Question 1

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:

Accepted Answer

A)  patents and copyrights. 
B)  natural monopolies. 
C)  profit-maximizing behavior. 
D)  network externalities. 
A)  patents and copyrights. 
B)  natural monopolies. 
C)  profit-maximizing behavior. 
D)  network externalities.

Question 2

Of the four market structures, the only one that is characterized by product differentiation is oligopoly.

Accepted Answer

A) True 
 B)False

Question 3

An oligopoly that engages in price discrimination will charge higher prices to customers with the most elastic demand.

Accepted Answer

A) True 
 B)False

Question 4

For a monopolist to practice price discrimination successfully, its customers must all have the same willingness to pay for the good.

Accepted Answer

A) True 
 B)False

Question 5

Price discrimination can occur if:

Accepted Answer

A)  there are many firms in the industry, all producing the same identical good. 
B)  producers are price takers. 
C)  all consumers have the same willingness to pay for the good. 
D)  the market structure is a monopolistic competition. 
A)  there are many firms in the industry, all producing the same identical good. 
B)  producers are price takers. 
C)  all consumers have the same willingness to pay for the good. 
D)  the market structure is a monopolistic competition.

Question 6

The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually beneficial trades is called:

Accepted Answer

A)  sunk costs. 
B)  opportunity costs. 
C)  deadweight loss. 
D)  inequity. 
A)  sunk costs. 
B)  opportunity costs. 
C)  deadweight loss. 
D)  inequity.

Question 7

Suppose a perfectly competitive industry is suddenly transformed to a monopoly industry. What will happen to price, output, consumer and producer surplus, and deadweight loss?

Accepted Answer

The monopolist will reduce output and in

Question 8

Diamond rings are relatively scarce because:

Accepted Answer

A)  according to geologists, diamonds are less common than any other gem-quality stone. 
B)  the demand for diamonds is so high. 
C)  diamond producers limit the quantity supplied to the market. 
D)  of monopolistic competition. 
A)  according to geologists, diamonds are less common than any other gem-quality stone. 
B)  the demand for diamonds is so high. 
C)  diamond producers limit the quantity supplied to the market. 
D)  of monopolistic competition.

Question 9

Use the following to answer questions:  
-(Table: Demand for Lenny's Coffee) Look at the table Demand for Lenny's Coffee. Lenny's Café is the only source of coffee for hundreds of miles in any direction. If Lenny's marginal cost of selling coffee is a constant $2, his profit-maximizing level of output is _____ cups at _____ per cup.

Accepted Answer

A)  four; $6 
B)  eight; $3 
C)  five; $5 
D)  three; $7 
A)  four; $6 
B)  eight; $3 
C)  five; $5 
D)  three; $7

Question 10

Use the following to answer questions:  
-(Table: Demand and Total Cost) Look at the table Demand and Total Cost. Lenoia runs a natural monopoly firm producing electricity for a small mountain village. The table shows Lenoia's demand and total cost of producing electricity. To maximize profits, Lenoia should charge a price of:

Accepted Answer

A)  $350. 
B)  $400. 
C)  $450. 
D)  $500. 
A)  $350. 
B)  $400. 
C)  $450. 
D)  $500.

Question 11

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

Accepted Answer

A)  Z. 
B)  P. 
C)  S. 
D)  I. 
A)  Z. 
B)  P. 
C)  S. 
D)  I.

Question 12

Use the following to answer questions:
Figure: The Profit-Maximizing Output and Price  
-(Figure: The Profit-Maximizing Output and Price) Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a perfectly competitive industry, deadweight loss is:

Accepted Answer

A)  $0. 
B)  $200. 
C)  $1,600. 
D)  $3,200. 
A)  $0. 
B)  $200. 
C)  $1,600. 
D)  $3,200.

Question 13

Which of the following is (are) barrier(s) to entry?

Accepted Answer

A)  control of scarce resources 
B)  economies of scale 
C)  patents and copyrights 
D)  control of scarce resources, economies of scale, and patents and copyrights 
A)  control of scarce resources 
B)  economies of scale 
C)  patents and copyrights 
D)  control of scarce resources, economies of scale, and patents and copyrights

Question 14

Because of monopoly, consumers experience _____ than with perfect competition.

Accepted Answer

A)  more choices 
B)  larger quantities 
C)  higher quality 
D)  higher prices 
A)  more choices 
B)  larger quantities 
C)  higher quality 
D)  higher prices

Question 15

Use the following to answer questions:  
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what is deadweight loss in the long run?

Accepted Answer

A)  $0 
B)  $4 
C)  $180 
D)  $360 
A)  $0 
B)  $4 
C)  $180 
D)  $360

Question 16

Use the following to answer questions:
Figure: A Profit-Maximizing Monopoly Firm  
-(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. The firm in this figure will produce _____ units of output per week.

Accepted Answer

A)  150 
B)  200 
C)  250 
D)  300 
A)  150 
B)  200 
C)  250 
D)  300

Question 17

A monopolistically competitive industry is made up of:

Accepted Answer

A)  a few firms, each producing a very differentiated good. 
B)  one firm that produces a standardized good. 
C)  market participants who are all price takers. 
D)  many firms producing a differentiated product. 
A)  a few firms, each producing a very differentiated good. 
B)  one firm that produces a standardized good. 
C)  market participants who are all price takers. 
D)  many firms producing a differentiated product.

Question 18

When price discrimination occurs, the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost.

Accepted Answer

A)  the same as; marginal 
B)  more than; marginal 
C)  less than; marginal 
D)  the same as; average total 
A)  the same as; marginal 
B)  more than; marginal 
C)  less than; marginal 
D)  the same as; average total

Question 19

Natural monopolies are likely to include all of the following EXCEPT:

Accepted Answer

A)  a diamond mining company. 
B)  a gas company. 
C)  an electricity company. 
D)  railways. 
A)  a diamond mining company. 
B)  a gas company. 
C)  an electricity company. 
D)  railways.

Question 20

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:

Accepted Answer

A)  low levels of production. 
B)  all levels of production. 
C)  high levels of production. 
D)  levels at which elasticity is unit-elastic. 
A)  low levels of production. 
B)  all levels of production. 
C)  high levels of production. 
D)  levels at which elasticity is unit-elastic.

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:

Of the four market structures, the only one that is characterized by product differentiation is oligopoly.

An oligopoly that engages in price discrimination will charge higher prices to customers with the most elastic demand.

For a monopolist to practice price discrimination successfully, its customers must all have the same willingness to pay for the good.

Price discrimination can occur if:

The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually beneficial trades is called:

Suppose a perfectly competitive industry is suddenly transformed to a monopoly industry. What will happen to price, output, consumer and producer surplus, and deadweight loss?

Diamond rings are relatively scarce because:

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

Which of the following is (are) barrier(s) to entry?

Because of monopoly, consumers experience _____ than with perfect competition.

Use the following to answer questions: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. The firm in this figure will produce _____ units of output per week.

A monopolistically competitive industry is made up of:

When price discrimination occurs, the producer's profit is _ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _ cost.

Natural monopolies are likely to include all of the following EXCEPT:

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:

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

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:

Of the four market structures, the only one that is characterized by product differentiation is oligopoly.

An oligopoly that engages in price discrimination will charge higher prices to customers with the most elastic demand.

For a monopolist to practice price discrimination successfully, its customers must all have the same willingness to pay for the good.

Price discrimination can occur if:

The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually beneficial trades is called:

Suppose a perfectly competitive industry is suddenly transformed to a monopoly industry. What will happen to price, output, consumer and producer surplus, and deadweight loss?

Diamond rings are relatively scarce because:

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

Which of the following is (are) barrier(s) to entry?

Because of monopoly, consumers experience _____ than with perfect competition.

Use the following to answer questions: Figure: A Profit-Maximizing Monopoly Firm -(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. The firm in this figure will produce _____ units of output per week.

A monopolistically competitive industry is made up of:

When price discrimination occurs, the producer's profit is _____ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _____ cost.

Natural monopolies are likely to include all of the following EXCEPT:

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:

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

When price discrimination occurs, the producer's profit is _ if the producer charges each customer the same profit-maximizing price where marginal revenue equals _ cost.