Question 1

Firms price discriminate

Accepted Answer

A) to reduce the quantity sold so as to reduce production costs. 
B) to increase profits. 
C) to take advantage of customers. 
D) to increase total economic surplus. 
A) to reduce the quantity sold so as to reduce production costs. 
B) to increase profits. 
C) to take advantage of customers. 
D) to increase total economic surplus.

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 price charged for the profit-maximising output level?

Accepted Answer

A) $13 
B) $21 
C) $27 
D) $34 
A) $13 
B) $21 
C) $27 
D) $34

Question 3

a.What is the defining characteristic of a natural monopoly?
b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive?
c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal,it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain.
d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

Accepted Answer

a.The defining characteristic is the pre

Question 4

Identify four reasons for high entry barriers.Briefly explain each reason.

Accepted Answer

1.Economies of scale.This occurs when a

Question 5

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Accepted Answer

A) True 
 B)False

Question 6

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 7

For a natural monopoly to exist

Accepted Answer

A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier. 
A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier.

Question 8

Figure 9-6   Figure 9-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 9-6.The monopolist's total revenue is

Accepted Answer

A) $1116. 
B) $1488. 
C) $1726.40 
D) $1826. 
A) $1116. 
B) $1488. 
C) $1726.40 
D) $1826.

Question 9

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

Accepted Answer

A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource 
A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource

Question 10

The size of a deadweight loss in a market is reduced by

Accepted Answer

A) government legislating a price ceiling. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction. 
A) government legislating a price ceiling. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction.

Question 11

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Accepted Answer

A) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. 
A) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good.

Question 12

Many universities practice yield management to maximise the revenue they receive from tuition and

Accepted Answer

A) to maximise the amount of aid they receive from the federal government. 
B) to maximise the amount of their student loans. 
C) to maximise the size of their endowments. 
D) to increase the academic quality of the students who enroll in their schools. 
A) to maximise the amount of aid they receive from the federal government. 
B) to maximise the amount of their student loans. 
C) to maximise the size of their endowments. 
D) to increase the academic quality of the students who enroll in their schools.

Question 13

With perfect price discrimination,the marginal revenue curve

Accepted Answer

A) is below the demand curve. 
B) is above the demand curve. 
C) is equal to the demand curve. 
D) is horizontal. 
A) is below the demand curve. 
B) is above the demand curve. 
C) is equal to the demand curve. 
D) is horizontal.

Question 14

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 15

Figure 9-10  
-Refer to Figure 9-10.What is the area that represents consumer surplus under a monopoly?

Accepted Answer

A) the triangle P0P1F 
B) the triangle P0P2E 
C) the trapezium P1P2EF 
D) the rectangle P1P3HF 
A) the triangle P0P1F 
B) the triangle P0P2E 
C) the trapezium P1P2EF 
D) the rectangle P1P3HF

Question 16

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Accepted Answer

A) that has been granted special production rights by the government. 
B) that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C) that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D) that has the largest market share in an industry. 
A) that has been granted special production rights by the government. 
B) that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C) that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D) that has the largest market share in an industry.

Question 17

Table 9-2
   The government of a small developing country has granted exclusive rights to Linden Enterprises for the production of plastic syringes.Table 9-2 shows the cost and demand data for this government protected monopolist.
-Refer to Table 9-2.What is the amount of profit that the firm earns?

Accepted Answer

A) $34.50 
B) $42 
C) $47 
D) $49 
A) $34.50 
B) $42 
C) $47 
D) $49

Question 18

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 19

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

Accepted Answer

A) the firm must set different prices for different regions where the product is sold. 
B) the firm must be willing to offer price discounts for senior citizens and children. 
C) the firm must be able to divide the market in a way that makes arbitrage impossible. 
D) the firm must choose a marketing strategy that appeals to different segments of the economy. 
A) the firm must set different prices for different regions where the product is sold. 
B) the firm must be willing to offer price discounts for senior citizens and children. 
C) the firm must be able to divide the market in a way that makes arbitrage impossible. 
D) the firm must choose a marketing strategy that appeals to different segments of the economy.

Question 20

If Mort's House of Flowers sells one dozen roses to different customers at different prices,economists would consider this an example of

Accepted Answer

A) price gouging. 
B) rational ignorance. 
C) arbitrage. 
D) price discrimination. 
A) price gouging. 
B) rational ignorance. 
C) arbitrage. 
D) price discrimination.

Firms price discriminate

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is the price charged for the profit-maximising output level?

Identify four reasons for high entry barriers.Briefly explain each reason.

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

For a natural monopoly to exist

Figure 9-6 Figure 9-6 shows the cost and demand curves for a monopolist. -Refer to Figure 9-6.The monopolist's total revenue is

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

The size of a deadweight loss in a market is reduced by

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Many universities practice yield management to maximise the revenue they receive from tuition and

With perfect price discrimination,the marginal revenue curve

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

Figure 9-10 -Refer to Figure 9-10.What is the area that represents consumer surplus under a monopoly?

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Table 9-2 The government of a small developing country has granted exclusive rights to Linden Enterprises for the production of plastic syringes.Table 9-2 shows the cost and demand data for this government protected monopolist. -Refer to Table 9-2.What is the amount of profit that the firm earns?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

If Mort's House of Flowers sells one dozen roses to different customers at different prices,economists would consider this an example of

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

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Exam 9: Monopoly Markets

Firms price discriminate

Figure 9-4 Figure 9-4 shows the demand and cost curves for a monopolist. -Refer to Figure 9-4.What is the price charged for the profit-maximising output level?

Identify four reasons for high entry barriers.Briefly explain each reason.

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

For a natural monopoly to exist

Figure 9-6 Figure 9-6 shows the cost and demand curves for a monopolist. -Refer to Figure 9-6.The monopolist's total revenue is

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

The size of a deadweight loss in a market is reduced by

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Many universities practice yield management to maximise the revenue they receive from tuition and

With perfect price discrimination,the marginal revenue curve

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

Figure 9-10 -Refer to Figure 9-10.What is the area that represents consumer surplus under a monopoly?

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Table 9-2 The government of a small developing country has granted exclusive rights to Linden Enterprises for the production of plastic syringes.Table 9-2 shows the cost and demand data for this government protected monopolist. -Refer to Table 9-2.What is the amount of profit that the firm earns?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

If Mort's House of Flowers sells one dozen roses to different customers at different prices,economists would consider this an example of

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