Question 1

Which of the following situations allows monopolists to capture the entire consumer surplus as their profit?

Accepted Answer

A) When they can charge a single price for their product 
B) When they are subject to a per unit excise tax 
C) When they are subject to an excess profit tax 
D) When they can practice perfect price discrimination 
A) When they can charge a single price for their product 
B) When they are subject to a per unit excise tax 
C) When they are subject to an excess profit tax 
D) When they can practice perfect price discrimination

Question 2

Which of the following is an advantage of peak-load pricing?

Accepted Answer

A) It allows a firm to reduce its total cost by reallocating its production. 
B) It allows a firm to capture the entire consumer surplus. 
C) It allows a firm to clearly identify each consumer's willingness to pay. 
D) It reduces monopoly profits and increases consumer surplus. 
A) It allows a firm to reduce its total cost by reallocating its production. 
B) It allows a firm to capture the entire consumer surplus. 
C) It allows a firm to clearly identify each consumer's willingness to pay. 
D) It reduces monopoly profits and increases consumer surplus.

Question 3

Which of the following best describes a two-part tariff?

Accepted Answer

A) A discount provided to frequent shoppers 
B) A price that varies with the quantity of output consumed 
C) A price that varies with each individual consumer's ability to pay 
D) An entry fee followed by a constant per-unit price 
A) A discount provided to frequent shoppers 
B) A price that varies with the quantity of output consumed 
C) A price that varies with each individual consumer's ability to pay 
D) An entry fee followed by a constant per-unit price

Question 4

Which of the following is true of price discrimination?

Accepted Answer

A) It refers to the illegal movement of commodities from one country to another. 
B) It refers to the practice of charging different prices to different consumers for the same product. 
C) It is practiced by competitive firms to enjoy long run profits. 
D) It refers to the practice of buying a good at a low price and selling it at a higher price. 
A) It refers to the illegal movement of commodities from one country to another. 
B) It refers to the practice of charging different prices to different consumers for the same product. 
C) It is practiced by competitive firms to enjoy long run profits. 
D) It refers to the practice of buying a good at a low price and selling it at a higher price.

Question 5

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

Accepted Answer

A) PA = 200;PB = 169.89 
B) PA = 500;PB = 208.29 
C) PA = 105;PB = 108.39 
D) PA = 405;PB = 138.89 
A) PA = 200;PB = 169.89 
B) PA = 500;PB = 208.29 
C) PA = 105;PB = 108.39 
D) PA = 405;PB = 138.89

Question 6

The following figure shows the downward sloping demand and marginal revenue [MR] curves of a monopolist.The MR curve intersects the marginal cost [MC] curve at point B.MC is constant at the price level PS1U1B11S1U1B0.
Figure 12-1  
-Refer to Figure 12-1.If the monopolist cannot price discriminate,consumer surplus will be _____.

Accepted Answer

A) P3AP2 
B) P3CP1 
C) P2ABP1 
D) ABC 
A) P3AP2 
B) P3CP1 
C) P2ABP1 
D) ABC

Question 7

The following figure shows the downward sloping demand and marginal revenue [MR] curves of a monopolist.The MR curve intersects the marginal cost [MC] curve at point B.MC is constant at the price level PS1U1B11S1U1B0.
Figure 12-1  
-Refer to Figure 12-1.If the monopolist practices perfect price discrimination,consumer surplus will be equal to:

Accepted Answer

A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero. 
A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero.

Question 8

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

Accepted Answer

A) market A = $12 and market B = $30 
B) market A = $60 and market B = $15 
C) market A = $15 and market B = $60 
D) market A = $30 and market B = $12 
A) market A = $12 and market B = $30 
B) market A = $60 and market B = $15 
C) market A = $15 and market B = $60 
D) market A = $30 and market B = $12

Question 9

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.
Figure 12-2  
-Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:

Accepted Answer

A) ACFH. 
B) BCFH. 
C) AVFH. 
D) AWEH. 
A) ACFH. 
B) BCFH. 
C) AVFH. 
D) AWEH.

Which of the following situations allows monopolists to capture the entire consumer surplus as their profit?

Which of the following is an advantage of peak-load pricing?

Which of the following best describes a two-part tariff?

Which of the following is true of price discrimination?

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Figure 12-2 -Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 12: Product Pricing With Monopoly Power

Which of the following situations allows monopolists to capture the entire consumer surplus as their profit?

Which of the following is an advantage of peak-load pricing?

Which of the following best describes a two-part tariff?

Which of the following is true of price discrimination?

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Figure 12-2 -Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters