Question 1

Because the monopolist is the sole producer of a good,it can never incur a loss.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Figure 10.2.The marginal revenue of the eighth pound of burritos is:

Accepted Answer

A) $5. 
B) $3. 
C) $6. 
D) $24. 
A) $5. 
B) $3. 
C) $6. 
D) $24.

Question 3

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

Accepted Answer

A) True 
 B)False

Question 4

Patent protection is always efficient from society's perspective.

Accepted Answer

A) True 
 B)False

Question 5

A monopolist is a price maker,but is not entirely free to set the price of its product.Explain.

Accepted Answer

A monopolist faces a downward-

Question 6

-Refer to Figure 10.6.The profit-maximizing price:

Accepted Answer

A) is $2. 
B) is $4. 
C) is $5. 
D) is approximately $4.50. 
A) is $2. 
B) is $4. 
C) is $5. 
D) is approximately $4.50.

Question 7

Booksellers are able to charge ________ prices to consumers who buy hardback books because their demand for the book is more ________ than consumers who wait until the paperback comes out.

Accepted Answer

A) lower;inelastic 
B) lower;elastic 
C) higher;elastic 
D) higher;inelastic 
A) lower;inelastic 
B) lower;elastic 
C) higher;elastic 
D) higher;inelastic

Question 8

If we switch from a perfectly competitive market to a monopoly,consumers will be better off.

Accepted Answer

A) True 
 B)False

Question 9

It is possible for society to gain by rewarding 20-year patents to companies.

Accepted Answer

A) True 
 B)False

Question 10

The process of using public policy to gain economic profit is:

Accepted Answer

A) deadweight loss. 
B) never successful. 
C) rent seeking. 
D) illegal. 
A) deadweight loss. 
B) never successful. 
C) rent seeking. 
D) illegal.

Question 11

-Refer to Figure 10.8.If the paper books industry is competitive,the market price will be ________ and the market output will be ________ units.

Accepted Answer

A) $25;600 
B) $10;400 
C) $20;800 
D) $15;600 
A) $25;600 
B) $10;400 
C) $20;800 
D) $15;600

Question 12

Which of the following is TRUE about price discrimination?

Accepted Answer

A) It can only be used by monopolistic firms. 
B) It is only possible if the good cannot be resold. 
C) It maximizes consumer welfare since each consumer pays only what he is willing to pay. 
D) All of the above are true. 
A) It can only be used by monopolistic firms. 
B) It is only possible if the good cannot be resold. 
C) It maximizes consumer welfare since each consumer pays only what he is willing to pay. 
D) All of the above are true.

Question 13

The benefits of patents encourage firms to undertake expensive research and development.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) An individual finds his favorite brand of cookies on sale at the local grocery store. 
B) A computer manufacturer offers a mail-in rebate for its product. 
C) A local movie theater offers college students a discount on the price of admission. 
D) An airline passenger who is staying on his trip over a Saturday night will pay a lower fare than a passenger traveling only during the workweek. 
A) An individual finds his favorite brand of cookies on sale at the local grocery store. 
B) A computer manufacturer offers a mail-in rebate for its product. 
C) A local movie theater offers college students a discount on the price of admission. 
D) An airline passenger who is staying on his trip over a Saturday night will pay a lower fare than a passenger traveling only during the workweek.

Question 15

Assume that Lorex is the only pharmaceutical company that has a patent in producing Lipitor for cholesterol.Lorex can make a profit by selling Lipitor:

Accepted Answer

A) in the short run but not in the long run because new firms will enter the industry in the long run. 
B) only in the long run because government regulations prevent monopolists from earning profits in the short run. 
C) in the long run but not the short run because the monopolist will face competition in the short run. 
D) in the long run because entry into the industry by new firms is blocked until the patent expires. 
A) in the short run but not in the long run because new firms will enter the industry in the long run. 
B) only in the long run because government regulations prevent monopolists from earning profits in the short run. 
C) in the long run but not the short run because the monopolist will face competition in the short run. 
D) in the long run because entry into the industry by new firms is blocked until the patent expires.

Question 16

Table 10.2
-ABC,Incorporated has a local monopoly in the sale of automatic paper towel dispensers.Table 10.2 shows the demand for these towel dispensers at various prices.The total cost of production of the various levels of output is also shown.Calculate total revenue and profit for the firm.What level of output maximizes profit? What price should the firm charge?

Accepted Answer

The answer of   
   Table 10.2
-ABC,Incorporated...

Question 17

Price discrimination in practice is illegal.

Accepted Answer

A) True 
 B)False

Question 18

Comment on the following statement: "For a nondiscriminating monopolist,marginal revenue is always equal to price."

Accepted Answer

The statement is false.Marginal revenue

Question 19

-Refer to Figure 10.3.The profit-maximizing level of output for this monopolist is ________ units of output.

Accepted Answer

A) 20 
B) 22 
C) 24 
D) 26 
A) 20 
B) 22 
C) 24 
D) 26

Question 20

Price discrimination is best described as a firm charging different prices from other firms selling the same product or service.

Accepted Answer

A) True 
 B)False

Because the monopolist is the sole producer of a good,it can never incur a loss.

-Refer to Figure 10.2.The marginal revenue of the eighth pound of burritos is:

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

Patent protection is always efficient from society's perspective.

A monopolist is a price maker,but is not entirely free to set the price of its product.Explain.

-Refer to Figure 10.6.The profit-maximizing price:

Booksellers are able to charge prices to consumers who buy hardback books because their demand for the book is more than consumers who wait until the paperback comes out.

If we switch from a perfectly competitive market to a monopoly,consumers will be better off.

It is possible for society to gain by rewarding 20-year patents to companies.

The process of using public policy to gain economic profit is:

-Refer to Figure 10.8.If the paper books industry is competitive,the market price will be and the market output will be units.

Which of the following is TRUE about price discrimination?

The benefits of patents encourage firms to undertake expensive research and development.

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

Assume that Lorex is the only pharmaceutical company that has a patent in producing Lipitor for cholesterol.Lorex can make a profit by selling Lipitor:

Price discrimination in practice is illegal.

Comment on the following statement: "For a nondiscriminating monopolist,marginal revenue is always equal to price."

-Refer to Figure 10.3.The profit-maximizing level of output for this monopolist is ________ units of output.

Price discrimination is best described as a firm charging different prices from other firms selling the same product or service.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 10: Monopoly and Price Discrimination

Because the monopolist is the sole producer of a good,it can never incur a loss.

-Refer to Figure 10.2.The marginal revenue of the eighth pound of burritos is:

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

Patent protection is always efficient from society's perspective.

A monopolist is a price maker,but is not entirely free to set the price of its product.Explain.

-Refer to Figure 10.6.The profit-maximizing price:

Booksellers are able to charge ________ prices to consumers who buy hardback books because their demand for the book is more ________ than consumers who wait until the paperback comes out.

If we switch from a perfectly competitive market to a monopoly,consumers will be better off.

It is possible for society to gain by rewarding 20-year patents to companies.

The process of using public policy to gain economic profit is:

-Refer to Figure 10.8.If the paper books industry is competitive,the market price will be ________ and the market output will be ________ units.

Which of the following is TRUE about price discrimination?

The benefits of patents encourage firms to undertake expensive research and development.

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

Assume that Lorex is the only pharmaceutical company that has a patent in producing Lipitor for cholesterol.Lorex can make a profit by selling Lipitor:

Price discrimination in practice is illegal.

Comment on the following statement: "For a nondiscriminating monopolist,marginal revenue is always equal to price."

-Refer to Figure 10.3.The profit-maximizing level of output for this monopolist is ________ units of output.

Price discrimination is best described as a firm charging different prices from other firms selling the same product or service.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Booksellers are able to charge prices to consumers who buy hardback books because their demand for the book is more than consumers who wait until the paperback comes out.

-Refer to Figure 10.8.If the paper books industry is competitive,the market price will be and the market output will be units.