Question 1

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 revenue?

Accepted Answer

A) $21 600 
B) $20 400 
C) $19 740 
D) $7800 
A) $21 600 
B) $20 400 
C) $19 740 
D) $7800

Question 2

Why does a monopoly cause a deadweight loss?

Accepted Answer

A) because it does not produce some output for which marginal benefit exceeds marginal cost 
B) because it appropriates a portion of consumer surplus for itself 
C) because it increases producer surplus at the expense of consumer surplus 
D) because it does not produce some output for which demand exceeds supply 
A) because it does not produce some output for which marginal benefit exceeds marginal cost 
B) because it appropriates a portion of consumer surplus for itself 
C) because it increases producer surplus at the expense of consumer surplus 
D) because it does not produce some output for which demand exceeds supply

Question 3

A monopoly firm's demand curve

Accepted Answer

A) is the same as the market demand curve. 
B) is perfectly inelastic. 
C) is more inelastic than the demand curve for the product. 
D) is inelastic at high prices and elastic at lower prices. 
A) is the same as the market demand curve. 
B) is perfectly inelastic. 
C) is more inelastic than the demand curve for the product. 
D) is inelastic at high prices and elastic at lower prices.

Question 4

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Accepted Answer

A) True 
 B)False

Question 5

A successful strategy of price discrimination requires that a firm be a price-taker.

Accepted Answer

A) True 
 B)False

Question 6

Explain why the monopolist has no supply curve?

Accepted Answer

A supply curve shows the relationship be

Question 7

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Accepted Answer

A) The monopoly firm has control of a key resource necessary to produce a good. 
B) There are important network externalities in supplying a good or service. 
C) large economies of scale that result in a natural monopoly 
D) a high concentration ratio 
A) The monopoly firm has control of a key resource necessary to produce a good. 
B) There are important network externalities in supplying a good or service. 
C) large economies of scale that result in a natural monopoly 
D) a high concentration ratio

Question 8

Figure 9-2   Figure 9-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9-2.If the firm's average total cost curve is ATC3,the firm will

Accepted Answer

A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition. 
A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition.

Question 9

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Accepted Answer

A) whether or not there are close substitutes for the products of the two firms. 
B) how elastic the demand is for each firm's product. 
C) counting the number of firms that produce the same product. 
D) how much advertising is done in the industry. 
A) whether or not there are close substitutes for the products of the two firms. 
B) how elastic the demand is for each firm's product. 
C) counting the number of firms that produce the same product. 
D) how much advertising is done in the industry.

Question 10

Compared to a monopolistic competitor,a monopolist faces

Accepted Answer

A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero. 
A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero.

Question 11

One reason why airlines charge business travelers and leisure travelers different prices is

Accepted Answer

A) business travelers fly according to schedules that are planned months in advance.Many leisure travelers buy their tickets at the last minute. 
B) business travelers usually travel alone.Leisure travelers often fly with friends and family members;therefore,they have a more inelastic demand for airline tickets than business travelers. 
C) business travelers fly more often than most leisure travelers.As a result,their employers are able to bargain with airlines for lower fares than leisure travelers pay. 
D) business travelers often have inflexible schedules and have to travel on a particular day.The opposite is true for leisure travelers. 
A) business travelers fly according to schedules that are planned months in advance.Many leisure travelers buy their tickets at the last minute. 
B) business travelers usually travel alone.Leisure travelers often fly with friends and family members;therefore,they have a more inelastic demand for airline tickets than business travelers. 
C) business travelers fly more often than most leisure travelers.As a result,their employers are able to bargain with airlines for lower fares than leisure travelers pay. 
D) business travelers often have inflexible schedules and have to travel on a particular day.The opposite is true for leisure travelers.

Question 12

Figure 9-4   Figure 9-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 9-4.What is likely to happen to this monopoly in the long run?

Accepted Answer

A) New firms will enter the market to eliminate its profits. 
B) It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C) As long as there are entry barriers,this firm will continue to enjoy economic profits. 
D) It will be regulated by the government because of its excess profits. 
A) New firms will enter the market to eliminate its profits. 
B) It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C) As long as there are entry barriers,this firm will continue to enjoy economic profits. 
D) It will be regulated by the government because of its excess profits.

Question 13

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-7  
-Refer to Figure 9-7.Use the figure above to answer the following questions.
a.What is the profit-maximising quantity and what price will the monopolist charge?
b.What is the total revenue at the profit-maximising output level?
c.What is the total cost at the profit-maximising output level?
d.What is the profit?
e.What is the profit per unit (average profit)at the profit-maximising output level?
f.If this industry was organised as a perfectly competitive industry,what would be the profit-maximising price and quantity?

Accepted Answer

a.Quantity = 50;price = 32
b.Total reven

Question 15

Which of the following is not a way by which price-discriminating firms can segment a market?

Accepted Answer

A) on the basis of time of purchase,for example long-distance calling 
B) by requiring an advance purchase,for example air tickets 
C) on basis of the buyer's location,for example requiring out-of-state students to pay higher tuition 
D) on the basis of the supplier's marginal cost of production,for example requiring customers to pay a premium for customising options 
A) on the basis of time of purchase,for example long-distance calling 
B) by requiring an advance purchase,for example air tickets 
C) on basis of the buyer's location,for example requiring out-of-state students to pay higher tuition 
D) on the basis of the supplier's marginal cost of production,for example requiring customers to pay a premium for customising options

Question 16

Successful price discrimination cannot take place if

Accepted Answer

A) the market is perfectly competitive. 
B) the market can be segmented into different buyer groups. 
C) customers are not able to resell the product. 
D) the demand curve facing the firm is downward sloping. 
A) the market is perfectly competitive. 
B) the market can be segmented into different buyer groups. 
C) customers are not able to resell the product. 
D) the demand curve facing the firm is downward sloping.

Question 17

Figure 9-3   Figure 9-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximising/loss-minimising output level?

Accepted Answer

A) $38 
B) $54 
C) $68 
D) $75 
A) $38 
B) $54 
C) $68 
D) $75

Question 18

Figure 9-16  
-Refer to Figure 9-16.Graph (a)represents a monopolist who cannot price discriminate and graph (b)represents a monopolist practicing perfect price discrimination.On each graph,identify the monopoly price,the monopoly output,the efficient output,and the areas representing profit,consumer surplus,and deadweight loss.

Accepted Answer

In graph (b),the monopoly output is equa

Question 19

Figure 9-10  
-Refer to Figure 9-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A) area FHE. 
B) area FGE. 
C) area P1P2EF. 
D) area P1P2GF. 
A) area FHE. 
B) area FGE. 
C) area P1P2EF. 
D) area P1P2GF.

Question 20

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

Accepted Answer

A) most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B) prices remain high without patent protection because of a lack of competition.Firms that are not granted patents cannot compete with firms that are granted patents. 
C) other firms are free to produce chemically identical drugs.Competition reduces the profits that had been earned by the firms that received patents. 
D) firms will find ways to obtain additional patent protection-often by making cosmetic changes in drugs that were patented-so that they can continue charging high prices. 
A) most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B) prices remain high without patent protection because of a lack of competition.Firms that are not granted patents cannot compete with firms that are granted patents. 
C) other firms are free to produce chemically identical drugs.Competition reduces the profits that had been earned by the firms that received patents. 
D) firms will find ways to obtain additional patent protection-often by making cosmetic changes in drugs that were patented-so that they can continue charging high prices.

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 revenue?

Why does a monopoly cause a deadweight loss?

A monopoly firm's demand curve

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

A successful strategy of price discrimination requires that a firm be a price-taker.

Explain why the monopolist has no supply curve?

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Figure 9-2 Figure 9-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-2.If the firm's average total cost curve is ATC₃,the firm will

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Compared to a monopolistic competitor,a monopolist faces

One reason why airlines charge business travelers and leisure travelers different prices is

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is likely to happen to this monopoly in the long run?

A product's price approaches its marginal cost as market concentration increases.

Which of the following is not a way by which price-discriminating firms can segment a market?

Successful price discrimination cannot take place if

Figure 9-3 Figure 9-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximising/loss-minimising output level?

Figure 9-10 -Refer to Figure 9-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

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

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 revenue?

Why does a monopoly cause a deadweight loss?

A monopoly firm's demand curve

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

A successful strategy of price discrimination requires that a firm be a price-taker.

Explain why the monopolist has no supply curve?

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Figure 9-2 Figure 9-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-2.If the firm's average total cost curve is ATC3,the firm will

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Compared to a monopolistic competitor,a monopolist faces

One reason why airlines charge business travelers and leisure travelers different prices is

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is likely to happen to this monopoly in the long run?

A product's price approaches its marginal cost as market concentration increases.

Which of the following is not a way by which price-discriminating firms can segment a market?

Successful price discrimination cannot take place if

Figure 9-3 Figure 9-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximising/loss-minimising output level?

Figure 9-10 -Refer to Figure 9-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

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

Figure 9-2 Figure 9-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-2.If the firm's average total cost curve is ATC₃,the firm will