Question 1

"Rent-seeking" refers to

Accepted Answer

A) trying to pay the lowest rent possible for an apartment or house. 
B) trying to lower rent that is paid on a factory in order to lower fixed costs. 
C) the actions of individuals who spend resources to influence public policy in the hope of transferring income to themselves from others. 
D) the fact that the deadweight loss triangle is a genuine cost of monopoly. 
E) none of the above 
A) trying to pay the lowest rent possible for an apartment or house. 
B) trying to lower rent that is paid on a factory in order to lower fixed costs. 
C) the actions of individuals who spend resources to influence public policy in the hope of transferring income to themselves from others. 
D) the fact that the deadweight loss triangle is a genuine cost of monopoly. 
E) none of the above

Question 2

Which of the following is the best example of price discrimination?

Accepted Answer

A) a cellular telephone company charging lower rates to weekend callers than weekday callers 
B) a gas station charging less per gallon to customers who pay cash than customers who use a credit card 
C) an auto insurance company charging a higher premium to a seventeen year old boy with a driving record that includes three accidents than the premium charged to a middle-aged driver with a clean driving record 
D) a private attorney charging higher fees to clients receiving special services than clients receiving regular services 
A) a cellular telephone company charging lower rates to weekend callers than weekday callers 
B) a gas station charging less per gallon to customers who pay cash than customers who use a credit card 
C) an auto insurance company charging a higher premium to a seventeen year old boy with a driving record that includes three accidents than the premium charged to a middle-aged driver with a clean driving record 
D) a private attorney charging higher fees to clients receiving special services than clients receiving regular services

Question 3

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 4

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 5

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 6

Monopolists are guaranteed to earn a positive economic profit because they are the only seller in their industry.

Accepted Answer

A) True 
 B)False

Question 7

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

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 8

The monopolist's marginal revenue curve is

Accepted Answer

A) downward sloping and lies below the firm's demand curve. 
B) upward sloping and lies above the firm's demand curve. 
C) perfectly inelastic. 
D) downward sloping and lies above the firm's demand curve. 
E) the same as the industry demand curve. 
A) downward sloping and lies below the firm's demand curve. 
B) upward sloping and lies above the firm's demand curve. 
C) perfectly inelastic. 
D) downward sloping and lies above the firm's demand curve. 
E) the same as the industry demand curve.

Question 9

Maximizing total revenue turns out to be the same as maximizing profit only when

Accepted Answer

A) average fixed cost declines continually as output rises. 
B) a firm has no fixed costs. 
C) a firm has no variable costs. 
D) a firm has both variable and fixed costs. 
A) average fixed cost declines continually as output rises. 
B) a firm has no fixed costs. 
C) a firm has no variable costs. 
D) a firm has both variable and fixed costs.

Question 10

The profit-maximizing single-price monopolist will charge a price

Accepted Answer

A) equal to marginal revenue. 
B) greater than marginal cost. 
C) less than marginal revenue, but greater than marginal cost. 
D) greater than marginal revenue, but equal to marginal cost. 
E) a and b 
A) equal to marginal revenue. 
B) greater than marginal cost. 
C) less than marginal revenue, but greater than marginal cost. 
D) greater than marginal revenue, but equal to marginal cost. 
E) a and b

Question 11

Describe the similarities between why sellers want to price discriminate and why district attorneys want to plea-bargain. In addition, discuss the conditions that must be satisfied before district attorneys (DAs) can plea-bargain successfully and how they relate to the three conditions necessary for successful price discrimination.

Accepted Answer

Sellers want to maximize profits, and pr

Question 12

Which of the following statements is true?

Accepted Answer

A) The perfectly competitive firm produces a level of output at which P=MC. 
B) The single-price monopolist produces a level of output at which P > MC. 
C) The perfectly price-discriminating monopolist produces a level of output at which P>MC. 
D) a and b 
E) all of the above 
A) The perfectly competitive firm produces a level of output at which P=MC. 
B) The single-price monopolist produces a level of output at which P > MC. 
C) The perfectly price-discriminating monopolist produces a level of output at which P>MC. 
D) a and b 
E) all of the above

Question 13

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 14

Perfect price discrimination is discrimination among

Accepted Answer

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

Question 15

For the monopoly firm that does not engage in perfect price discrimination,

Accepted Answer

A) the marginal revenue curve lies below the demand curve. 
B) the marginal revenue curve and demand curve are the same. 
C) the marginal revenue curve lies above the demand curve. 
D) marginal revenue equals price. 
E) c and d 
A) the marginal revenue curve lies below the demand curve. 
B) the marginal revenue curve and demand curve are the same. 
C) the marginal revenue curve lies above the demand curve. 
D) marginal revenue equals price. 
E) c and d

Question 16

If a monopolist wishes to sell an additional unit of the good, then

Accepted Answer

A) it must raise its price to signal consumers that its product is now a more important part of their budget, and they will purchase more. 
B) like a competitive firm, it can simply make more output available and not lower price. 
C) it must lower price. 
D) it can raise price and not worry that sales will decrease. 
E) a and d 
A) it must raise its price to signal consumers that its product is now a more important part of their budget, and they will purchase more. 
B) like a competitive firm, it can simply make more output available and not lower price. 
C) it must lower price. 
D) it can raise price and not worry that sales will decrease. 
E) a and d

Question 17

X-inefficiency occurs when a monopolist produces output at a cost that is greater than the lowest possible cost.

Accepted Answer

A) True 
 B)False

Question 18

For the monopoly firm, its demand curve is

Accepted Answer

A) perfectly inelastic. 
B) the market demand curve. 
C) perfectly elastic. 
D) necessarily unit elastic. 
E) none of the above 
A) perfectly inelastic. 
B) the market demand curve. 
C) perfectly elastic. 
D) necessarily unit elastic. 
E) none of the above

Question 19

Exhibit 23-10
  
-Refer to Exhibit 23-10. 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 20

Which of the following statements is false?

Accepted Answer

A) The monopolist has the ability to control to some degree the price of the product it sells. 
B) The monopolist faces a downward-sloping demand curve. 
C) The monopolist is a price taker. 
D) The monopoly firm is the industry. 
A) The monopolist has the ability to control to some degree the price of the product it sells. 
B) The monopolist faces a downward-sloping demand curve. 
C) The monopolist is a price taker. 
D) The monopoly firm is the industry.

Exam 23: Monopoly

"Rent-seeking" refers to

Which of the following is the best example of price discrimination?

Which of the following statements is false?

X-inefficiency results from

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

Monopolists are guaranteed to earn a positive economic profit because they are the only seller in their industry.

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

The monopolist's marginal revenue curve is

Maximizing total revenue turns out to be the same as maximizing profit only when

The profit-maximizing single-price monopolist will charge a price

Which of the following statements is true?

A single-price monopolist

Perfect price discrimination is discrimination among

For the monopoly firm that does not engage in perfect price discrimination,

If a monopolist wishes to sell an additional unit of the good, then

X-inefficiency occurs when a monopolist produces output at a cost that is greater than the lowest possible cost.

For the monopoly firm, its demand curve is

Exhibit 23-10 -Refer to Exhibit 23-10. The profit-maximizing single-price monopolist earns total revenue equal to what area?

Which of the following statements is false?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice 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

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

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The Economic Case for and Against Government Five Topics Considered

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