Question 1

What does successful price discrimination have a negative effect on?

Accepted Answer

A)  deadweight loss 
B)  economic profits 
C)  output level 
D)  marginal revenue 
A)  deadweight loss 
B)  economic profits 
C)  output level 
D)  marginal revenue A

Question 2

Where does a profit-maximizing monopolist operate?

Accepted Answer

A)  where demand is elastic 
B)  where demand is infinitely elastic 
C)  where demand is inelastic 
D)  where demand is unit elastic 
A)  where demand is elastic 
B)  where demand is infinitely elastic 
C)  where demand is inelastic 
D)  where demand is unit elastic A

Question 3

When would a monopolist shut down in the short run?

Accepted Answer

A)  if price is less than marginal revenue 
B)  if total revenue is less than total variable cost 
C)  if price exceeds marginal revenue 
D)  if price is less than average total cost 
A)  if price is less than marginal revenue 
B)  if total revenue is less than total variable cost 
C)  if price exceeds marginal revenue 
D)  if price is less than average total cost B

Question 4

FIGURE 9-4
  
-Refer to Figure 9-4. What price would a monopolist charge when maximizing profits?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 5

If marginal revenue on the tenth unit of output equals $4 for a non-discriminating, profit-maximizing monopolist, then what is the price?

Accepted Answer

A)  price is less than $4 
B)  price must be equal to average total cost 
C)  price is greater than $4 
D)  price equals $4 
A)  price is less than $4 
B)  price must be equal to average total cost 
C)  price is greater than $4 
D)  price equals $4

Question 6

The demand curve faced by a monopolist is the same as the marginal revenue curve.

Accepted Answer

A) True 
 B)False

Question 7

A natural gas monopoly currently sells 100 gigajoules of natural gas at $11.00 per gigajoule. To sell one more gigajoule, the natural gas company must lower the price of natural gas to $10.90. Which of the following best describes the marginal revenue of the 101st gigajoule of natural gas?

Accepted Answer

A)  The marginal revenue equals the change in price, or $ 0.10. 
B)  The marginal revenue equals the price, or $10.90. 
C)  The marginal revenue is greater than $10.90. 
D)  The marginal revenue is less than $10.90. 
A)  The marginal revenue equals the change in price, or $ 0.10. 
B)  The marginal revenue equals the price, or $10.90. 
C)  The marginal revenue is greater than $10.90. 
D)  The marginal revenue is less than $10.90.

Question 8

Which of the following is a major difference between a monopolist and firms in perfectly competitive markets?

Accepted Answer

A)  The monopolist may earn short-run profit; firms in perfectly competitive markets cannot. 
B)  The monopolist maximizes profit; firms in perfectly competitive markets maximize sales. 
C)  The monopolist is a price taker; firms in other markets are price searchers. 
D)  The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot. 
A)  The monopolist may earn short-run profit; firms in perfectly competitive markets cannot. 
B)  The monopolist maximizes profit; firms in perfectly competitive markets maximize sales. 
C)  The monopolist is a price taker; firms in other markets are price searchers. 
D)  The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot.

Question 9

What quantity will a monopolist operate at?

Accepted Answer

A)  where MR = MC, charging a price equal to average variable cost 
B)  where MR = MC, charging a price equal to marginal revenue 
C)  where MR = MC, charging price corresponding to average total cost at that level 
D)  where MR = MC, charging a price corresponding to demand at that level 
A)  where MR = MC, charging a price equal to average variable cost 
B)  where MR = MC, charging a price equal to marginal revenue 
C)  where MR = MC, charging price corresponding to average total cost at that level 
D)  where MR = MC, charging a price corresponding to demand at that level

Question 10

What does average cost regulation of a natural monopoly NOT involve?

Accepted Answer

A)  production at the output level at which demand intersects the average total cost curve 
B)  a subsidy 
C)  a tendency for average total cost curves to shift upward over time 
D)  production at a socially inefficient level of output 
A)  production at the output level at which demand intersects the average total cost curve 
B)  a subsidy 
C)  a tendency for average total cost curves to shift upward over time 
D)  production at a socially inefficient level of output

Question 11

A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 12

Under what circumstances will a price-discriminating monopolist tend to charge a lower price to students?

Accepted Answer

A)  If it believes student demand is more inelastic than other demanders. 
B)  If it believes student demand is graphically represented by a vertical curve. 
C)  If it believes student demand is more elastic than other demanders. 
D)  If it believes student demand is unit elastic. 
A)  If it believes student demand is more inelastic than other demanders. 
B)  If it believes student demand is graphically represented by a vertical curve. 
C)  If it believes student demand is more elastic than other demanders. 
D)  If it believes student demand is unit elastic.

Question 13

The following diagram contains information on cost and revenue curves facing a regulated monopoly.
FIGURE 9-3
  
-Refer to Figure 9-3. If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

Accepted Answer

A)  P5 and Q2 
B)  P4 and Q3 
C)  P3 and Q1 
D)  P2 and Q2 
A)  P5 and Q2 
B)  P4 and Q3 
C)  P3 and Q1 
D)  P2 and Q2

Question 14

Which of the following firms does NOT practice price discrimination?

Accepted Answer

A)  automobile dealerships 
B)  airlines 
C)  movie theatres 
D)  gas stations 
A)  automobile dealerships 
B)  airlines 
C)  movie theatres 
D)  gas stations

Question 15

Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-1
  
-Refer to Figure 9-1. What area indicates the welfare loss due to monopoly?

Accepted Answer

A)  EHF 
B)  EGQ2Q1 
C)  FHQ3Q1 
D)  EGI 
A)  EHF 
B)  EGQ2Q1 
C)  FHQ3Q1 
D)  EGI

Question 17

The following diagram contains information on cost and revenue curves facing a regulated monopoly.
FIGURE 9-3
  
-Refer to Figure 9-3. Which of the following price and output combinations would the monopoly prefer?

Accepted Answer

A)  P2 and Q2 
B)  P3 and Q1 
C)  P1 and Q1 
D)  P4 and Q3 
A)  P2 and Q2 
B)  P3 and Q1 
C)  P1 and Q1 
D)  P4 and Q3

Question 18

What is the result when a monopolist is able to price-discriminate?

Accepted Answer

A)  Both its profits and consumer surplus tend to increase. 
B)  Both its profits and consumer surplus tend to decrease. 
C)  Its profits tend to increase and consumer surplus tends to fall. 
D)  Its profits tend to fall and consumer surplus tends to increase. 
A)  Both its profits and consumer surplus tend to increase. 
B)  Both its profits and consumer surplus tend to decrease. 
C)  Its profits tend to increase and consumer surplus tends to fall. 
D)  Its profits tend to fall and consumer surplus tends to increase.

Question 19

When setting prices, on what basis may the monopolist choose to charge alternative customers different prices?

Accepted Answer

A)  marital status 
B)  age 
C)  race 
D)  religion 
A)  marital status 
B)  age 
C)  race 
D)  religion

Question 20

TABLE 9-2
  
-Refer to Table 9-2. What is the profit-maximizing level of output?

Accepted Answer

A)  9 units 
B)  10 units 
C)  11 units 
D)  12 units 
A)  9 units 
B)  10 units 
C)  11 units 
D)  12 units

What does successful price discrimination have a negative effect on?

Where does a profit-maximizing monopolist operate?

When would a monopolist shut down in the short run?

FIGURE 9-4 -Refer to Figure 9-4. What price would a monopolist charge when maximizing profits?

If marginal revenue on the tenth unit of output equals $4 for a non-discriminating, profit-maximizing monopolist, then what is the price?

The demand curve faced by a monopolist is the same as the marginal revenue curve.

A natural gas monopoly currently sells 100 gigajoules of natural gas at $11.00 per gigajoule. To sell one more gigajoule, the natural gas company must lower the price of natural gas to $10.90. Which of the following best describes the marginal revenue of the 101st gigajoule of natural gas?

Which of the following is a major difference between a monopolist and firms in perfectly competitive markets?

What quantity will a monopolist operate at?

What does average cost regulation of a natural monopoly NOT involve?

A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

Under what circumstances will a price-discriminating monopolist tend to charge a lower price to students?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

Which of the following firms does NOT practice price discrimination?

Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Figure 9-1 -Refer to Figure 9-1. What area indicates the welfare loss due to monopoly?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. Which of the following price and output combinations would the monopoly prefer?

What is the result when a monopolist is able to price-discriminate?

When setting prices, on what basis may the monopolist choose to charge alternative customers different prices?

TABLE 9-2 -Refer to Table 9-2. What is the profit-maximizing level of output?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters

Exam 9: Monopoly

What does successful price discrimination have a negative effect on?

Where does a profit-maximizing monopolist operate?

When would a monopolist shut down in the short run?

FIGURE 9-4 -Refer to Figure 9-4. What price would a monopolist charge when maximizing profits?

If marginal revenue on the tenth unit of output equals $4 for a non-discriminating, profit-maximizing monopolist, then what is the price?

The demand curve faced by a monopolist is the same as the marginal revenue curve.

A natural gas monopoly currently sells 100 gigajoules of natural gas at $11.00 per gigajoule. To sell one more gigajoule, the natural gas company must lower the price of natural gas to $10.90. Which of the following best describes the marginal revenue of the 101st gigajoule of natural gas?

Which of the following is a major difference between a monopolist and firms in perfectly competitive markets?

What quantity will a monopolist operate at?

What does average cost regulation of a natural monopoly NOT involve?

A natural monopolist will voluntarily choose to produce at the point of allocative efficiency.

Under what circumstances will a price-discriminating monopolist tend to charge a lower price to students?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. If the government is able to regulate the monopolist using average-cost pricing, what price and output combinations are expected to result?

Which of the following firms does NOT practice price discrimination?

Monopoly firms, which are provided a subsidy equal to their losses and subject to marginal cost-pricing regulation, have little incentive to minimize costs.

Figure 9-1 -Refer to Figure 9-1. What area indicates the welfare loss due to monopoly?

The following diagram contains information on cost and revenue curves facing a regulated monopoly. FIGURE 9-3 -Refer to Figure 9-3. Which of the following price and output combinations would the monopoly prefer?

What is the result when a monopolist is able to price-discriminate?

When setting prices, on what basis may the monopolist choose to charge alternative customers different prices?

TABLE 9-2 -Refer to Table 9-2. What is the profit-maximizing level of output?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters