Question 1

A monopolist under marginal cost pricing has an incentive to

Accepted Answer

A) inflate costs. 
B) produce more than the efficient quantity of output. 
C) produce less than the efficient quantity of output. 
D) maximize consumer surplus. 
E) produce the efficient quantity of output. 
A) inflate costs. 
B) produce more than the efficient quantity of output. 
C) produce less than the efficient quantity of output. 
D) maximize consumer surplus. 
E) produce the efficient quantity of output.

Question 2

If the demand for its good or service is inelastic,a monopoly's

Accepted Answer

A) total revenue increases when the firm lowers its price. 
B) total revenue is unchanged when the firm lowers its price. 
C) marginal revenue is negative. 
D) marginal revenue is equal to zero. 
E) marginal revenue is positive. 
A) total revenue increases when the firm lowers its price. 
B) total revenue is unchanged when the firm lowers its price. 
C) marginal revenue is negative. 
D) marginal revenue is equal to zero. 
E) marginal revenue is positive.

Question 3

An exclusive right granted to a firm to supply a good or service is

Accepted Answer

A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale. 
A) a licence. 
B) a patent. 
C) a public franchise. 
D) the essential characteristic of natural monopoly. 
E) an economy of scale.

Question 4

To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

Accepted Answer

A) $48 
B) $6 
C) $1 
D) -$1 
E) None of the above. 
A) $48 
B) $6 
C) $1 
D) -$1 
E) None of the above.

Question 5

Use the figure below to answer the following questions.
   
Figure 13.4.6
-Prime Pharmaceuticals has developed a new asthma medicine,for which it has a patent.An inhaler can be produced at a constant marginal cost of $2 per inhaler.The demand curve,marginal revenue curve,and marginal cost curve for this new asthma inhaler are shown in Figure 13.4.6.The patent gives Prime Pharmaceuticals a monopoly for its new inhaler.If Prime Pharmaceuticals can perfectly price discriminate,then it

Accepted Answer

A) sells 16 million inhalers. 
B) charges a price of $2 for each inhaler it sells. 
C) sells inhalers for $6 each. 
D) makes zero economic profit. 
E) Both A and B are correct. 
A) sells 16 million inhalers. 
B) charges a price of $2 for each inhaler it sells. 
C) sells inhalers for $6 each. 
D) makes zero economic profit. 
E) Both A and B are correct.

Question 6

Use the figure below to answer the following question.
   
Figure 13.2.4
-Refer to Figure 13.2.4.Grannie's is the only cake bakery on Coastal Island.The graph shows Grannie's demand curve,marginal revenue curve,and marginal cost curve.Grannie's profit-maximizing price is ________ a cake and its profit-maximizing output is ________ cakes a week.

Accepted Answer

A) $28;12 
B) $16;12 
C) $36;2 
D) $16;24 
E) $24;16 
A) $28;12 
B) $16;12 
C) $36;2 
D) $16;24 
E) $24;16

Question 7

To prevent monopoly from arising,there must be

Accepted Answer

A) a single supplier of a good in the market. 
B) no close substitutes for the good. 
C) barriers preventing entry of other firms. 
D) freedom of entry into the market. 
E) economies of scale. 
A) a single supplier of a good in the market. 
B) no close substitutes for the good. 
C) barriers preventing entry of other firms. 
D) freedom of entry into the market. 
E) economies of scale.

Question 8

If a firm practises perfect price discrimination,

Accepted Answer

A) its marginal cost curve is horizontal. 
B) it will maximize total revenue. 
C) it does not produce the quantity at which marginal revenue equals marginal cost. 
D) it will produce the quantity at which the marginal revenue curve intersects the average total cost curve. 
E) it will produce the quantity at which the marginal cost curve intersects the demand curve. 
A) its marginal cost curve is horizontal. 
B) it will maximize total revenue. 
C) it does not produce the quantity at which marginal revenue equals marginal cost. 
D) it will produce the quantity at which the marginal revenue curve intersects the average total cost curve. 
E) it will produce the quantity at which the marginal cost curve intersects the demand curve.

Question 9

Use the figure below to answer the following questions.
   
Figure 13.3.4
-Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Accepted Answer

A) Q1 and price is P1. 
B) Q1 and price is P3. 
C) Q2 and price is P2. 
D) Q3 and price is P0. 
E) Q4 and price is 0. 
A) Q1 and price is P1. 
B) Q1 and price is P3. 
C) Q2 and price is P2. 
D) Q3 and price is P0. 
E) Q4 and price is 0.

Question 10

Use the figure below to answer the following questions.
   
Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3.What is the difference in producer surplus between a single-price monopoly and a perfectly competitive market?

Accepted Answer

A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD 
A) EADH 
B) EABH 
C) ABD 
D) ACD 
E) EABH - BCD

Question 11

A single-price monopolist's demand curve

Accepted Answer

A) is its marginal revenue curve. 
B) shows that demand for the good is perfectly elastic. 
C) is the same as the market demand curve. 
D) shows that demand for the good is perfectly inelastic. 
E) is horizontal. 
A) is its marginal revenue curve. 
B) shows that demand for the good is perfectly elastic. 
C) is the same as the market demand curve. 
D) shows that demand for the good is perfectly inelastic. 
E) is horizontal.

Question 12

A perfect price-discriminating monopoly is

Accepted Answer

A) less efficient than a single-price monopoly. 
B) more efficient than a single-price monopoly, but less efficient than a perfectly competitive industry. 
C) as efficient as a single-price monopoly. 
D) more efficient than a perfectly competitive industry. 
E) as efficient as a perfectly competitive industry. 
A) less efficient than a single-price monopoly. 
B) more efficient than a single-price monopoly, but less efficient than a perfectly competitive industry. 
C) as efficient as a single-price monopoly. 
D) more efficient than a perfectly competitive industry. 
E) as efficient as a perfectly competitive industry.

Question 13

Use the figure below to answer the following questions.
   
Figure 13.3.3
-Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive,which area indicates the deadweight loss?

Accepted Answer

A) ABD 
B) BCD 
C) KDI 
D) ADC 
E) None of the above. 
A) ABD 
B) BCD 
C) KDI 
D) ADC 
E) None of the above.

Question 14

Social interest theory predicts that the political process will seek to minimize

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) total surplus. 
D) deadweight loss. 
E) average total cost. 
A) producer surplus. 
B) consumer surplus. 
C) total surplus. 
D) deadweight loss. 
E) average total cost.

Question 15

Use the table below to answer the following questions.
Table 13.4.1
  
-Table 13.4.1 shows the demand schedule faced by a monopoly.If the monopoly is a perfect price-discriminating monopoly the marginal revenue from the sale of the 3rd unit of output is

Accepted Answer

A) $2. 
B) $6. 
C) $4. 
D) $3. 
E) $5. 
A) $2. 
B) $6. 
C) $4. 
D) $3. 
E) $5.

Question 16

Consider the cost and revenue curves in Figure 13.3.3.Which area indicates the deadweight loss from a single-price monopoly?

Accepted Answer

A) EACF 
B) ACD 
C) ABD 
D) BCD 
E) None of the above. 
A) EACF 
B) ACD 
C) ABD 
D) BCD 
E) None of the above.

Question 17

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus,the pizza firm is

Accepted Answer

A) implementing unfair pricing practices. 
B) incurring a loss on on-campus sales. 
C) eliminating all competition. 
D) located close to the campus. 
E) practising price discrimination. 
A) implementing unfair pricing practices. 
B) incurring a loss on on-campus sales. 
C) eliminating all competition. 
D) located close to the campus. 
E) practising price discrimination.

Question 18

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR,a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which profit from price discrimination are ________.

Accepted Answer

A) Canada Post and Rogers Communications 
B) only Pfizer 
C) only Canada Post 
D) all three monopolies 
E) none of the above 
A) Canada Post and Rogers Communications 
B) only Pfizer 
C) only Canada Post 
D) all three monopolies 
E) none of the above

Question 19

Which of the following is true for a perfect price-discriminating monopoly?

Accepted Answer

A) P = MR for each unit sold. 
B) P = ATC for each unit sold. 
C) P = MC for each unit sold. 
D) P > MC for each unit sold. 
E) P > MR for each unit sold. 
A) P = MR for each unit sold. 
B) P = ATC for each unit sold. 
C) P = MC for each unit sold. 
D) P > MC for each unit sold. 
E) P > MR for each unit sold.

Question 20

Use the figure below to answer the following questions.
   
Figure 13.2.2
-Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit,what is total economic profit?

Accepted Answer

A) $3 
B) $4 
C) $6 
D) $9 
E) None of the above. 
A) $3 
B) $4 
C) $6 
D) $9 
E) None of the above.

Exam 13: Monopoly

A monopolist under marginal cost pricing has an incentive to

If the demand for its good or service is inelastic,a monopoly's

An exclusive right granted to a firm to supply a good or service is

To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?

To prevent monopoly from arising,there must be

If a firm practises perfect price discrimination,

Use the figure below to answer the following questions. Figure 13.3.4 -Consider the natural monopoly depicted in Figure 13.3.4.Total surplus is at a maximum when quantity is

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the revenue and cost curves in Figure 13.3.3.What is the difference in producer surplus between a single-price monopoly and a perfectly competitive market?

A single-price monopolist's demand curve

A perfect price-discriminating monopoly is

Use the figure below to answer the following questions. Figure 13.3.3 -Consider the market demand curve in Figure 13.3.3.If the market is perfectly competitive,which area indicates the deadweight loss?

Social interest theory predicts that the political process will seek to minimize

Use the table below to answer the following questions. Table 13.4.1 -Table 13.4.1 shows the demand schedule faced by a monopoly.If the monopoly is a perfect price-discriminating monopoly the marginal revenue from the sale of the 3rd unit of output is

Consider the cost and revenue curves in Figure 13.3.3.Which area indicates the deadweight loss from a single-price monopoly?

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus,the pizza firm is

Canada Post has a monopoly on residential mail delivery.Pfizer Inc.makes LIPITOR,a prescription drug that lowers cholesterol.Rogers Communications is the sole provider of cable television service in some parts of Ontario.The monopolies which profit from price discrimination are ________.

Which of the following is true for a perfect price-discriminating monopoly?

Use the figure below to answer the following questions. Figure 13.2.2 -Refer to Figure 13.2.2.If the single-price monopoly shown in Figure 13.2.2 is maximizing profit,what is total economic profit?

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

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