Question 1

A perfectly competitive firm cannot practice price discrimination because

Accepted Answer

A) a firm that breaks even in the long run cannot afford to engage in yield management. 
B) it does not advertise;this prevents the firm from marketing its product to different segments of the market. 
C) each consumer in a perfectly competitive market has the same willingness to pay. 
D) the firm can only charge the market price. 
A) a firm that breaks even in the long run cannot afford to engage in yield management. 
B) it does not advertise;this prevents the firm from marketing its product to different segments of the market. 
C) each consumer in a perfectly competitive market has the same willingness to pay. 
D) the firm can only charge the market price.

Question 2

Figure 9-4   Figure 9-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 9-4.What is the amount of the monopoly's total cost of production?

Accepted Answer

A) $21 600 
B) $17 700 
C) $9340 
D) $7800 
A) $21 600 
B) $17 700 
C) $9340 
D) $7800

Question 3

To maximise profit,a monopolist will produce and sell a quantity such that for the last unit sold,marginal revenue equals marginal cost,and will charge a price given by the demand curve at that output level.

Accepted Answer

A) True 
 B)False

Question 4

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

Accepted Answer

A) a copyright. 
B) a network externality. 
C) a quota. 
D) a public franchise. 
A) a copyright. 
B) a network externality. 
C) a quota. 
D) a public franchise.

Question 5

Which of the following pricing strategies allows a firm to earn economic profit?

Accepted Answer

A) price discrimination 
B) charging a price equal to marginal cost 
C) charging a price equal to the average total cost of production 
D) charging a price equal to the average variable cost of production 
A) price discrimination 
B) charging a price equal to marginal cost 
C) charging a price equal to the average total cost of production 
D) charging a price equal to the average variable cost of production

Question 6

A monopoly is a firm that is the only seller of a good or service that does not have

Accepted Answer

A) a patent. 
B) a close complement. 
C) a barrier to entry. 
D) a close substitute. 
A) a patent. 
B) a close complement. 
C) a barrier to entry. 
D) a close substitute.

Question 7

Figure 9-11   Figure 9-11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9-11.If this industry was organised as a perfectly competitive industry,the market output and market price would be

Accepted Answer

A) output = 62;price = $24. 
B) output = 83;price = $22. 
C) output = 62;price = $18. 
D) output = 104;price = $20.80. 
A) output = 62;price = $24. 
B) output = 83;price = $22. 
C) output = 62;price = $18. 
D) output = 104;price = $20.80.

Question 8

In which market structure is it not possible to practice price discrimination?

Accepted Answer

A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly 
A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly

Question 9

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Accepted Answer

A) to maximise profit the firm should increase output. 
B) to maximise profit the firm should decrease output. 
C) to maximise profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximise profit. 
A) to maximise profit the firm should increase output. 
B) to maximise profit the firm should decrease output. 
C) to maximise profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximise profit.

Question 10

Economic efficiency in a free market occurs when

Accepted Answer

A) consumer surplus is maximised. 
B) producer surplus is maximised. 
C) the sum of consumer surplus and producer surplus is maximised. 
D) price is as low as possible. 
A) consumer surplus is maximised. 
B) producer surplus is maximised. 
C) the sum of consumer surplus and producer surplus is maximised. 
D) price is as low as possible.

Question 11

With perfect price discrimination there is

Accepted Answer

A) no deadweight loss. 
B) no producer surplus. 
C) one single price. 
D) an increase in consumer surplus. 
A) no deadweight loss. 
B) no producer surplus. 
C) one single price. 
D) an increase in consumer surplus.

Question 12

The demand curve for a monopoly firm

Accepted Answer

A) is perfectly inelastic. 
B) lies below its marginal revenue curve. 
C) is the same as the market demand curve. 
D) is horizontal. 
A) is perfectly inelastic. 
B) lies below its marginal revenue curve. 
C) is the same as the market demand curve. 
D) is horizontal.

Question 13

Consider the following characteristics:
A.a market structure with barriers to entry
B.demand curves that are easily identified
C.firm cannot make zero profits in the long run
D.firm can reap long run profits.
Which of the characteristics in the list above is shared by an oligopolist and a monopolist?

Accepted Answer

A) a,b,c,and d 
B) a,b,and d 
C) a,c,and d 
D) a and d 
A) a,b,c,and d 
B) a,b,and d 
C) a,c,and d 
D) a and d

Question 14

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Accepted Answer

A) government antitrust laws. 
B) the pricing decisions of its suppliers. 
C) the pricing decisions of firms that produce complementary products. 
D) the actions of all other firms. 
A) government antitrust laws. 
B) the pricing decisions of its suppliers. 
C) the pricing decisions of firms that produce complementary products. 
D) the actions of all other firms.

Question 15

If a firm's average total cost is less than price where MR = MC,

Accepted Answer

A) the firm should shut down. 
B) the firm should raise its price. 
C) the firm should continue to produce the output it is producing. 
D) the firm should cut back on its output to lower its cost. 
A) the firm should shut down. 
B) the firm should raise its price. 
C) the firm should continue to produce the output it is producing. 
D) the firm should cut back on its output to lower its cost.

Question 16

A monopoly is characterised by all of the following except

Accepted Answer

A) there are only a few sellers each selling a unique product. 
B) entry barriers are high. 
C) there are no close substitutes to the firm's product. 
D) the firm has market power. 
A) there are only a few sellers each selling a unique product. 
B) entry barriers are high. 
C) there are no close substitutes to the firm's product. 
D) the firm has market power.

Question 17

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Accepted Answer

A natural monopoly arises when the produ

Question 18

Figure 9-9   Figure 9-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

Accepted Answer

A) $8 
B) $11.50 
C) $21 
D) There is no difference. 
A) $8 
B) $11.50 
C) $21 
D) There is no difference.

Question 19

A possible advantage of a horizontal merger for the economy is that

Accepted Answer

A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue. 
A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue.

Question 20

What happens to a monopoly's revenue when it sells more units of its product?

Accepted Answer

The monopolist must lower its price to s

A perfectly competitive firm cannot practice price discrimination because

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is the amount of the monopoly's total cost of production?

To maximise profit,a monopolist will produce and sell a quantity such that for the last unit sold,marginal revenue equals marginal cost,and will charge a price given by the demand curve at that output level.

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

Which of the following pricing strategies allows a firm to earn economic profit?

A monopoly is a firm that is the only seller of a good or service that does not have

Figure 9-11 Figure 9-11 shows the cost and demand curves for a monopolist. -Refer to Figure 9-11.If this industry was organised as a perfectly competitive industry,the market output and market price would be

In which market structure is it not possible to practice price discrimination?

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Economic efficiency in a free market occurs when

With perfect price discrimination there is

The demand curve for a monopoly firm

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

If a firm's average total cost is less than price where MR = MC,

A monopoly is characterised by all of the following except

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Figure 9-9 Figure 9-9 shows the demand and cost curves for a monopolist. -Refer to Figure 9-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

A possible advantage of a horizontal merger for the economy is that

What happens to a monopoly's revenue when it sells more units of its product?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 9: Monopoly Markets

A perfectly competitive firm cannot practice price discrimination because

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is the amount of the monopoly's total cost of production?

To maximise profit,a monopolist will produce and sell a quantity such that for the last unit sold,marginal revenue equals marginal cost,and will charge a price given by the demand curve at that output level.

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

Which of the following pricing strategies allows a firm to earn economic profit?

A monopoly is a firm that is the only seller of a good or service that does not have

Figure 9-11 Figure 9-11 shows the cost and demand curves for a monopolist. -Refer to Figure 9-11.If this industry was organised as a perfectly competitive industry,the market output and market price would be

In which market structure is it not possible to practice price discrimination?

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Economic efficiency in a free market occurs when

With perfect price discrimination there is

The demand curve for a monopoly firm

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

If a firm's average total cost is less than price where MR = MC,

A monopoly is characterised by all of the following except

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Figure 9-9 Figure 9-9 shows the demand and cost curves for a monopolist. -Refer to Figure 9-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

A possible advantage of a horizontal merger for the economy is that

What happens to a monopoly's revenue when it sells more units of its product?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters