Deck 9: B: Monopoly

Question 1

After a corporate merger, Rebecca Jalamid became the CEO of a monopoly firm. She was surprised to learn that one benefit of being a monopoly was that her company

A) could charge as high a price as desired
B) was in a good position to capture the fruits of any innovation
C) received increased scrutiny from government regulators
D) started to attract potential competitors motivated to get a share of the economic profits of Rebecca's company
E) contributed to the deadweight loss in the economy

Answer 1

B

Question 2

Cell phone companies offer pricing plan alternatives in order to convert some

A) consumer surplus into profit
B) producer surplus into profit
C) economic profit into normal profit
D) profit into consumer surplus
E) consumer surplus into deadweight loss

Answer 2

A

Question 3

Consumer concern about "blood diamonds," a diamond mined in a war zone and sold to finance an insurgency, invading army's war efforts, or a warlord's activity, may have caused a drop in De Beers sales.

Answer 3

True

Question 4

Because some monopolies could still earn an economic profit even if the firm is inefficient, corporate executives might waste resources by indulging in

A) long lunches
B) corporate jets
C) plush offices
D) None of the answers is correct.
E) All of the answers are correct.

Question 5

NARRBEGIN: Exhibit 9-15
Exhibit 9-18

In Exhibit 9-18, a non-discriminating monopolist will charge what price?

A) P₁
B) P₂
C) P₃
D) either P₁ or P₂
E) unable to tell from the information given

Question 6

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

A) IBM charges business users of its laser printer more than home users
B) Intel offered faster and slower versions of a computer chip
C) An amusement park charges the same admission fee to local residents and out-of-towners
D) Adobe stripped some features from Photoshop to offer a cheaper version
E) Holders of Nevada driver's licenses pay less to ride the Las Vegas monorail

Question 7

NARRBEGIN: Exhibit 9-15
Exhibit 9-18

In Exhibit 9-18, a price discriminating monopolist will charge what price?

A) P₁ in segments A and B
B) P₂ in segments A and B
C) P₃ in segments A and B
D) P₁ in segment A and P2 in segment B
E) unable to be determined

Question 8

Which of the following is not an example of De Beers Diamonds trying to increase consumer demand?

A) sending the marketing message that a diamond lasts forever
B) ads that illustrate that a diamond should remain in the family and not be sold
C) informing potential customers about how diamonds lose monetary value over time
D) introducing the idea of the diamond engagement ring
E) the "spirit ring" as a sign of independence

Question 9

Which of the following is an example of a local monopoly as compared to a national or international monopoly?

A) a restaurant at a rural crossroads
B) Alcoa during the 19th century
C) De Beers Consolidated Mines
D) AT&T
E) U.S. Postal Service

Question 10

Adam Matsumi is an attorney who can charge legal fees above the competitive level because entry of new competitors is made more difficult by the need to hold a(n)

A) state license
B) patent
C) essential resource
D) economy of scale
E) copyright

Question 11

Business-class airline tickets cost much more than coach-class tickets because, compared to householders, businesspeople's demand for travel is

A) equally elastic
B) unitary elastic
C) more elastic
D) less elastic
E) not a factor in the cost of airline tickets

Question 12

NARRBEGIN: Exhibit 9-15
Exhibit 9-18

In Exhibit 9-18, how does market segment A differ from market segment B?

A) demand is relatively more elastic in segment A than in segment B
B) demand is relatively more income elastic in segment A than in segment B
C) demand is relatively more income elastic in segment B than in segment A
D) there are more consumers in segment A than in segment B
E) demand is relatively more inelastic in segment A than in segment B

Question 13

United States Postal Service has successfully leveraged its monopoly power through

A) online postage purchases
B) delivery of Netflix DVDs
C) an online bill-paying service
D) a secure online document transmission service
E) increasing third-class mail rates