Question 1

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours.Why is this the case?

Accepted Answer

A) Telephone companies hope to discourage customers from calling long distance during the day to keep their labour costs down. 
B) The cost of making long-distance connections is higher during the day than in the evenings. 
C) Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. 
D) Increasingly,businesses who must call suppliers or customers during business hours resort to the Internet,thereby reducing demand for long-distance calls.To make up for this fall in demand,telephone companies charge higher rates. 
A) Telephone companies hope to discourage customers from calling long distance during the day to keep their labour costs down. 
B) The cost of making long-distance connections is higher during the day than in the evenings. 
C) Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. 
D) Increasingly,businesses who must call suppliers or customers during business hours resort to the Internet,thereby reducing demand for long-distance calls.To make up for this fall in demand,telephone companies charge higher rates.

Question 2

Table 9-3
   Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9-3 above shows a portion of her survey results.
-Refer to Table 9-3.If Julie charges $10 per hour,how many hours of pet sitting services will be purchased and by whom?

Accepted Answer

A) 2 hours (1 hour by Cara and 1 hour by Dawn) 
B) 1 hour by Cara only 
C) 1 hour by Dawn only 
D) 3 hours (1 hour each by Arun,Bernice and Cara) 
A) 2 hours (1 hour by Cara and 1 hour by Dawn) 
B) 1 hour by Cara only 
C) 1 hour by Dawn only 
D) 3 hours (1 hour each by Arun,Bernice and Cara)

Question 3

Figure 9-13   Figure 9-13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 9-13.Suppose the government regulates this industry in order to remove the inefficiency implied by the behaviour of the profit-maximising owners.If regulators require that the firm produces the economically efficient output level,what is this level and what price will be charged?

Accepted Answer

A) Q4 units;P4 
B) Q1 units;P4 
C) Q1 units;P1 
D) Q3 units;P3 
A) Q4 units;P4 
B) Q1 units;P4 
C) Q1 units;P1 
D) Q3 units;P3

Question 4

For which of the following firms is patent protection of vital importance?

Accepted Answer

A) furniture producers 
B) software firms 
C) pharmaceutical firms 
D) auto makers 
A) furniture producers 
B) software firms 
C) pharmaceutical firms 
D) auto makers

Question 5

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

Accepted Answer

A) True 
 B)False

Question 6

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 7

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 ATC1,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 8

If you own the only bookstore in a small town,do you have a monopoly?

Accepted Answer

Because consumers in your town could buy

Question 9

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Accepted Answer

A) True 
 B)False

Question 10

Figure 9-15  
-Refer to Figure 9-15.What is the economically efficient output level?

Accepted Answer

A) Q1 units 
B) Q2 units 
C) Q3 units 
D) Q4 units 
A) Q1 units 
B) Q2 units 
C) Q3 units 
D) Q4 units

Question 11

Which of the following is not a requirement for a successful price discrimination strategy?

Accepted Answer

A) A firm must have the ability to charge a price greater than marginal cost. 
B) Some consumers must have a greater willingness to pay for the product than other consumers,and the firm must be able to know what prices consumers are willing to pay. 
C) The firm must be able to prevent arbitrage. 
D) Transactions costs must be the same for all consumers. 
A) A firm must have the ability to charge a price greater than marginal cost. 
B) Some consumers must have a greater willingness to pay for the product than other consumers,and the firm must be able to know what prices consumers are willing to pay. 
C) The firm must be able to prevent arbitrage. 
D) Transactions costs must be the same for all consumers.

Question 12

Figure 9-3   Figure 9-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9-3.What happens to the monopolist represented in the diagram in the long run?

Accepted Answer

A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same,it will exit the market. 
C) The government will subsidise the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers. 
A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same,it will exit the market. 
C) The government will subsidise the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers.

Question 13

Market power refers to

Accepted Answer

A) the ability of consumers to dictate what products should be produced. 
B) the ability of a firm to advertise its product and succeed in selling more output. 
C) the ability of a firm to sell at a lower price than rival sellers. 
D) the ability of a firm to charge a price higher than the marginal cost of production. 
A) the ability of consumers to dictate what products should be produced. 
B) the ability of a firm to advertise its product and succeed in selling more output. 
C) the ability of a firm to sell at a lower price than rival sellers. 
D) the ability of a firm to charge a price higher than the marginal cost of production.

Question 14

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Accepted Answer

A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve. 
A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve.

Question 15

Which of the following is not an example of price discrimination?

Accepted Answer

A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B) Unlike foreign tourists,citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C) Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities. 
A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B) Unlike foreign tourists,citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C) Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities.

Question 16

What is a public franchise? Are all public franchises natural monopolies?

Accepted Answer

A public franchise is a firm which the g

Question 17

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

Accepted Answer

A) True 
 B)False

Question 18

Figure 9-11   Figure 9-11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9-11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

Accepted Answer

A) $21 
B) $124 
C) $186 
D) $332 
A) $21 
B) $124 
C) $186 
D) $332

Question 19

A monopolist faces

Accepted Answer

A) a perfectly elastic demand curve. 
B) a perfectly inelastic demand curve. 
C) a horizontal demand curve. 
D) a downward-sloping demand curve. 
A) a perfectly elastic demand curve. 
B) a perfectly inelastic demand curve. 
C) a horizontal demand curve. 
D) a downward-sloping demand curve.

Question 20

Joss is a marketing consultant.Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report.Iris is willing to pay $500 for the service while Daphne is willing to pay $800.Suppose that the opportunity cost of Joss's time is $1200.Assume that Iris and Daphne do not know each other.If the price is $800 per copy,

Accepted Answer

A) both Iris and Daphne will purchase Joss's services,and Joss will undertake the job. 
B) only Daphne will purchase Joss's services,and Joss will undertake the job for her. 
C) only Daphne will want to purchase Joss's services,but Joss will not be willing to do the work. 
D) neither Iris nor Daphne will commission the work. 
A) both Iris and Daphne will purchase Joss's services,and Joss will undertake the job. 
B) only Daphne will purchase Joss's services,and Joss will undertake the job for her. 
C) only Daphne will want to purchase Joss's services,but Joss will not be willing to do the work. 
D) neither Iris nor Daphne will commission the work.

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours.Why is this the case?

For which of the following firms is patent protection of vital importance?

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

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 ATC₁,the firm will

If you own the only bookstore in a small town,do you have a monopoly?

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Figure 9-15 -Refer to Figure 9-15.What is the economically efficient output level?

Which of the following is not a requirement for a successful price discrimination strategy?

Figure 9-3 Figure 9-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-3.What happens to the monopolist represented in the diagram in the long run?

Market power refers to

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Which of the following is not an example of price discrimination?

What is a public franchise? Are all public franchises natural monopolies?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

Figure 9-11 Figure 9-11 shows the cost and demand curves for a monopolist. -Refer to Figure 9-11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

A monopolist faces

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

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours.Why is this the case?

For which of the following firms is patent protection of vital importance?

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

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 ATC1,the firm will

If you own the only bookstore in a small town,do you have a monopoly?

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Figure 9-15 -Refer to Figure 9-15.What is the economically efficient output level?

Which of the following is not a requirement for a successful price discrimination strategy?

Figure 9-3 Figure 9-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9-3.What happens to the monopolist represented in the diagram in the long run?

Market power refers to

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Which of the following is not an example of price discrimination?

What is a public franchise? Are all public franchises natural monopolies?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

Figure 9-11 Figure 9-11 shows the cost and demand curves for a monopolist. -Refer to Figure 9-11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

A monopolist faces

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 ATC₁,the firm will