Question 1

The practice of selling the same product at different prices to different consumers,without corresponding differences in costs,is:

Accepted Answer

A) price discrimination. 
B) privatizing. 
C) monopolizing. 
D) output prioritizing. 
A) price discrimination. 
B) privatizing. 
C) monopolizing. 
D) output prioritizing.

Question 2

A natural monopoly exists when:

Accepted Answer

A) a few firms collude to make one large firm. 
B) economies of scale provide large cost advantages to having one firm produce the industry's output. 
C) firms naturally maximize profit regardless of market structure. 
D) firms enter the industry as a result of profit incentives. 
A) a few firms collude to make one large firm. 
B) economies of scale provide large cost advantages to having one firm produce the industry's output. 
C) firms naturally maximize profit regardless of market structure. 
D) firms enter the industry as a result of profit incentives.

Question 3

Which statement about the differences between monopoly and perfect competition is INCORRECT?

Accepted Answer

A) A monopolist has market power,while a perfect competitor does not. 
B) Unlike a perfectly competitive firm,a monopoly can make positive economic profits in the long run. 
C) A monopoly will charge a higher price and produce a smaller quantity than will a competitive market with the same demand and cost structure. 
D) Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than does a comparable perfectly competitive industry. 
A) A monopolist has market power,while a perfect competitor does not. 
B) Unlike a perfectly competitive firm,a monopoly can make positive economic profits in the long run. 
C) A monopoly will charge a higher price and produce a smaller quantity than will a competitive market with the same demand and cost structure. 
D) Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than does a comparable perfectly competitive industry.

Question 4

To increase profits with price discrimination,different groups of an oligopolist's customers must respond differently to prices of the good.

Accepted Answer

A) True 
 B)False

Question 5

_____ firms have the MOST market power.

Accepted Answer

A) Monopoly 
B) Duopoly 
C) Oligopoly 
D) Monopolistic competition 
A) Monopoly 
B) Duopoly 
C) Oligopoly 
D) Monopolistic competition

Question 6

The pricing in monopoly prevents some mutually beneficial trades.The value of these unrealized mutually beneficial trades is called:

Accepted Answer

A) sunk costs. 
B) opportunity costs. 
C) deadweight loss. 
D) inequity. 
A) sunk costs. 
B) opportunity costs. 
C) deadweight loss. 
D) inequity.

Question 7

Use the following to answer question:  
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The maximum profit Lenoia can make is:

Accepted Answer

A) $225. 
B) $425. 
C) $400. 
D) $1,800. 
A) $225. 
B) $425. 
C) $400. 
D) $1,800.

Question 8

Use the following to answer question:  
-(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny increases the quantity sold from 5 cups to 6,his marginal revenue will be:

Accepted Answer

A) $4. 
B) $24. 
C) -$1. 
D) $5. 
A) $4. 
B) $24. 
C) -$1. 
D) $5.

Question 9

Microsoft and its operating system are often cited as an example of a company that grew into a monopolist through:

Accepted Answer

A) ownership of a resource. 
B) patents. 
C) network externalities. 
D) large economies of scale. 
A) ownership of a resource. 
B) patents. 
C) network externalities. 
D) large economies of scale.

Question 10

A firm that is a natural monopoly will:

Accepted Answer

A) attempt to break even,not profit-maximize. 
B) maximize profit by producing where MR = MC. 
C) face increasing costs of production. 
D) face greater market instability than does a regular monopoly. 
A) attempt to break even,not profit-maximize. 
B) maximize profit by producing where MR = MC. 
C) face increasing costs of production. 
D) face greater market instability than does a regular monopoly.

Question 11

When price discrimination occurs,the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost.

Accepted Answer

A) the same as;marginal 
B) greater than;marginal 
C) less than;marginal 
D) the same as;average total 
A) the same as;marginal 
B) greater than;marginal 
C) less than;marginal 
D) the same as;average total

Question 12

To practice price discrimination,the producer must have some control over the price of the product.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer question:
Figure: A Rock Climbing Shoe Monopoly  
-(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will sell _____ pairs of shoes at _____ per pair.

Accepted Answer

A) Q2;P1 
B) Q2;P5 
C) Q3;P2 
D) Q4;P3 
A) Q2;P1 
B) Q2;P5 
C) Q3;P2 
D) Q4;P3

Question 14

Of the four market structures,the only one that is characterized by product differentiation is oligopoly.

Accepted Answer

A) True 
 B)False

Question 15

The MAIN reason a monopoly engages in price discrimination is that:

Accepted Answer

A) it wants to discriminate against a particular ethnic group. 
B) doing so increases its profits. 
C) it wants to discourage potential competitors. 
D) by charging a lower price to some people,it may succeed in discouraging efforts to regulate it. 
A) it wants to discriminate against a particular ethnic group. 
B) doing so increases its profits. 
C) it wants to discourage potential competitors. 
D) by charging a lower price to some people,it may succeed in discouraging efforts to regulate it.

Question 16

Suppose that the Yankee Cap Company is a profit-maximizing firm with a monopoly in the production of baseball caps.The firm sells its baseball caps for $25 each.From this information,we can assume that the Yankee Cap Company is producing a level of output at which:

Accepted Answer

A) marginal revenue equals $25. 
B) marginal cost is less than $25. 
C) average total cost equals $25. 
D) average total cost is greater than $25. 
A) marginal revenue equals $25. 
B) marginal cost is less than $25. 
C) average total cost equals $25. 
D) average total cost is greater than $25.

Question 17

Use the following to answer question:
Figure: PPV  
-(Figure: PPV)Use Figure: PPV.The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV.Assume that the marginal cost and average cost are a constant $40.If the cable company practices perfect price discrimination,consumer surplus will be:

Accepted Answer

A) $180. 
B) $100. 
C) $40. 
D) $0. 
A) $180. 
B) $100. 
C) $40. 
D) $0.

Question 18

To practice effective price discrimination,a monopolist must be able to:

Accepted Answer

A) estimate its own production and cost functions. 
B) avoid charging too low a price. 
C) prevent the resale of goods among groups of buyers. 
D) calculate the income level of each buyer in the market. 
A) estimate its own production and cost functions. 
B) avoid charging too low a price. 
C) prevent the resale of goods among groups of buyers. 
D) calculate the income level of each buyer in the market.

Question 19

Because business travelers' demand for airline flights is relatively _____,large increases in price will result in relatively _____ decreases in additional business travelers.

Accepted Answer

A) price-inelastic;small 
B) price-elastic;large 
C) price-inelastic;large 
D) price-elastic;small 
A) price-inelastic;small 
B) price-elastic;large 
C) price-inelastic;large 
D) price-elastic;small

Question 20

In contrast with perfect competition,a monopolist:

Accepted Answer

A) produces more at a lower price. 
B) produces where MR > MC,and a perfectly competitively firm produces where P = MC. 
C) may have economic profits in the long run. 
D) earns zero economic profits in the long run. 
A) produces more at a lower price. 
B) produces where MR > MC,and a perfectly competitively firm produces where P = MC. 
C) may have economic profits in the long run. 
D) earns zero economic profits in the long run.

Exam 13: Monopoly

The practice of selling the same product at different prices to different consumers,without corresponding differences in costs,is:

A natural monopoly exists when:

Which statement about the differences between monopoly and perfect competition is INCORRECT?

To increase profits with price discrimination,different groups of an oligopolist's customers must respond differently to prices of the good.

_____ firms have the MOST market power.

The pricing in monopoly prevents some mutually beneficial trades.The value of these unrealized mutually beneficial trades is called:

Use the following to answer question: -(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The maximum profit Lenoia can make is:

Use the following to answer question: -(Table: Demand for Lenny's Coffee)Use Table: Demand for Lenny's Coffee.Lenny's Café is the only source of coffee for hundreds of miles in any direction.If Lenny increases the quantity sold from 5 cups to 6,his marginal revenue will be:

Microsoft and its operating system are often cited as an example of a company that grew into a monopolist through:

A firm that is a natural monopoly will:

When price discrimination occurs,the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost.

To practice price discrimination,the producer must have some control over the price of the product.

Use the following to answer question: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will sell _____ pairs of shoes at _____ per pair.

Of the four market structures,the only one that is characterized by product differentiation is oligopoly.

The MAIN reason a monopoly engages in price discrimination is that:

Suppose that the Yankee Cap Company is a profit-maximizing firm with a monopoly in the production of baseball caps.The firm sells its baseball caps for $25 each.From this information,we can assume that the Yankee Cap Company is producing a level of output at which:

To practice effective price discrimination,a monopolist must be able to:

Because business travelers' demand for airline flights is relatively _____,large increases in price will result in relatively _____ decreases in additional business travelers.

In contrast with perfect competition,a monopolist:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

When price discrimination occurs,the producer's profit is _ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _ cost.

Use the following to answer question: Figure: A Rock Climbing Shoe Monopoly -(Figure: A Rock Climbing Shoe Monopoly)Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will sell _ pairs of shoes at _ per pair.

Because business travelers' demand for airline flights is relatively _,large increases in price will result in relatively _ decreases in additional business travelers.