Question 1

Buying low and selling high is often referred to as

Accepted Answer

A)  price discrimination. 
B)  rent-seeking. 
C)  arbitrage. 
D)  scarcity. 
E)  capitalization. 
A)  price discrimination. 
B)  rent-seeking. 
C)  arbitrage. 
D)  scarcity. 
E)  capitalization.

Question 2

Exhibit 24-10
  
-Refer to Exhibit 24-10.The deadweight loss triangle is what area?

Accepted Answer

A)  GFC 
B)  HGD 
C)  GCD 
D)  DCE 
E)  BFG 
A)  GFC 
B)  HGD 
C)  GCD 
D)  DCE 
E)  BFG

Question 3

Exhibit 24-2
  
-Refer to Exhibit 24-2.Total revenue at the profit-maximizing quantity of output is the

Accepted Answer

A)  area 0P0AQ0. 
B)  area 0P3FQ0. 
C)  distance from Q0 to A. 
D)  distance from Q0 to D. 
E)  none of the above 
A)  area 0P0AQ0. 
B)  area 0P3FQ0. 
C)  distance from Q0 to A. 
D)  distance from Q0 to D. 
E)  none of the above

Question 4

Which of the following statements is false?

Accepted Answer

A)  A perfectly price-discriminating monopolist does not lower price on all previous units in order to sell an additional unit of its product. 
B)  Second-degree price discrimination is when the seller charges a uniform price per unit for one specific quantity, a lower price of an additional quantity, and so on. 
C)  Charging senior citizens less for medicine is an act of third-degree price discrimination. 
D)  Charging women less for a car wash is an act of second-degree price discrimination. 
E)  A price taker cannot practice price discrimination. 
A)  A perfectly price-discriminating monopolist does not lower price on all previous units in order to sell an additional unit of its product. 
B)  Second-degree price discrimination is when the seller charges a uniform price per unit for one specific quantity, a lower price of an additional quantity, and so on. 
C)  Charging senior citizens less for medicine is an act of third-degree price discrimination. 
D)  Charging women less for a car wash is an act of second-degree price discrimination. 
E)  A price taker cannot practice price discrimination.

Question 5

Which of the following is the best example of a barrier to entry into a monopolistic industry?

Accepted Answer

A)  diminishing returns 
B)  comparative advantage 
C)  high price elasticity of demand 
D)  a public franchise 
A)  diminishing returns 
B)  comparative advantage 
C)  high price elasticity of demand 
D)  a public franchise

Question 6

The ________________________ Acts,passed by the British Parliament in the 1760s,imposed taxes on a variety of products imported into the American colonies.

Accepted Answer

A)  Smoot-Hawley Tariff 
B)  Tea 
C)  Townsend 
D)  British East India 
A)  Smoot-Hawley Tariff 
B)  Tea 
C)  Townsend 
D)  British East India

Question 7

Second-degree price discrimination is discrimination among

Accepted Answer

A)  units. 
B)  quantities. 
C)  buyers. 
D)  prices. 
A)  units. 
B)  quantities. 
C)  buyers. 
D)  prices.

Question 8

Which of the following statements is false?

Accepted Answer

A)  A price searcher must lower price to sell an additional unit of its product. 
B)  For a price searcher, price equals marginal revenue for all units except the first. 
C)  For a price searcher, price is greater than marginal revenue for all units except the first. 
D)  A price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost. 
A)  A price searcher must lower price to sell an additional unit of its product. 
B)  For a price searcher, price equals marginal revenue for all units except the first. 
C)  For a price searcher, price is greater than marginal revenue for all units except the first. 
D)  A price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost.

Question 9

The single-price monopolist produces the quantity of output at which marginal cost equals marginal revenue and charges a price that is greater than marginal revenue.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 24-4
  
-Refer to Exhibit 24-4.The profit-maximizing single-price monopolist will produce

Accepted Answer

A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units. 
A)  3 units. 
B)  4 units. 
C)  5 units. 
D)  6 units.

Question 11

A seller that has the ability (to some degree)to control the price of the product it sells is called a price

Accepted Answer

A)  taker. 
B)  searcher. 
C)  breaker. 
D)  twister. 
A)  taker. 
B)  searcher. 
C)  breaker. 
D)  twister.

Question 12

Which of the following is the best example of a monopoly?

Accepted Answer

A)  a local public utility 
B)  a fast-food restaurant 
C)  a department store 
D)  a wheat farmer 
A)  a local public utility 
B)  a fast-food restaurant 
C)  a department store 
D)  a wheat farmer

Question 13

Exhibit 24-9
  
-Refer to Exhibit 24-9.The reason we know the firm represented in the exhibit is a price searcher and not a price taker is because

Accepted Answer

A)  its total costs rise as more output is produced and sold. 
B)  it has to lower price to sell additional units of its good. 
C)  marginal revenue is not constant for all given levels of output. 
D)  at some levels of output it earns negative profit. 
E)  b and c 
A)  its total costs rise as more output is produced and sold. 
B)  it has to lower price to sell additional units of its good. 
C)  marginal revenue is not constant for all given levels of output. 
D)  at some levels of output it earns negative profit. 
E)  b and c

Question 14

Which of the following statements is false?

Accepted Answer

A)  Congress has granted the U.S. Postal Service the exclusive franchise to deliver first-class mail. 
B)  A natural monopoly exists where economies of scale are so pronounced in an industry that only one firm can survive. 
C)  In the United States patents are granted for a period of 10 years. 
D)  A public franchise is a right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing the same. 
A)  Congress has granted the U.S. Postal Service the exclusive franchise to deliver first-class mail. 
B)  A natural monopoly exists where economies of scale are so pronounced in an industry that only one firm can survive. 
C)  In the United States patents are granted for a period of 10 years. 
D)  A public franchise is a right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing the same.

Question 15

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

Accepted Answer

A)  ABGH 
B)  HGCD 
C)  DCE 
D)  ABCD 
E)  GFC 
A)  ABGH 
B)  HGCD 
C)  DCE 
D)  ABCD 
E)  GFC

Question 16

Exhibit 24-5
  
-Which of the following is true of price and marginal revenue for the first unit of output sold by a monopolist?

Accepted Answer

A)  Price is greater than marginal revenue. 
B)  Price is less than marginal revenue. 
C)  Price is equal to marginal revenue. 
D)  This answer could be a or b, depending on whether it is a single-price or a price discriminating monopolist. 
A)  Price is greater than marginal revenue. 
B)  Price is less than marginal revenue. 
C)  Price is equal to marginal revenue. 
D)  This answer could be a or b, depending on whether it is a single-price or a price discriminating monopolist.

Question 17

A single-price monopolist

Accepted Answer

A)  must lower price on all previous units to sell an additional unit of output. 
B)  is a price taker. 
C)  finds that its marginal revenue and price are the same for the first unit of the good it sells. 
D)  necessarily faces a perfectly inelastic demand curve. 
E)  a and c 
A)  must lower price on all previous units to sell an additional unit of output. 
B)  is a price taker. 
C)  finds that its marginal revenue and price are the same for the first unit of the good it sells. 
D)  necessarily faces a perfectly inelastic demand curve. 
E)  a and c

Question 18

If a price-discriminating monopoly charges a lower price to individuals in City X,it is likely that the firm

Accepted Answer

A)  believes that the demand of individuals in City X is relatively inelastic. 
B)  believes that the demand of individuals in City X is relatively elastic. 
C)  wants to shift the demand of individuals in City X. 
D)  cares about the well-being of the individuals in City X. 
A)  believes that the demand of individuals in City X is relatively inelastic. 
B)  believes that the demand of individuals in City X is relatively elastic. 
C)  wants to shift the demand of individuals in City X. 
D)  cares about the well-being of the individuals in City X.

Question 19

Exhibit 24-1
  
-Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what do profits equal at the profit maximizing level of output?

Accepted Answer

A)  area 0P1BQ1 
B)  area BCA 
C)  area P1P2CB 
D)  area P2CAP1 
E)  none of the above 
A)  area 0P1BQ1 
B)  area BCA 
C)  area P1P2CB 
D)  area P2CAP1 
E)  none of the above

Question 20

One of the conditions necessary for price discrimination is that the seller be a price searcher.

Accepted Answer

A) True 
 B)False

Exam 24: Monopoly

Buying low and selling high is often referred to as

Exhibit 24-10 -Refer to Exhibit 24-10.The deadweight loss triangle is what area?

Exhibit 24-2 -Refer to Exhibit 24-2.Total revenue at the profit-maximizing quantity of output is the

Which of the following statements is false?

Which of the following is the best example of a barrier to entry into a monopolistic industry?

The ________________________ Acts,passed by the British Parliament in the 1760s,imposed taxes on a variety of products imported into the American colonies.

Second-degree price discrimination is discrimination among

Which of the following statements is false?

The single-price monopolist produces the quantity of output at which marginal cost equals marginal revenue and charges a price that is greater than marginal revenue.

Exhibit 24-4 -Refer to Exhibit 24-4.The profit-maximizing single-price monopolist will produce

A seller that has the ability (to some degree)to control the price of the product it sells is called a price

Which of the following is the best example of a monopoly?

Exhibit 24-9 -Refer to Exhibit 24-9.The reason we know the firm represented in the exhibit is a price searcher and not a price taker is because

Which of the following statements is false?

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

Exhibit 24-5 -Which of the following is true of price and marginal revenue for the first unit of output sold by a monopolist?

A single-price monopolist

If a price-discriminating monopoly charges a lower price to individuals in City X,it is likely that the firm

Exhibit 24-1 -Refer to Exhibit 24-1.If the product is produced under single-price monopoly,what do profits equal at the profit maximizing level of output?

One of the conditions necessary for price discrimination is that the seller be a price searcher.

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

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