Question 1

(Last Word): The ability of personalized pricing by online retailers to price discriminate

Accepted Answer

A) is enhanced by Big Data's ability to accurately determine a buyer's reservation price. 
B) is only effective at the group level. 
C) means that buyers with more elastic demand face systematically higher prices. 
D) is limited by buyers' willingness and ability to easily search out lower prices at other online sites. 
A) is enhanced by Big Data's ability to accurately determine a buyer's reservation price. 
B) is only effective at the group level. 
C) means that buyers with more elastic demand face systematically higher prices. 
D) is limited by buyers' willingness and ability to easily search out lower prices at other online sites.

Question 2

A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

Accepted Answer

A) natural monopoly. 
B) monopolistically competitive market. 
C) pure monopoly. 
D) near-monopoly. 
A) natural monopoly. 
B) monopolistically competitive market. 
C) pure monopoly. 
D) near-monopoly.

Question 3

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Accepted Answer

A) True 
 B)False

Question 4

The problem with socially optimal pricing regulation of a natural monopoly is that

Accepted Answer

A) P < MC. 
B) P < AVC. 
C) P < ATC. 
D) P < MR. 
A) P < MC. 
B) P < AVC. 
C) P < ATC. 
D) P < MR.

Question 5

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Accepted Answer

A) increase total revenue, increase total cost, and decrease profit. 
B) decrease total revenue, increase total cost, and decrease profit. 
C) increase total revenue, decrease total cost, and decrease profit. 
D) decrease total revenue, total cost, and profit. 
A) increase total revenue, increase total cost, and decrease profit. 
B) decrease total revenue, increase total cost, and decrease profit. 
C) increase total revenue, decrease total cost, and decrease profit. 
D) decrease total revenue, total cost, and profit.

Question 6

Confronted with the same unit cost data, a monopolistic producer will charge

Accepted Answer

A) the same price and produce the same output as a competitive firm. 
B) a higher price and produce a larger output than a competitive firm. 
C) a higher price and produce a smaller output than a competitive firm. 
D) a lower price and produce a smaller output than a competitive firm. 
A) the same price and produce the same output as a competitive firm. 
B) a higher price and produce a larger output than a competitive firm. 
C) a higher price and produce a smaller output than a competitive firm. 
D) a lower price and produce a smaller output than a competitive firm.

Question 7

In the short-run equilibrium, a monopolist's profits

Accepted Answer

A) may be positive, negative, or zero. 
B) are positive because of the monopolist's market power. 
C) are positive if the product's elasticity of demand is less than 1. 
D) are positive if the product's elasticity of demand is greater than 1. 
A) may be positive, negative, or zero. 
B) are positive because of the monopolist's market power. 
C) are positive if the product's elasticity of demand is less than 1. 
D) are positive if the product's elasticity of demand is greater than 1.

Question 8

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
1 $100 $100 $100.00 $30
2 90 80 63.00 26
3 80 60 52.67 32
4 70 40 49.50 40
5 60 20 49.60 50
6 50 0 50.00 52
7 40 -20 52.29 66
8 30 -40 55.75 80
9 20 -60 60.67 100
10 10 -80 67.60 130
Refer to the data.At its profit-maximizing output, this firm's total revenue will be

Accepted Answer

A) $300. 
B) $198. 
C) $180. 
D) $280. 
A) $300. 
B) $198. 
C) $180. 
D) $280.

Question 9

Natural monopolies result from

Accepted Answer

A) patents and copyrights. 
B) pricing strategies. 
C) extensive economies of scale in production. 
D) control over an essential natural resource. 
A) patents and copyrights. 
B) pricing strategies. 
C) extensive economies of scale in production. 
D) control over an essential natural resource.

Question 10

When a pure monopolist is producing its profit-maximizing output, price will

Accepted Answer

A) be less than MR. 
B) equal neither MC nor MR. 
C) equal MR. 
D) equal MC. 
A) be less than MR. 
B) equal neither MC nor MR. 
C) equal MR. 
D) equal MC.

Question 11

If a monopolist were to produce in the inelastic segment of its demand curve,

Accepted Answer

A) total revenue would be at a maximum. 
B) marginal revenue would be positive. 
C) the firm would not be maximizing profits. 
D) it would necessarily incur a loss. 
A) total revenue would be at a maximum. 
B) marginal revenue would be positive. 
C) the firm would not be maximizing profits. 
D) it would necessarily incur a loss.

Question 12

One of the economic effects of monopoly is an income transfer from consumers to the firm.

Accepted Answer

A) True 
 B)False

Question 13

A price-discriminating monopolist will follow a system where

Accepted Answer

A) buyers with inelastic demand are charged higher prices than buyers with elastic demand. 
B) buyers with inelastic demand are charged lower prices than buyers with elastic demand. 
C) all buyers are charged the same price regardless of their elasticity of demand. 
D) the price of the product is held the same even if the demand changes. 
A) buyers with inelastic demand are charged higher prices than buyers with elastic demand. 
B) buyers with inelastic demand are charged lower prices than buyers with elastic demand. 
C) all buyers are charged the same price regardless of their elasticity of demand. 
D) the price of the product is held the same even if the demand changes.

Question 14

Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true of price discrimination?

Accepted Answer

A) Successful price discrimination will provide the firm with lower total profits than if it did not discriminate. 
B) Successful price discrimination will provide the firm with more profit than if it did not discriminate. 
C) Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly. 
D) Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers. 
A) Successful price discrimination will provide the firm with lower total profits than if it did not discriminate. 
B) Successful price discrimination will provide the firm with more profit than if it did not discriminate. 
C) Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly. 
D) Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers.

Question 16

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
1 $100 $100 $100.00 $30
2 90 80 63.00 26
3 80 60 52.67 32
4 70 40 49.50 40
5 60 20 49.60 50
6 50 0 50.00 52
7 40 -20 52.29 66
8 30 -40 55.75 80
9 20 -60 60.67 100
10 10 -80 67.60 130
Refer to the data for a non discriminating monopolist.This firm will maximize its profit by producing

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 17

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
1 $100 $100 $100.00 $30
2 90 80 63.00 26
3 80 60 52.67 32
4 70 40 49.50 40
5 60 20 49.60 50
6 50 0 50.00 52
7 40 -20 52.29 66
8 30 -40 55.75 80
9 20 -60 60.67 100
10 10 -80 67.60 130
Refer to the data for a non discriminating monopolist.At its profit-maximizing output, this firm will be operating in the

Accepted Answer

A) perfectly elastic portion of its demand curve. 
B) perfectly inelastic portion of its demand curve. 
C) elastic portion of its demand curve. 
D) inelastic portion of its demand curve. 
A) perfectly elastic portion of its demand curve. 
B) perfectly inelastic portion of its demand curve. 
C) elastic portion of its demand curve. 
D) inelastic portion of its demand curve.

Question 18

Which of the following conditions is not required for price discrimination?

Accepted Answer

A) Buyers with different elasticities must be physically separate from each other. 
B) The good or service cannot be profitably resold by original buyers. 
C) The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand. 
D) The seller must possess some degree of monopoly power. 
A) Buyers with different elasticities must be physically separate from each other. 
B) The good or service cannot be profitably resold by original buyers. 
C) The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand. 
D) The seller must possess some degree of monopoly power.

Question 19

Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00.The firm could increase profits by

Accepted Answer

A) decreasing price and increasing output. 
B) increasing price and decreasing output. 
C) decreasing price and leaving output unchanged. 
D) decreasing output and leaving prices unchanged. 
A) decreasing price and increasing output. 
B) increasing price and decreasing output. 
C) decreasing price and leaving output unchanged. 
D) decreasing output and leaving prices unchanged.

Question 20

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Accepted Answer

A) the marginal revenue curve and the total revenue curve will now coincide. 
B) the marginal revenue curve will now shift to a position above the demand curve. 
C) the firm will face multiple marginal revenue curves. 
D) marginal revenue will become less at each level of output than it would be without price discrimination. 
A) the marginal revenue curve and the total revenue curve will now coincide. 
B) the marginal revenue curve will now shift to a position above the demand curve. 
C) the firm will face multiple marginal revenue curves. 
D) marginal revenue will become less at each level of output than it would be without price discrimination.

Exam 12: Pure Monopoly

(Last Word): The ability of personalized pricing by online retailers to price discriminate

A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

The problem with socially optimal pricing regulation of a natural monopoly is that

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Confronted with the same unit cost data, a monopolistic producer will charge

In the short-run equilibrium, a monopolist's profits

Natural monopolies result from

When a pure monopolist is producing its profit-maximizing output, price will

If a monopolist were to produce in the inelastic segment of its demand curve,

One of the economic effects of monopoly is an income transfer from consumers to the firm.

A price-discriminating monopolist will follow a system where

Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Which of the following statements is true of price discrimination?

Which of the following conditions is not required for price discrimination?

Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00.The firm could increase profits by

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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