Question 1

Exhibit 24-9
  
-Refer to Exhibit 24-9.Assuming that the firm is maximizing profits,the marginal cost of the last unit produced equals

Accepted Answer

A)  $4. 
B)  $40. 
C)  $5. 
D)  $50. 
E)  $6. 
A)  $4. 
B)  $40. 
C)  $5. 
D)  $50. 
E)  $6.

Question 2

X-inefficiency results from

Accepted Answer

A)  rent seeking behavior. 
B)  the lack of competitive pressure. 
C)  third-degree price discrimination. 
D)  first-degree price discrimination. 
E)  none of the above 
A)  rent seeking behavior. 
B)  the lack of competitive pressure. 
C)  third-degree price discrimination. 
D)  first-degree price discrimination. 
E)  none of the above

Question 3

Exhibit 24-7
  
-Refer to Exhibit 24-7.The total revenue collected by a profit-maximizing single-price monopolist is

Accepted Answer

A)  $4,500. 
B)  $2,250. 
C)  $6,750. 
D)  $9,000. 
A)  $4,500. 
B)  $2,250. 
C)  $6,750. 
D)  $9,000.

Question 4

Exhibit 24-10
  
-Refer to Exhibit 24-10.The profit-maximizing single-price monopolist earns total revenue equal to what area?

Accepted Answer

A)  0BCQ1 
B)  0ADQ1 
C)  DCE 
D)  ABCD 
E)  GFC 
A)  0BCQ1 
B)  0ADQ1 
C)  DCE 
D)  ABCD 
E)  GFC

Question 5

A single-price monopolist with the same demand and cost conditions as a perfectly price-discriminating monopolist produces __________ output than the perfectly price-discriminating monopolist and __________ resource-allocative efficient.

Accepted Answer

A)  less; is 
B)  less; is not 
C)  more; is 
D)  more; is not 
A)  less; is 
B)  less; is not 
C)  more; is 
D)  more; is not

Question 6

"X-inefficiency" refers to

Accepted Answer

A)  the fact that a monopolist wastes resources searching for the price at which it will sell its product. 
B)  the fact that monopolists don't have to produce at the lowest possible costs in order to survive. 
C)  the fact that perfectly competitive firms do not earn a profit in the long run and are not a good investment. 
D)  the difference between what consumers would be willing to pay for additional output from a monopolist and the additional cost of providing that output. 
A)  the fact that a monopolist wastes resources searching for the price at which it will sell its product. 
B)  the fact that monopolists don't have to produce at the lowest possible costs in order to survive. 
C)  the fact that perfectly competitive firms do not earn a profit in the long run and are not a good investment. 
D)  the difference between what consumers would be willing to pay for additional output from a monopolist and the additional cost of providing that output.

Question 7

Exhibit 24-7
  
-Refer to Exhibit 24-7.Let D be the demand curve facing a perfectly price-discriminating monopolist.The marginal revenue it receives from selling the 150th unit of good X sold equals

Accepted Answer

A)  $60. 
B)  $45. 
C)  $30. 
D)  $0, since it sells less than 150 units. 
A)  $60. 
B)  $45. 
C)  $30. 
D)  $0, since it sells less than 150 units.

Question 8

At one time,monopolies were granted to people who were in the favor of kings and queens.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is false?

Accepted Answer

A)  The perfectly competitive firm and the perfectly price-discriminating monopolist both exhibit resource-allocative efficiency. 
B)  The perfectly competitive firm, unlike the single-price monopolist, exhibits resource-allocative efficiency. 
C)  The perfectly competitive firm charges the same price for each unit of the good it sells. 
D)  The perfectly price-discriminating monopolist charges the same price for each unit of the good it sells. 
A)  The perfectly competitive firm and the perfectly price-discriminating monopolist both exhibit resource-allocative efficiency. 
B)  The perfectly competitive firm, unlike the single-price monopolist, exhibits resource-allocative efficiency. 
C)  The perfectly competitive firm charges the same price for each unit of the good it sells. 
D)  The perfectly price-discriminating monopolist charges the same price for each unit of the good it sells.

Question 10

Exhibit 24-5
  
-Refer to Exhibit 24-5.What area represents lost revenue when price goes from P2 to P1?

Accepted Answer

A)  CBA 
B)  0P1Cq2 
C)  q2CAq1 
D)  P1P2BC 
A)  CBA 
B)  0P1Cq2 
C)  q2CAq1 
D)  P1P2BC

Question 11

Exhibit 24-5
  
-Refer to Exhibit 24-5.Suppose a single-price monopolist sells its product at the price P2.Profits are equal to

Accepted Answer

A)  P2 times q2. 
B)  (P2 - P1) times q2. 
C)  (P2 - P1) times (q1 - q2). 
D)  This cannot be determined without the average total cost curve. 
A)  P2 times q2. 
B)  (P2 - P1) times q2. 
C)  (P2 - P1) times (q1 - q2). 
D)  This cannot be determined without the average total cost curve.

Question 12

In maximizing profits,a single-price monopolist will charge a price that is

Accepted Answer

A)  less than marginal cost. 
B)  equal to marginal cost. 
C)  greater than marginal cost. 
D)  There is not enough information to answer the question. 
A)  less than marginal cost. 
B)  equal to marginal cost. 
C)  greater than marginal cost. 
D)  There is not enough information to answer the question.

Question 13

The monopoly firm may earn positive economic profits in the long run because

Accepted Answer

A)  it produces a homogeneous product. 
B)  it is the only firm that wishes to produce the product. 
C)  of high barriers to entry. 
D)  a and c 
E)  all of the above 
A)  it produces a homogeneous product. 
B)  it is the only firm that wishes to produce the product. 
C)  of high barriers to entry. 
D)  a and c 
E)  all of the above

Question 14

Which of the following statements is true?

Accepted Answer

A)  For a monopoly firm, its marginal revenue curve and demand curve share two points in common. 
B)  A monopoly firm is a price taker; it takes the price government sets. 
C)  A firm that maximizes revenue automatically maximizes profit. 
D)  Maximizing revenues is the same as maximizing profits only when the firm has no variable costs. 
E)  a and d 
A)  For a monopoly firm, its marginal revenue curve and demand curve share two points in common. 
B)  A monopoly firm is a price taker; it takes the price government sets. 
C)  A firm that maximizes revenue automatically maximizes profit. 
D)  Maximizing revenues is the same as maximizing profits only when the firm has no variable costs. 
E)  a and d

Question 15

Which of the following statements is true?

Accepted Answer

A)  A monopolist can charge whatever price it wants without losing any customers, by virtue of its monopoly position. 
B)  A monopolist can always increase its profits by increasing its price. 
C)  In the monopoly market structure, there are low barriers to entry. 
D)  A monopolist is assured of positive economic profits. 
E)  none of the above 
A)  A monopolist can charge whatever price it wants without losing any customers, by virtue of its monopoly position. 
B)  A monopolist can always increase its profits by increasing its price. 
C)  In the monopoly market structure, there are low barriers to entry. 
D)  A monopolist is assured of positive economic profits. 
E)  none of the above

Question 16

The perfectly competitive firm charges ____________ price for each unit of the good it sells,and the perfectly price-discriminating monopolist charges _________________ price for each unit of the good it sells.

Accepted Answer

A)  the same; the same 
B)  a different; the same 
C)  the same; a different 
D)  a different; a different 
A)  the same; the same 
B)  a different; the same 
C)  the same; a different 
D)  a different; a different

Question 17

If a perfectly competitive firm and a perfectly price-discriminating monopolist face the same demand and cost curves,then

Accepted Answer

A)  the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B)  the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C)  the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D)  both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E)  neither the competitive firm nor the monopolist will attain resource-allocative efficiency. 
A)  the competitive firm will attain resource-allocative efficiency, but the monopolist will not. 
B)  the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product. 
C)  the competitive firm will not attain resource-allocative efficiency, but the monopolist will. 
D)  both the competitive firm and the monopolist will attain resource-allocative efficiency. 
E)  neither the competitive firm nor the monopolist will attain resource-allocative efficiency.

Question 18

Which of the following is not a necessary condition of price discrimination?

Accepted Answer

A)  The seller must be a price searcher. 
B)  The seller must be able to distinguish between customers willing to pay different prices. 
C)  It must cost the seller more to service some customers than others. 
D)  Reselling the product must be extremely costly or must not be possible 
A)  The seller must be a price searcher. 
B)  The seller must be able to distinguish between customers willing to pay different prices. 
C)  It must cost the seller more to service some customers than others. 
D)  Reselling the product must be extremely costly or must not be possible

Question 19

Exhibit 24-6
  
-Refer to Exhibit 24-6.Let C be the demand curve facing a perfectly price-discriminating monopolist and P0 the price it charges for the last unit of X it sells.The marginal cost of the last unit

Accepted Answer

A)  is less than P0. 
B)  equals P0. 
C)  is greater than P0. 
D)  could be any of the above, depending on the shape of the marginal cost curve. 
A)  is less than P0. 
B)  equals P0. 
C)  is greater than P0. 
D)  could be any of the above, depending on the shape of the marginal cost curve.

Question 20

Which of the following is an example of a legal barrier to entry?

Accepted Answer

A)  a public franchise 
B)  a patent 
C)  exclusive ownership of a scarce resource 
D)  a and b 
E)  a, b, and c 
A)  a public franchise 
B)  a patent 
C)  exclusive ownership of a scarce resource 
D)  a and b 
E)  a, b, and c

Exam 24: Monopoly

Exhibit 24-9 -Refer to Exhibit 24-9.Assuming that the firm is maximizing profits,the marginal cost of the last unit produced equals

X-inefficiency results from

Exhibit 24-7 -Refer to Exhibit 24-7.The total revenue collected by a profit-maximizing single-price monopolist is

Exhibit 24-10 -Refer to Exhibit 24-10.The profit-maximizing single-price monopolist earns total revenue equal to what area?

A single-price monopolist with the same demand and cost conditions as a perfectly price-discriminating monopolist produces __________ output than the perfectly price-discriminating monopolist and __________ resource-allocative efficient.

"X-inefficiency" refers to

Exhibit 24-7 -Refer to Exhibit 24-7.Let D be the demand curve facing a perfectly price-discriminating monopolist.The marginal revenue it receives from selling the 150th unit of good X sold equals

At one time,monopolies were granted to people who were in the favor of kings and queens.

Which of the following statements is false?

Exhibit 24-5 -Refer to Exhibit 24-5.What area represents lost revenue when price goes from P2 to P1?

Exhibit 24-5 -Refer to Exhibit 24-5.Suppose a single-price monopolist sells its product at the price P2.Profits are equal to

In maximizing profits,a single-price monopolist will charge a price that is

The monopoly firm may earn positive economic profits in the long run because

Which of the following statements is true?

Which of the following statements is true?

The perfectly competitive firm charges ____________ price for each unit of the good it sells,and the perfectly price-discriminating monopolist charges _________________ price for each unit of the good it sells.

If a perfectly competitive firm and a perfectly price-discriminating monopolist face the same demand and cost curves,then

Which of the following is not a necessary condition of price discrimination?

Exhibit 24-6 -Refer to Exhibit 24-6.Let C be the demand curve facing a perfectly price-discriminating monopolist and P0 the price it charges for the last unit of X it sells.The marginal cost of the last unit

Which of the following is an example of a legal barrier to entry?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

A single-price monopolist with the same demand and cost conditions as a perfectly price-discriminating monopolist produces output than the perfectly price-discriminating monopolist and resource-allocative efficient.

Exhibit 24-5 -Refer to Exhibit 24-5.What area represents lost revenue when price goes from P₂ to P₁?

Exhibit 24-5 -Refer to Exhibit 24-5.Suppose a single-price monopolist sells its product at the price P₂.Profits are equal to

The perfectly competitive firm charges price for each unit of the good it sells,and the perfectly price-discriminating monopolist charges _____ price for each unit of the good it sells.

Exhibit 24-6 -Refer to Exhibit 24-6.Let C be the demand curve facing a perfectly price-discriminating monopolist and P₀ the price it charges for the last unit of X it sells.The marginal cost of the last unit