2 & € 20 & € 25 \
\hline 3 & € 10 & € 40 \
\hline 4 & € 0 & € 60 \
\hline
\end{array}$
Refer to the table above. To maximize profit, the monopolist sets the price at
?

Accepted Answer

A)  €40 
B)  €20 
C)  €0 
D)  €10 
A)  €40 
B)  €20 
C)  €0 
D)  €10

Question 13

Consider the following demand and cost information ?

$\begin{array}{|c|c|c|}
\hline \underline{\text { Quantity }} & \underline{\text { Price }} & \underline{\text { Total Cost }} \
\hline 0 & € 40 & € 10 \
\hline 1 & € 30 & € 15 \
\hline 2 & € 20 & € 25 \
\hline 3 & € 10 & € 40 \
\hline 4 & € 0 & € 60 \
\hline
\end{array}$
Refer to the table above. The marginal cost of the fourth unit
?

Accepted Answer

A)  €60 
B)  €40 
C)  €20 
D)  €10 
A)  €60 
B)  €40 
C)  €20 
D)  €10

Question 14

Most economists argue that the most efficient solution to the problem of monopoly is that the monopoly should be publicly owned.

Accepted Answer

A) True 
 B)False

Question 15

If regulators break up a natural monopoly into many smaller firms, the cost of production

Accepted Answer

A)  will remain the same. 
B)  will fall. 
C)  will rise. 
D)  could either rise or fall depending on the elasticity of the monopolist's supply curve. 
A)  will remain the same. 
B)  will fall. 
C)  will rise. 
D)  could either rise or fall depending on the elasticity of the monopolist's supply curve.

Question 16

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

​ @#IMG-DLM& ​
A profit-maximizing monopolist will

Question 17

Price discrimination is only possible if there is no arbitrage.

Accepted Answer

A) True 
 B)False

Question 18

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)  produces that output where average total cost is at a maximum. 
B)  is protected by barriers to entry. 
C)  operates as a price taker rather than a price maker. 
D)  realizes revenues that exceed variable costs. 
A)  produces that output where average total cost is at a maximum. 
B)  is protected by barriers to entry. 
C)  operates as a price taker rather than a price maker. 
D)  realizes revenues that exceed variable costs.

Question 19

The demand curve facing a monopolist is the market demand curve for its product.

Accepted Answer

A) True 
 B)False

Question 20

The simplest way for a monopoly to arise is for a single firm to

Accepted Answer

A)  decrease its price below its competitors' prices. 
B)  decrease production to increase demand for its product. 
C)  make pricing decisions jointly with other firms. 
D)  own a key resource. 
A)  decrease its price below its competitors' prices. 
B)  decrease production to increase demand for its product. 
C)  make pricing decisions jointly with other firms. 
D)  own a key resource.

Exam 14: Market Structures I: Monopoly

A monopolist that practises perfect price discrimination

Which of the following is not a barrier to entry in a monopolized market?

Which of the following statements about price discrimination is not true?

A monopolist's profits with price discrimination will be

Patent and copyright laws encourage

Which of the following is a characteristic of a monopoly?

A benefit of a monopoly is

Give some examples of the benefits and costs of competition laws.

Cengage is a monopolist in the production of your textbook because Cengage:

If government officials break a natural monopoly up into several smaller firms, then

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will

Consider the following demand and cost information ? 0 40 10 1 30 15 2 20 25 3 10 40 4 0 60 Refer to the table above. To maximize profit, the monopolist sets the price at ?

Consider the following demand and cost information ? 0 40 10 1 30 15 2 20 25 3 10 40 4 0 60 Refer to the table above. The marginal cost of the fourth unit ?

Most economists argue that the most efficient solution to the problem of monopoly is that the monopoly should be publicly owned.

If regulators break up a natural monopoly into many smaller firms, the cost of production

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Price discrimination is only possible if there is no arbitrage.

Sizable economic profits can persist over time under monopoly if the monopolist

The demand curve facing a monopolist is the market demand curve for its product.

The simplest way for a monopoly to arise is for a single firm to

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

The Economics of Factor Markets

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Supply-Side Policies

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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