Question 1

To have a monopoly in an industry there must be

Accepted Answer

A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise,making the monopoly the exclusive legal provider of a good or service. 
A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise,making the monopoly the exclusive legal provider of a good or service.

Question 2

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result,the monopoly's profit will fall.

Accepted Answer

A) True 
 B)False

Question 3

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

Accepted Answer

A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft,the wealthy corn farmer is probably a monopolist 
A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft,the wealthy corn farmer is probably a monopolist

Question 4

What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?

Accepted Answer

Perfect price discrimination,also known

Question 5

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

Accepted Answer

Profit maximisation is not the same thin

Question 6

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 7

To maximise profit a monopolist will produce where

Accepted Answer

A) marginal revenue is equal to marginal cost. 
B) demand for its product is unit-elastic. 
C) revenue per unit is maximised. 
D) average total cost is equal to average revenue. 
A) marginal revenue is equal to marginal cost. 
B) demand for its product is unit-elastic. 
C) revenue per unit is maximised. 
D) average total cost is equal to average revenue.

Question 8

To successfully price discriminate,a firm must ensure that there are no opportunities for arbitrage.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following are necessary condition(s)for successful price discrimination?
A.zero transactions cost
B.a perfectly competitive market structure
C.an imperfectly competitive market structure
D.at least two different markets with different price elasticities of demand
E.at least two different markets with different price elasticities of supply

Accepted Answer

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

Question 10

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A) Each must lower its price to sell more output. 
B) Each sets a price for its product that will maximise its revenue. 
C) Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D) Each maximises profits by producing a quantity for which price equals marginal cost. 
A) Each must lower its price to sell more output. 
B) Each sets a price for its product that will maximise its revenue. 
C) Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D) Each maximises profits by producing a quantity for which price equals marginal cost.

Question 11

Firms that face downward-sloping demand curves for their output in the product market are called

Accepted Answer

A) price takers. 
B) price dictators. 
C) monopolists. 
D) price makers. 
A) price takers. 
B) price dictators. 
C) monopolists. 
D) price makers.

Question 12

A patent or copyright is a barrier to entry based on

Accepted Answer

A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities. 
A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities.

Question 13

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Accepted Answer

A monopoly's marginal revenue curve lies

Question 14

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

Accepted Answer

A) odd pricing. 
B) cost-plus pricing. 
C) price discrimination. 
D) markup pricing. 
A) odd pricing. 
B) cost-plus pricing. 
C) price discrimination. 
D) markup pricing.

Question 15

If a restaurant was a natural monopoly,dividing the restaurant equally into two separate restaurants would

Accepted Answer

A) decrease marginal cost. 
B) raise average total cost. 
C) increase total revenue. 
D) make marginal revenue less elastic. 
A) decrease marginal cost. 
B) raise average total cost. 
C) increase total revenue. 
D) make marginal revenue less elastic.

Question 16

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

Accepted Answer

A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even. 
A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even.

Question 17

Figure 9-1  
-Refer to Figure 9-1.Which of the following statements about the firm depicted in the diagram is true?

Accepted Answer

A) The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B) The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C) The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D) The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits. 
A) The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B) The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C) The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D) The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits.

Question 18

Which of the following statements about perfect price discrimination is false?

Accepted Answer

A) There is no consumer surplus if a firm engages in perfect price discrimination. 
B) Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C) A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D) For the price-discriminating firm,its marginal revenue curve coincides with its demand curve. 
A) There is no consumer surplus if a firm engages in perfect price discrimination. 
B) Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C) A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D) For the price-discriminating firm,its marginal revenue curve coincides with its demand curve.

Question 19

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

Accepted Answer

A) True 
 B)False

Question 20

A natural monopoly is most likely to occur in which of the following industries?

Accepted Answer

A) the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B) the diamond mining and marketing industry because one firm can control a key resource 
C) the software industry because of the importance of network externalities 
D) an industry where fixed costs are very large relative to variable costs 
A) the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B) the diamond mining and marketing industry because one firm can control a key resource 
C) the software industry because of the importance of network externalities 
D) an industry where fixed costs are very large relative to variable costs

To have a monopoly in an industry there must be

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result,the monopoly's profit will fall.

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

A monopolist's demand curve is the same as the marginal revenue curve for the product.

To maximise profit a monopolist will produce where

To successfully price discriminate,a firm must ensure that there are no opportunities for arbitrage.

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Firms that face downward-sloping demand curves for their output in the product market are called

A patent or copyright is a barrier to entry based on

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

If a restaurant was a natural monopoly,dividing the restaurant equally into two separate restaurants would

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

Figure 9-1 -Refer to Figure 9-1.Which of the following statements about the firm depicted in the diagram is true?

Which of the following statements about perfect price discrimination is false?

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

A natural monopoly is most likely to occur in which of the following industries?

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

To have a monopoly in an industry there must be

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result,the monopoly's profit will fall.

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

A monopolist's demand curve is the same as the marginal revenue curve for the product.

To maximise profit a monopolist will produce where

To successfully price discriminate,a firm must ensure that there are no opportunities for arbitrage.

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Firms that face downward-sloping demand curves for their output in the product market are called

A patent or copyright is a barrier to entry based on

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

If a restaurant was a natural monopoly,dividing the restaurant equally into two separate restaurants would

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

Figure 9-1 -Refer to Figure 9-1.Which of the following statements about the firm depicted in the diagram is true?

Which of the following statements about perfect price discrimination is false?

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

A natural monopoly is most likely to occur in which of the following industries?

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