Question 1

The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:

Accepted Answer

A)  inverted block pricing 
B)  second-degree price discrimination 
C)  peak-load pricing 
D)  first-degree price discrimination 
E)  none of the above 
A)  inverted block pricing 
B)  second-degree price discrimination 
C)  peak-load pricing 
D)  first-degree price discrimination 
E)  none of the above C

Question 2

Which of the following is a source of market power for a monopolist?

Accepted Answer

A)  a firm may have a patent or copyright 
B)  a firm may control critical resources 
C)  a firm may have a government-authorized franchise 
D)  a firm may enjoy economies of scale 
E)  all of the above are sources of market power for a monopolist 
A)  a firm may have a patent or copyright 
B)  a firm may control critical resources 
C)  a firm may have a government-authorized franchise 
D)  a firm may enjoy economies of scale 
E)  all of the above are sources of market power for a monopolist E

Question 3

Of the following,which is not an economic rationale for public utility regulation?

Accepted Answer

A)  production process exhibiting increasing returns to scale 
B)  constant cost industry 
C)  avoidance of duplication of facilities 
D)  protection of consumers from price discrimination 
E)  none of the above 
A)  production process exhibiting increasing returns to scale 
B)  constant cost industry 
C)  avoidance of duplication of facilities 
D)  protection of consumers from price discrimination 
E)  none of the above B

Question 4

In natural monopoly,AC continuously declines due to economies in distribution or in production,which tends to found in industries which face increasing returns to scale.If price were set equal to marginal cost,then:

Accepted Answer

A)  price would equal average cost. 
B)  price would exceed average cost. 
C)  price would be below average cost. 
D)  price would be at the profit maximizing level for natural monopoly 
E)  all of the above 
A)  price would equal average cost. 
B)  price would exceed average cost. 
C)  price would be below average cost. 
D)  price would be at the profit maximizing level for natural monopoly 
E)  all of the above

Question 5

Unique Creations has a monopoly position in magnometers.If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -4,what is the optimal monopoly price? Hint: P (1 +1/E)= MC.

Accepted Answer

A)  $37.50 
B)  $41.25 
C)  $66.67 
D)  $75.00 
E)  $82.50 
A)  $37.50 
B)  $41.25 
C)  $66.67 
D)  $75.00 
E)  $82.50

Question 6

The profit-maximizing monopolist,faced with a negative-sloping demand curve,will always produce:

Accepted Answer

A)  at an output greater than the output where average costs are minimized 
B)  at an output short of that output where average costs are minimized 
C)  at an output equal to industry output under pure competition 
D)  a and c 
E)  none of the above 
A)  at an output greater than the output where average costs are minimized 
B)  at an output short of that output where average costs are minimized 
C)  at an output equal to industry output under pure competition 
D)  a and c 
E)  none of the above

Question 7

Zar Island Gas Company is the sole producer of natural gas in the remote island country of Zar.The company's operations are regulated by the State Energy Commission.The demand function for gas in Zar has been estimated as:
where Q is output (measured in units)and P is price (measured in dollars per unit).Zar Island's cost function is:
This total cost function does not include a "normal" return on the firm's invested capital of $4 million.
(a)In the absence of any government price regulation,determine Zar Island's optimal (i)output level,(ii)selling price,(iii)total profits,and (iv)rate of return on its asset base.
(b)The State Energy Commission has ordered the firm to charge a price which will provide it with no more than a 12 percent return on its total assets.Determine Zar Island's (i)output level,(ii)selling price,and (iii)total profits under this constraint.
Hint: The roots of the quadratic equation:
 (a) In the absence of any government price regulation, determine Zar Island's optimal (i) output level, (ii) selling price, (iii) total profits, and (iv) rate of return on its asset base. The State Energy Commission has ordered the firm to charge a price which will provide it
(b) with no more than a 12 percent return on its total assets. Determine Zar Island's (1) output level, (ii) selling price, and (iii) total profits under this constraint. Hint: The roots of the quadratic equation:
$$a x ^ { 2 } + b x + c = 0 \text { are } X = \frac { - b \pm \left( b ^ { 2 } - 4 a c \right) ^ { 5 } } { 2 a }$$ $$a x ^ { 2 } + b x + c = 0 \text { are } X = \frac { - b \pm \left( b ^ { 2 } - 4 a c \right) ^ { 5 } } { 2 a }$$

Accepted Answer

(a) @#IMG-DLM& (i) \[\begin{aligned}
\pi & = \math

Question 8

Regulatory agencies engage in all of the following activities except _______.

Accepted Answer

A)  controlling entry into the regulated industries 
B)  overseeing the quality of service provided by the firms 
C)  setting federal and state income tax rates on regulated firms 
D)  setting prices that consumers will pay 
E)  none of the above 
A)  controlling entry into the regulated industries 
B)  overseeing the quality of service provided by the firms 
C)  setting federal and state income tax rates on regulated firms 
D)  setting prices that consumers will pay 
E)  none of the above

Question 9

Declining cost industries

Accepted Answer

A)  have upward rising AC curves. 
B)  have upward rising demand curves. 
C)  have ∩-shaped total costs. 
D)  have diseconomies of scale. 
E)  have marginal cost curves below their average cost curve. 
A)  have upward rising AC curves. 
B)  have upward rising demand curves. 
C)  have ∩-shaped total costs. 
D)  have diseconomies of scale. 
E)  have marginal cost curves below their average cost curve.

Question 10

A monopolist faces the following demand curve: P = 12 - .3Q with marginal costs of $3.What is the monopolistic PRICE?

Accepted Answer

A)  P = $5.50 
B)  P = $6.50 
C)  P = $7.50 
D)  P = $8.50 
E)  P = $9.50 
A)  P = $5.50 
B)  P = $6.50 
C)  P = $7.50 
D)  P = $8.50 
E)  P = $9.50

Question 11

In the case of pure monopoly:

Accepted Answer

A)  one firm is the sole producer of a good or service which has no close substitutes 
B)  the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue 
C)  the demand curve is always elastic 
D)  a and b only 
E)  a,b,and c 
A)  one firm is the sole producer of a good or service which has no close substitutes 
B)  the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue 
C)  the demand curve is always elastic 
D)  a and b only 
E)  a,b,and c

Question 12

A monopoly will always produce less than a purely competitive industry,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 13

The Zinger Company manufactures and sells a line of sewing machines.Demand per period (Q)for a particular model is given by the following relationship:
Q = 400 ? .5P
where P is price.Total costs (including a "normal" return to the owners)of producing Q units per period are:
TC = 20,000 + 50Q + 3Q2 (a) Express total profits $( \pi )$ in terms of $Q$.
(b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level?
(c) What model of market pricing has been assumed in this problem? Justify your answer.

Accepted Answer

(a) (a)
  (c)Non-dis

Question 14

​Microsoft's success over Apple although Apple had a technologically superior product is the result of:

Accepted Answer

A)  ​increasing returns in a network-based business 
B)  ​Microsoft's economies of scale over a wide range of output 
C)  ​the revenue sources derived from Microsoft's intellectual property 
D)  ​superior marketing and promotions 
E)  ​all of the above 
A)  ​increasing returns in a network-based business 
B)  ​Microsoft's economies of scale over a wide range of output 
C)  ​the revenue sources derived from Microsoft's intellectual property 
D)  ​superior marketing and promotions 
E)  ​all of the above

Question 15

The demand curve facing the firm in ____ is the same as the industry demand curve.

Accepted Answer

A)  pure competition 
B)  monopolistic competition 
C)  oligopoly 
D)  pure monopoly 
E)  none of the above 
A)  pure competition 
B)  monopolistic competition 
C)  oligopoly 
D)  pure monopoly 
E)  none of the above

Question 16

​Which of the following relate(s)to gross profit margin?

Accepted Answer

A)  ​a term often used in manufacturing businesses 
B)  ​the profit margin after subtracting direct costs from wholesale revenue 
C)  ​the profit margin after subtracting variable manufacturing costs 
D)  a and b 
E)  ​a through c 
A)  ​a term often used in manufacturing businesses 
B)  ​the profit margin after subtracting direct costs from wholesale revenue 
C)  ​the profit margin after subtracting variable manufacturing costs 
D)  a and b 
E)  ​a through c

Question 17

When the cross elasticity of demand between one product and all other products is low,one is generally referring to a(n)____ situation.

Accepted Answer

A)  oligopoly 
B)  monopoly 
C)  pure competition 
D)  substitution 
E)  monopolistic competition 
A)  oligopoly 
B)  monopoly 
C)  pure competition 
D)  substitution 
E)  monopolistic competition

Question 18

In the electric power industry,residential customers have relatively ____ demand for electricity compared with large industrial users.But contrary to price discrimination,large industrial users generally are charged ____ rates.

Accepted Answer

A)  similar,similar 
B)  elastic,lower 
C)  elastic,higher 
D)  inelastic,lower 
E)  inelastic,higher 
A)  similar,similar 
B)  elastic,lower 
C)  elastic,higher 
D)  inelastic,lower 
E)  inelastic,higher

Question 19

A monopolist seller of Irish ceramics faces the following demand function for its product: P = 62 - 3Q.The fixed cost is $10 and the variable cost per unit is $2.What is the maximizing QUANTITY for this monopoly? Hint: MR is twice as steep as the inverse demand curve: MR = 62 - 6 Q.(Pick closest answer)

Accepted Answer

A)  Q = 10 
B)  Q = 15 
C)  Q = 22 
D)  Q = 37 
E)  Q = 41 
A)  Q = 10 
B)  Q = 15 
C)  Q = 22 
D)  Q = 37 
E)  Q = 41

Question 20

Land's End estimates a demand curve for turtleneck sweaters to be: Log Q = .41 + 2.3 Log Y - 3 Log P
Where Q is quantity,P is price,and Y is a measure on national income.If the marginal cost of imported turtleneck sweaters is $9.00.(HINT: P (1 +1/E)= MC).The optimal monopoly price would be:

Accepted Answer

A)  P = $13.50 
B)  P = $26.50 
C)  P = $27.50 
D)  P = $34.50 
E)  P = $56.22 
A)  P = $13.50 
B)  P = $26.50 
C)  P = $27.50 
D)  P = $34.50 
E)  P = $56.22

The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:

Which of the following is a source of market power for a monopolist?

Of the following,which is not an economic rationale for public utility regulation?

In natural monopoly,AC continuously declines due to economies in distribution or in production,which tends to found in industries which face increasing returns to scale.If price were set equal to marginal cost,then:

Unique Creations has a monopoly position in magnometers.If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -4,what is the optimal monopoly price? Hint: P (1 +1/E)= MC.

The profit-maximizing monopolist,faced with a negative-sloping demand curve,will always produce:

Regulatory agencies engage in all of the following activities except _______.

Declining cost industries

A monopolist faces the following demand curve: P = 12 - .3Q with marginal costs of $3.What is the monopolistic PRICE?

In the case of pure monopoly:

A monopoly will always produce less than a purely competitive industry,ceteris paribus.

Microsoft's success over Apple although Apple had a technologically superior product is the result of:

The demand curve facing the firm in ____ is the same as the industry demand curve.

Which of the following relate(s)to gross profit margin?

When the cross elasticity of demand between one product and all other products is low,one is generally referring to a(n)____ situation.

In the electric power industry,residential customers have relatively demand for electricity compared with large industrial users.But contrary to price discrimination,large industrial users generally are charged rates.

Land's End estimates a demand curve for turtleneck sweaters to be: Log Q = .41 + 2.3 Log Y - 3 Log P Where Q is quantity,P is price,and Y is a measure on national income.If the marginal cost of imported turtleneck sweaters is $9.00.(HINT: P (1 +1/E)= MC).The optimal monopoly price would be:

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Oligopoly

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Exam 11: Price and Output Determination: Monopoly and Dominant Firms

The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:

Which of the following is a source of market power for a monopolist?

Of the following,which is not an economic rationale for public utility regulation?

In natural monopoly,AC continuously declines due to economies in distribution or in production,which tends to found in industries which face increasing returns to scale.If price were set equal to marginal cost,then:

Unique Creations has a monopoly position in magnometers.If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -4,what is the optimal monopoly price? Hint: P (1 +1/E)= MC.

The profit-maximizing monopolist,faced with a negative-sloping demand curve,will always produce:

Regulatory agencies engage in all of the following activities except _______.

Declining cost industries

A monopolist faces the following demand curve: P = 12 - .3Q with marginal costs of $3.What is the monopolistic PRICE?

In the case of pure monopoly:

A monopoly will always produce less than a purely competitive industry,ceteris paribus.

​Microsoft's success over Apple although Apple had a technologically superior product is the result of:

The demand curve facing the firm in ____ is the same as the industry demand curve.

​Which of the following relate(s)to gross profit margin?

When the cross elasticity of demand between one product and all other products is low,one is generally referring to a(n)____ situation.

In the electric power industry,residential customers have relatively ____ demand for electricity compared with large industrial users.But contrary to price discrimination,large industrial users generally are charged ____ rates.

Land's End estimates a demand curve for turtleneck sweaters to be: Log Q = .41 + 2.3 Log Y - 3 Log P Where Q is quantity,P is price,and Y is a measure on national income.If the marginal cost of imported turtleneck sweaters is $9.00.(HINT: P (1 +1/E)= MC).The optimal monopoly price would be:

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Oligopoly

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Microsoft's success over Apple although Apple had a technologically superior product is the result of:

Which of the following relate(s)to gross profit margin?

In the electric power industry,residential customers have relatively demand for electricity compared with large industrial users.But contrary to price discrimination,large industrial users generally are charged rates.