Question 1

If a firm charges each consumer the absolute maximum price that he or she is willing to pay,the firm is practicing

Accepted Answer

A)  perfect price discrimination. 
B)  marginal revenue pricing. 
C)  price discrimination. 
D)  monopoly pricing. 
A)  perfect price discrimination. 
B)  marginal revenue pricing. 
C)  price discrimination. 
D)  monopoly pricing. A

Question 2

Which of the following conditions does not need to be satisfied in order to practice price discrimination?

Accepted Answer

A)  a perfectly elastic demand curve 
B)  a negatively-sloped demand curve for the firm's output 
C)  the ability to identify customers who are willing to pay more for the good 
D)  the ability to identify customers who are not willing to pay more 
E)  the ability to prevent resale of the good 
A)  a perfectly elastic demand curve 
B)  a negatively-sloped demand curve for the firm's output 
C)  the ability to identify customers who are willing to pay more for the good 
D)  the ability to identify customers who are not willing to pay more 
E)  the ability to prevent resale of the good A

Question 3

-Figure 10-17 shows a single-price monopolist.In order to maximize its economic profit in the short run,the firm should produce

Accepted Answer

A)  the output level associated with point F 
B)  the output level associated with point G 
C)  the output level associated with point H 
D)  the output level associated with point I 
E)  zero 
A)  the output level associated with point F 
B)  the output level associated with point G 
C)  the output level associated with point H 
D)  the output level associated with point I 
E)  zero A

Question 4

-What is the total profit (or loss)for the (single-price)monopolist shown in Figure 10-9?

Accepted Answer

A)  profit of cbgf 
B)  loss of fcbg 
C)  profit of egbd 
D)  loss of edcf 
E)  profit of edcf 
A)  profit of cbgf 
B)  loss of fcbg 
C)  profit of egbd 
D)  loss of edcf 
E)  profit of edcf

Question 5

Price discrimination occurs when

Accepted Answer

A)  price exceeds marginal cost 
B)  a firm charges different customers different prices,and the differences are not explained by cost factors 
C)  price exceeds average cost 
D)  a firm charges different customers different prices,where these differences are based on cost differences 
E)  price equals average variable cost 
A)  price exceeds marginal cost 
B)  a firm charges different customers different prices,and the differences are not explained by cost factors 
C)  price exceeds average cost 
D)  a firm charges different customers different prices,where these differences are based on cost differences 
E)  price equals average variable cost

Question 6

Patent laws establish property rights for new goods

Accepted Answer

A)  for 10 years 
B)  for 20 years 
C)  for 5 years 
D)  until a better product comes along 
E)  until the firm goes out of business 
A)  for 10 years 
B)  for 20 years 
C)  for 5 years 
D)  until a better product comes along 
E)  until the firm goes out of business

Question 7

-For the monopolist in Figure 10-2 producing at point D,which of the following statements is true?

Accepted Answer

A)  profit will be greater than producing at point C 
B)  profit will be the same as producing at point C 
C)  profit will be less than producing at C 
D)  profit will be maximized 
E)  cannot compare profit level at C and D 
A)  profit will be greater than producing at point C 
B)  profit will be the same as producing at point C 
C)  profit will be less than producing at C 
D)  profit will be maximized 
E)  cannot compare profit level at C and D

Question 8

Most firms are not monopolies in the real world because

Accepted Answer

A)  firms usually face downward-sloping demand curves 
B)  supply curves slope upward 
C)  price is usually set equal to marginal cost by firms 
D)  monopolies are not efficient 
E)  there are substitutes for most goods 
A)  firms usually face downward-sloping demand curves 
B)  supply curves slope upward 
C)  price is usually set equal to marginal cost by firms 
D)  monopolies are not efficient 
E)  there are substitutes for most goods

Question 9

A firm that engages in perfect price discrimination produces more output to maximize its profits than it would if it charged only one price.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that a monopoly is earning economic profits in the short run.As a result,

Accepted Answer

A)  no new firms will enter the industry because of barriers to entry 
B)  the monopolist will increase its price and lower its output 
C)  the market supply curve will shift to the right 
D)  profits will fall as new firms enter the market 
E)  the market demand curve will shift to the left 
A)  no new firms will enter the industry because of barriers to entry 
B)  the monopolist will increase its price and lower its output 
C)  the market supply curve will shift to the right 
D)  profits will fall as new firms enter the market 
E)  the market demand curve will shift to the left

Question 11

If a monopolist incurs a large fixed cost that shifts its average total cost curve upward,the effect on price and output will be

Accepted Answer

A)  price and output will both rise 
B)  price will rise and output will fall 
C)  the firm will lower its price so that elastic demand will raise revenues to cover the additional cost 
D)  the firm will pass the higher cost on to customers without changing the amount consumers will buy 
E)  there will be no effect on price or output 
A)  price and output will both rise 
B)  price will rise and output will fall 
C)  the firm will lower its price so that elastic demand will raise revenues to cover the additional cost 
D)  the firm will pass the higher cost on to customers without changing the amount consumers will buy 
E)  there will be no effect on price or output

Question 12

-In Figure 10-31,if this monopolist increases its output from 100 to 150,its marginal revenue will be

Accepted Answer

A)  $30. 
B)  $45. 
C)  $0. 
D)  $15. 
A)  $30. 
B)  $45. 
C)  $0. 
D)  $15.

Question 13

Which of the following products would be most difficult to resell?

Accepted Answer

A)  Girl Scout cookies 
B)  suitcases 
C)  automobiles 
D)  pencils 
E)  medical exams 
A)  Girl Scout cookies 
B)  suitcases 
C)  automobiles 
D)  pencils 
E)  medical exams

Question 14

As long as P>AVC,a monopolist maximizes profit by producing the quantity at which

Accepted Answer

A)  MC=P. 
B)  MC=MR. 
C)  MR=P. 
D)  MR=ATC. 
A)  MC=P. 
B)  MC=MR. 
C)  MR=P. 
D)  MR=ATC.

Question 15

-The firm depicted in Figure 10-25 is a perfect price discriminator.What is its equilibrium price and output?

Accepted Answer

A)  P' and Q' 
B)  P and Q 
C)  P' and Q 
D)  each consumer is charged the maximum price he or she is willing to pay,and the equilibrium output is Q' 
E)  each consumer is charged the maximum price he or she is willing to pay,and the equilibrium output is Q 
A)  P' and Q' 
B)  P and Q 
C)  P' and Q 
D)  each consumer is charged the maximum price he or she is willing to pay,and the equilibrium output is Q' 
E)  each consumer is charged the maximum price he or she is willing to pay,and the equilibrium output is Q

Question 16

The concept of network externalities is most relevant to purchasers of

Accepted Answer

A)  computer software. 
B)  automobiles. 
C)  television sets. 
D)  radios. 
A)  computer software. 
B)  automobiles. 
C)  television sets. 
D)  radios.

Question 17

Patents and copyrights are designed to

Accepted Answer

A)  eliminate above-normal profit in the short run 
B)  move monopoly prices closer to prices that would occur under perfect competition 
C)  prevent the capitalization of monopoly profit 
D)  allow a period of above-normal profit to encourage innovation 
E)  limit a monopoly's rent-seeking activities 
A)  eliminate above-normal profit in the short run 
B)  move monopoly prices closer to prices that would occur under perfect competition 
C)  prevent the capitalization of monopoly profit 
D)  allow a period of above-normal profit to encourage innovation 
E)  limit a monopoly's rent-seeking activities

Question 18

Unlike perfectly competitive firms,monopolists can control

Accepted Answer

A)  how much of the good to produce 
B)  what inputs to use in production 
C)  its plant size 
D)  the price charged per unit of output 
E)  the quality of inputs used in production 
A)  how much of the good to produce 
B)  what inputs to use in production 
C)  its plant size 
D)  the price charged per unit of output 
E)  the quality of inputs used in production

Question 19

A copyright

Accepted Answer

A)  is required to sell printed material 
B)  grants exclusive rights over the protected material for at least seventy years 
C)  is granted only to best original works of art,literature,and music 
D)  grants the right to copy certain material such as printed material 
E)  grants communal rights over the protected material for at least seventy years 
A)  is required to sell printed material 
B)  grants exclusive rights over the protected material for at least seventy years 
C)  is granted only to best original works of art,literature,and music 
D)  grants the right to copy certain material such as printed material 
E)  grants communal rights over the protected material for at least seventy years

Question 20

A single-price monopolist is producing 500 units of output.At that level,price is $200,and average total cost is $150.In addition,both marginal cost and marginal revenue equal $120.Which of the following statements is correct in the short run?

Accepted Answer

A)  The firm has total costs of $60,000. 
B)  The firm could increase its profit by increasing output. 
C)  The firm has a profit per unit of $50. 
D)  The firm is suffering an economic loss of $15,000. 
E)  The firm is earning an economic profit of $40,000. 
A)  The firm has total costs of $60,000. 
B)  The firm could increase its profit by increasing output. 
C)  The firm has a profit per unit of $50. 
D)  The firm is suffering an economic loss of $15,000. 
E)  The firm is earning an economic profit of $40,000.

Exam 10: Monopoly

If a firm charges each consumer the absolute maximum price that he or she is willing to pay,the firm is practicing

Which of the following conditions does not need to be satisfied in order to practice price discrimination?

-Figure 10-17 shows a single-price monopolist.In order to maximize its economic profit in the short run,the firm should produce

-What is the total profit (or loss)for the (single-price)monopolist shown in Figure 10-9?

Price discrimination occurs when

Patent laws establish property rights for new goods

-For the monopolist in Figure 10-2 producing at point D,which of the following statements is true?

Most firms are not monopolies in the real world because

A firm that engages in perfect price discrimination produces more output to maximize its profits than it would if it charged only one price.

Suppose that a monopoly is earning economic profits in the short run.As a result,

If a monopolist incurs a large fixed cost that shifts its average total cost curve upward,the effect on price and output will be

-In Figure 10-31,if this monopolist increases its output from 100 to 150,its marginal revenue will be

Which of the following products would be most difficult to resell?

As long as P>AVC,a monopolist maximizes profit by producing the quantity at which

-The firm depicted in Figure 10-25 is a perfect price discriminator.What is its equilibrium price and output?

The concept of network externalities is most relevant to purchasers of

Patents and copyrights are designed to

Unlike perfectly competitive firms,monopolists can control

A copyright

A single-price monopolist is producing 500 units of output.At that level,price is $200,and average total cost is $150.In addition,both marginal cost and marginal revenue equal $120.Which of the following statements is correct in the short run?

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

What Macroeconomics Tries to Explain

Production, income, and Employment

The Price Level and Inflation

The Classical Long-Run Model

Part A: The Classical Model in an Open Economy

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-Run Macro Model

Fiscal Policy

Money,banks,and the Federal Reserve

The Money Market and Monetary Policy

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

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