Question 1

Which of the following statements about price discrimination is false?

Accepted Answer

A) Price discrimination is a method for a seller to capture some consumer surplus. 
B) Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C) Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D) Price discrimination increases a monopoly's profit. 
E) All forms of price discrimination are illegal. 
A) Price discrimination is a method for a seller to capture some consumer surplus. 
B) Compared to a single-price monopoly, the number of units sold increases when a monopoly price discriminates. 
C) Charging less for a second pizza that is identical to the first is an example of price discrimination. 
D) Price discrimination increases a monopoly's profit. 
E) All forms of price discrimination are illegal.

Question 2

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

Accepted Answer

A) P = MC 
B) P = MR 
C) MR = MC 
D) MC = ATC 
E) P > ATC 
A) P = MC 
B) P = MR 
C) MR = MC 
D) MC = ATC 
E) P > ATC

Question 3

-The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, Paul produces ________ pillows per hour and if the market was perfectly competitive, ________ pillows per hour would be produced.

Accepted Answer

A) 0; 4,000 
B) 3,000; 4,000 
C) 4,000; 4,000 
D) 3,000; 3,000 
E) 0; 3,000 
A) 0; 4,000 
B) 3,000; 4,000 
C) 4,000; 4,000 
D) 3,000; 3,000 
E) 0; 3,000

Question 4

12.6 Chapter Figures
   
The figure above shows a firm's demand and average total cost curves.
-The situation in the figure above creates a barrier to entry for a second firm because i. a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss.
Ii. a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers.
Iii. the first firm's average total cost curve indicates it has been given a patent for the product.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i and iii

Question 5

With perfect price discrimination ________, and production is expanded until marginal revenue equals ________.

Accepted Answer

A) the firm's demand curve becomes its marginal revenue curve; marginal cost 
B) the firm's demand curve becomes its marginal revenue curve; average total cost 
C) the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; marginal cost 
D) the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; average total cost 
E) economic profit is maximized when the lowest price equals marginal cost; average total cost. 
A) the firm's demand curve becomes its marginal revenue curve; marginal cost 
B) the firm's demand curve becomes its marginal revenue curve; average total cost 
C) the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; marginal cost 
D) the firm's marginal revenue curve bisects the angle with which demand intersects the price-axis; average total cost 
E) economic profit is maximized when the lowest price equals marginal cost; average total cost.

Question 6

With an average cost pricing rule, the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) greater than in the long run and less than in the short run than 
E) not comparable to 
A) greater than 
B) less than 
C) equal to 
D) greater than in the long run and less than in the short run than 
E) not comparable to

Question 7

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 22 & 9 \
2 & 20 & 10 \
3 & 18 & 12 \
4 & 16 & 16 \
5 & 14 & 22 \
6 & 12 & 30 \
7 & 10 & 40 \
8 & 8 & 52
\end{array}$$
-A monopolist has the market demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?

Accepted Answer

As a perfectly price discrimin

Question 8

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. The capture

Question 9

Which of the following is NOT a requirement for a firm to be able to price discriminate?

Accepted Answer

A) monopoly power 
B) groups of customers with different willingness to pay for the good 
C) economies of scale 
D) ability to keep the members of different customer groups separate 
E) ability to prevent resales of the product by customers 
A) monopoly power 
B) groups of customers with different willingness to pay for the good 
C) economies of scale 
D) ability to keep the members of different customer groups separate 
E) ability to prevent resales of the product by customers

Question 10

A natural monopoly

Accepted Answer

A) faces more competition after regulation. 
B) might exaggerate its costs if it is regulated using rate of return regulation. 
C) might falsely minimize its costs if it is regulated using rate of return regulation. 
D) might falsely minimize its costs if it is regulated using a marginal cost pricing rule. 
E) is allowed to maximize its profit under a marginal cost pricing rule. 
A) faces more competition after regulation. 
B) might exaggerate its costs if it is regulated using rate of return regulation. 
C) might falsely minimize its costs if it is regulated using rate of return regulation. 
D) might falsely minimize its costs if it is regulated using a marginal cost pricing rule. 
E) is allowed to maximize its profit under a marginal cost pricing rule.

Question 11

The above figure shows a market.
-If the market was a monopoly, the quantity would be ________ and the price would be ________; if the market tis perfectly competitive, the quantity would be ________ and the price would be ________.

Accepted Answer

A) Q₁; P₁; Q₂; P₂ 
B) Q₂; P₁; Q₁; P₂ 
C) Q₁; P₁; Q₂; P₁ 
D) Q₁; P₂; Q₂; P₁ 
E) Q₁; P₂; Q₁; P₁ 
A) Q₁; P₁; Q₂; P₂ 
B) Q₂; P₁; Q₁; P₂ 
C) Q₁; P₁; Q₂; P₁ 
D) Q₁; P₂; Q₂; P₁ 
E) Q₁; P₂; Q₁; P₁

Question 12

A monopoly creates a deadweight loss because the monopoly

Accepted Answer

A) sets a price that is too low. 
B) makes a normal profit. 
C) does not maximize profit. 
D) produces less than the efficient quantity. 
E) produces more than the efficient quantity. 
A) sets a price that is too low. 
B) makes a normal profit. 
C) does not maximize profit. 
D) produces less than the efficient quantity. 
E) produces more than the efficient quantity.

Question 13

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. What is the firm's total revenue?

Accepted Answer

A) $38 
B) $285 
C) $570 
D) $19 
E) There is not enough information given to answer the question. 
A) $38 
B) $285 
C) $570 
D) $19 
E) There is not enough information given to answer the question.

Question 14

The above figure shows a market.
-If the market in the figure above is a profit-maximizing single-price monopoly, consumer surplus is the area ________.

Accepted Answer

A) ABH 
B) BFGH 
C) ACG 
D) BCD 
E) ACE 
A) ABH 
B) BFGH 
C) ACG 
D) BCD 
E) ACE

Question 15

$$\begin{array} { c c } 
\text { Price(dollars) } & \text { Quantity(units) } \
\hline 6 & 1 \
5 & 2 \
4 & 3 \
3 & 4 \
2 & 5 \
1 & 6 \
\hline
\end{array}$$
-The above table gives the demand schedule for a monopoly. The demand is elastic at all prices between

Accepted Answer

A) $6 and $1. 
B) $5 and $1. 
C) $3 and $1. 
D) $6 and $4. 
E) $4 and $3. 
A) $6 and $1. 
B) $5 and $1. 
C) $3 and $1. 
D) $6 and $4. 
E) $4 and $3.

Question 16

Compared to a perfectly competitive industry, a single-price monopoly produces

Accepted Answer

A) more output. 
B) less output. 
C) the same output. 
D) some amount that might be more, less, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E) some amount that might be more, less, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve. 
A) more output. 
B) less output. 
C) the same output. 
D) some amount that might be more, less, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. 
E) some amount that might be more, less, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve.

Question 17

"If Michigan's electric utilities were allowed to use marginal cost pricing, it would lead to economic profits for these utilities." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. Im

Question 18

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

Accepted Answer

A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly. 
A) price discriminating. 
B) a natural monopoly. 
C) a legal monopoly. 
D) efficient when profit maximizing. 
E) an ownership-of-the-market monopoly.

Question 19

When demand is elastic, marginal revenue is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) increasing as output increases. 
E) undefined. 
A) positive. 
B) negative. 
C) zero. 
D) increasing as output increases. 
E) undefined.

Question 20

Firms that can effectively price discriminate

Accepted Answer

A) can be either perfectly competitive firms or monopolies. 
B) can prevent the resale of their products. 
C) have only one class of buyers, buyers willing to pay a high price. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) can be either perfectly competitive firms or monopolies. 
B) can prevent the resale of their products. 
C) have only one class of buyers, buyers willing to pay a high price. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Which of the following statements about price discrimination is false?

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

With perfect price discrimination , and production is expanded until marginal revenue equals .

With an average cost pricing rule, the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Which of the following is NOT a requirement for a firm to be able to price discriminate?

A natural monopoly

The above figure shows a market. -If the market was a monopoly, the quantity would be and the price would be ; if the market tis perfectly competitive, the quantity would be and the price would be .

A monopoly creates a deadweight loss because the monopoly

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. What is the firm's total revenue?

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, consumer surplus is the area ________.

Price(dollars) Quantity(units) 6 1 5 2 4 3 3 4 2 5 1 6 -The above table gives the demand schedule for a monopoly. The demand is elastic at all prices between

Compared to a perfectly competitive industry, a single-price monopoly produces

"If Michigan's electric utilities were allowed to use marginal cost pricing, it would lead to economic profits for these utilities." Is the previous statement correct or incorrect?

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

When demand is elastic, marginal revenue is

Firms that can effectively price discriminate

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 12: Monopoly

Which of the following statements about price discrimination is false?

Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?

With perfect price discrimination ________, and production is expanded until marginal revenue equals ________.

With an average cost pricing rule, the quantity produced by the natural monopoly is ________ the quantity produced with a marginal cost pricing rule.

"The theory that regulation seeks an efficient use of resources is called the capture theory of regulation." Is the previous statement correct or incorrect?

Which of the following is NOT a requirement for a firm to be able to price discriminate?

A natural monopoly

The above figure shows a market. -If the market was a monopoly, the quantity would be ________ and the price would be ________; if the market tis perfectly competitive, the quantity would be ________ and the price would be ________.

A monopoly creates a deadweight loss because the monopoly

A single-price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. What is the firm's total revenue?

The above figure shows a market. -If the market in the figure above is a profit-maximizing single-price monopoly, consumer surplus is the area ________.

Price(dollars) Quantity(units) 6 1 5 2 4 3 3 4 2 5 1 6 -The above table gives the demand schedule for a monopoly. The demand is elastic at all prices between

Compared to a perfectly competitive industry, a single-price monopoly produces

"If Michigan's electric utilities were allowed to use marginal cost pricing, it would lead to economic profits for these utilities." Is the previous statement correct or incorrect?

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

When demand is elastic, marginal revenue is

Firms that can effectively price discriminate

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

With perfect price discrimination , and production is expanded until marginal revenue equals .

The above figure shows a market. -If the market was a monopoly, the quantity would be and the price would be ; if the market tis perfectly competitive, the quantity would be and the price would be .