Question 1

A firm that can price-discriminate should adjust prices so that customers with _____ demand pay _____ prices than (as) those with _____ demand.

Accepted Answer

A)  price-inelastic; lower; elastic 
B)  price-inelastic; the same; elastic 
C)  price-elastic; lower; inelastic 
D)  price-elastic; higher; inelastic 
A)  price-inelastic; lower; elastic 
B)  price-inelastic; the same; elastic 
C)  price-elastic; lower; inelastic 
D)  price-elastic; higher; inelastic

Question 2

Sadia wants to practice price discrimination in her bakery. Which of the following techniques should Sadia NOT use?

Accepted Answer

A)  discounts for people who buy a large volume of bread 
B)  higher prices for people who buy bread on the day it is baked and lower prices for people who place advance orders 
C)  an annual fee for customers who want to shop at a discount in her store 
D)  the same price for all consumers for freshly baked goods 
A)  discounts for people who buy a large volume of bread 
B)  higher prices for people who buy bread on the day it is baked and lower prices for people who place advance orders 
C)  an annual fee for customers who want to shop at a discount in her store 
D)  the same price for all consumers for freshly baked goods

Question 3

Use the following to answer questions:
Figure: Short-Run Monopoly  
-(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price:

Accepted Answer

A)  N. 
B)  O. 
C)  P. 
D)  Q. 
A)  N. 
B)  O. 
C)  P. 
D)  Q.

Question 4

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist sells less but increases profits.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions:
Figure: PPV  
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company practices perfect price discrimination, consumer surplus will be:

Accepted Answer

A)  $180. 
B)  $100. 
C)  $40. 
D)  $0. 
A)  $180. 
B)  $100. 
C)  $40. 
D)  $0.

Question 6

A producer is a monopoly if it is the sole supplier of a good that has no close substitutes.

Accepted Answer

A) True 
 B)False

Question 7

A natural monopolist that is price-regulated at the marginal cost output level will:

Accepted Answer

A)  produce the optimal level of output and earn a normal profit. 
B)  eventually incur losses if MC is less than ATC. 
C)  be producing at the same output and price that an unregulated natural monopolist would choose. 
D)  produce the optimal level of output and earn an economic profit greater than zero. 
A)  produce the optimal level of output and earn a normal profit. 
B)  eventually incur losses if MC is less than ATC. 
C)  be producing at the same output and price that an unregulated natural monopolist would choose. 
D)  produce the optimal level of output and earn an economic profit greater than zero.

Question 8

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

Accepted Answer

A)  sunk costs. 
B)  government restrictions to entry. 
C)  economies of scale. 
D)  location. 
A)  sunk costs. 
B)  government restrictions to entry. 
C)  economies of scale. 
D)  location.

Question 9

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a _____ demand for swimming at the pool than residents.

Accepted Answer

A)  greater 
B)  lower 
C)  more elastic 
D)  less elastic 
A)  greater 
B)  lower 
C)  more elastic 
D)  less elastic

Question 10

In perfect competition, the firm produces the output such that _____, and in monopoly, the firm produces the output such that _____.

Accepted Answer

A)  P > MR = MC; P = MR = MC 
B)  P = MR = MC; P  MR = MC 
D)  P = MR = MC; P = MR = MC 
A)  P > MR = MC; P = MR = MC 
B)  P = MR = MC; P  MR = MC 
D)  P = MR = MC; P = MR = MC

Question 11

Use the following to answer questions:
Figure: PPV  
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $40. If the cable company is a single-price monopoly, to maximize profit it will sell _____ subscriptions and charge _____ per subscription.

Accepted Answer

A)  8; $20 
B)  6; $40 
C)  3; $70 
D)  2; $80 
A)  8; $20 
B)  6; $40 
C)  3; $70 
D)  2; $80

Question 12

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

Accepted Answer

A) True 
 B)False

Question 13

Price discrimination leads to a _____ price for consumers with a _____ demand.

Accepted Answer

A)  higher; less elastic 
B)  higher; more elastic 
C)  higher; perfectly elastic 
D)  lower; less elastic 
A)  higher; less elastic 
B)  higher; more elastic 
C)  higher; perfectly elastic 
D)  lower; less elastic

Question 14

If you had a license for the exclusive right to sell breakfast bagels in your community, your monopoly would result from:

Accepted Answer

A)  control of a scarce resource or input. 
B)  technological superiority. 
C)  increasing returns to scale. 
D)  government-set barriers. 
A)  control of a scarce resource or input. 
B)  technological superiority. 
C)  increasing returns to scale. 
D)  government-set barriers.

Question 15

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would pertain if the single price was set so that marginal revenue and marginal cost are equal.

Accepted Answer

A) True 
 B)False

Question 16

If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output, at that level of output, demand is:

Accepted Answer

A)  price-elastic. 
B)  price-inelastic. 
C)  perfectly price-inelastic. 
D)  price unit-elastic. 
A)  price-elastic. 
B)  price-inelastic. 
C)  perfectly price-inelastic. 
D)  price unit-elastic.

Question 17

Use the following to answer questions:
Figure: PPV  
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is in a perfectly competitive industry, what price will it charge?

Accepted Answer

A)  $20 
B)  $40 
C)  $60 
D)  $100 
A)  $20 
B)  $40 
C)  $60 
D)  $100

Question 18

Although price discrimination never occurs in perfect competition, it may occur in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 19

A firm that is a natural monopoly will:

Accepted Answer

A)  attempt to break even, not profit-maximize. 
B)  maximize profit by producing where MR = MC. 
C)  face increasing costs of production. 
D)  face greater market instability than a regular monopoly. 
A)  attempt to break even, not profit-maximize. 
B)  maximize profit by producing where MR = MC. 
C)  face increasing costs of production. 
D)  face greater market instability than a regular monopoly.

Question 20

Network externalities exist when a good's value to the consumer rises as:

Accepted Answer

A)  the number of people who use the good increases. 
B)  the number of people who use the good decreases. 
C)  the number of people who use the good remains constant. 
D)  technology improves. 
A)  the number of people who use the good increases. 
B)  the number of people who use the good decreases. 
C)  the number of people who use the good remains constant. 
D)  technology improves.

A firm that can price-discriminate should adjust prices so that customers with ___ demand pay _ prices than (as) those with ___ demand.

Sadia wants to practice price discrimination in her bakery. Which of the following techniques should Sadia NOT use?

Use the following to answer questions: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price:

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist sells less but increases profits.

A producer is a monopoly if it is the sole supplier of a good that has no close substitutes.

A natural monopolist that is price-regulated at the marginal cost output level will:

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a _____ demand for swimming at the pool than residents.

In perfect competition, the firm produces the output such that _, and in monopoly, the firm produces the output such that _.

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

Price discrimination leads to a _ price for consumers with a _ demand.

If you had a license for the exclusive right to sell breakfast bagels in your community, your monopoly would result from:

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would pertain if the single price was set so that marginal revenue and marginal cost are equal.

If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output, at that level of output, demand is:

Although price discrimination never occurs in perfect competition, it may occur in monopolistic competition.

A firm that is a natural monopoly will:

Network externalities exist when a good's value to the consumer rises as:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 13: Monopoly

A firm that can price-discriminate should adjust prices so that customers with _____ demand pay _____ prices than (as) those with _____ demand.

Sadia wants to practice price discrimination in her bakery. Which of the following techniques should Sadia NOT use?

Use the following to answer questions: Figure: Short-Run Monopoly -(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price:

When a monopolist practices price discrimination as opposed to setting a single price, the monopolist sells less but increases profits.

A producer is a monopoly if it is the sole supplier of a good that has no close substitutes.

A natural monopolist that is price-regulated at the marginal cost output level will:

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a _____ demand for swimming at the pool than residents.

In perfect competition, the firm produces the output such that _____, and in monopoly, the firm produces the output such that _____.

A disadvantage of public ownership of a monopoly is that publicly owned firms have relatively little incentive to keep costs low or offer high-quality products.

Price discrimination leads to a _____ price for consumers with a _____ demand.

If you had a license for the exclusive right to sell breakfast bagels in your community, your monopoly would result from:

A monopolist who practices price discrimination can increase sales but can never increase profits above the level that would pertain if the single price was set so that marginal revenue and marginal cost are equal.

If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output, at that level of output, demand is:

Although price discrimination never occurs in perfect competition, it may occur in monopolistic competition.

A firm that is a natural monopoly will:

Network externalities exist when a good's value to the consumer rises as:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

A firm that can price-discriminate should adjust prices so that customers with ___ demand pay _ prices than (as) those with ___ demand.

In perfect competition, the firm produces the output such that _, and in monopoly, the firm produces the output such that _.

Price discrimination leads to a _ price for consumers with a _ demand.