Question 1

Explain why a firm may choose to price discriminate.

Accepted Answer

By charging different prices to differen

Question 2

In order for a monopoly to maximize its profit,the monopoly will produce the quantity at which marginal revenue is less than marginal cost.

Accepted Answer

A) True 
 B)False

Question 3

A firm can effectively practice price discrimination and increase profit if

Accepted Answer

A)  the marginal cost of production in each market is different. 
B)  the average cost of production in each market is different. 
C)  the price elasticity of demand in each market is different. 
D)  the product can be produced in two different factories. 
A)  the marginal cost of production in each market is different. 
B)  the average cost of production in each market is different. 
C)  the price elasticity of demand in each market is different. 
D)  the product can be produced in two different factories.

Question 4

In a monopoly,the market demand curve is

Accepted Answer

A)  the same as the demand curve facing the firm. 
B)  the summation of all the individual firms' demand curves. 
C)  nonexistent. 
D)  the marginal cost curve above minimum average variable cost. 
A)  the same as the demand curve facing the firm. 
B)  the summation of all the individual firms' demand curves. 
C)  nonexistent. 
D)  the marginal cost curve above minimum average variable cost.

Question 5

Which of the following is an example of price discrimination?

Accepted Answer

A)  Firm A sells its output for less than Firm B. 
B)  Firm C doubles the price of its output given a large increase in market demand. 
C)  Firm D is the only seller of a product. 
D)  Firm E gives senior citizens a 10% discount. 
A)  Firm A sells its output for less than Firm B. 
B)  Firm C doubles the price of its output given a large increase in market demand. 
C)  Firm D is the only seller of a product. 
D)  Firm E gives senior citizens a 10% discount.

Question 6

A profit-maximizing monopolist will produce an output level at which

Accepted Answer

A)  marginal revenue is zero. 
B)  marginal cost is minimized. 
C)  price equals marginal cost. 
D)  marginal revenue equals marginal cost. 
A)  marginal revenue is zero. 
B)  marginal cost is minimized. 
C)  price equals marginal cost. 
D)  marginal revenue equals marginal cost.

Question 7

Given that a firm can divide its customers into two groups with different price elasticities of demand,a firm will charge a lower price to the group with the inelastic demand.

Accepted Answer

A) True 
 B)False

Question 8

Suppose Coca Cola Company uses heat sensors and microchips to automatically change prices of its products.Which of the following economic concepts describes Coca Cola's goal to charge higher prices for a can of Coke on a hot day?

Accepted Answer

A)  price discrimination 
B)  rent-seeking 
C)  deadweight loss 
D)  internalizing an externality 
A)  price discrimination 
B)  rent-seeking 
C)  deadweight loss 
D)  internalizing an externality

Question 9

Another source of inefficiency from a monopoly is the use of resources to acquire monopoly power.

Accepted Answer

A) True 
 B)False

Question 10

Relative to a perfectly competitive market,a monopoly produces

Accepted Answer

A)  more output, charges higher prices, and earns economic profits. 
B)  more output, charges higher prices, and incurs economic losses. 
C)  less output, charges higher prices, and earns only a normal profit. 
D)  less output, charges higher prices, and earns economic profits. 
A)  more output, charges higher prices, and earns economic profits. 
B)  more output, charges higher prices, and incurs economic losses. 
C)  less output, charges higher prices, and earns only a normal profit. 
D)  less output, charges higher prices, and earns economic profits.

Question 11

Explain what economists mean when they refer to rent-seeking behavior.

Accepted Answer

Firms with monopoly power will earn a la

Question 12

A local cable company has a monopoly on cable service.If it sells 20 of its packages its total revenue is $10,000,and if it sells 21 packages its total revenue is $10,600.When the local cable company sells 21 packages,the price per package is closest to

Accepted Answer

A)  $600. 
B)  $505. 
C)  $500. 
D)  $50. 
A)  $600. 
B)  $505. 
C)  $500. 
D)  $50.

Question 13

-Refer to Figure 10.4.The Exclusive Gift Company has a monopoly over the sale of gold hula hoops.This company is currently selling 50 gold hula hoops at a price of $5,000.You are hired as an economic consultant to this company.You should advise this monopolist to

Accepted Answer

A)  shut down in the short run and exit the industry in the long run. 
B)  produce in the short run and expand capacity in the long run. 
C)  produce in the short run but exit the industry in the long run if conditions do not change. 
D)  shut down in the short run but expand capacity in the long run if conditions do not change. 
A)  shut down in the short run and exit the industry in the long run. 
B)  produce in the short run and expand capacity in the long run. 
C)  produce in the short run but exit the industry in the long run if conditions do not change. 
D)  shut down in the short run but expand capacity in the long run if conditions do not change.

Question 14

A firm has an opportunity of price discrimination if

Accepted Answer

A)  it has some control over the price of its product. 
B)  it can split consumers in to different groups. 
C)  its products are not easily resold. 
D)  All of the above are correct. 
A)  it has some control over the price of its product. 
B)  it can split consumers in to different groups. 
C)  its products are not easily resold. 
D)  All of the above are correct.

Question 15

One barrier to entry is a patent granted by consumer associations.

Accepted Answer

A) True 
 B)False

Question 16

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

Accepted Answer

A) True 
 B)False

Question 17

What three conditions must be met in order for a firm to be able to price discriminate?

Accepted Answer

(1)The firm must have market p

Question 18

-Figure 10.7 shows the demand and cost conditions for a monopolist.What is the firm's maximum profit?

Accepted Answer

The monopolist will produce 10

Question 19

A Colombian emerald mine has a monopoly over the production of emeralds in Colombia.The mine will find it profitable to increase the mining production of emeralds as long as marginal cost

Accepted Answer

A)  is less than marginal revenue. 
B)  equals marginal revenue. 
C)  is greater than marginal revenue. 
D)  is positive. 
A)  is less than marginal revenue. 
B)  equals marginal revenue. 
C)  is greater than marginal revenue. 
D)  is positive.

Question 20

Assume that Lorex is the only pharmaceutical company that has a patent in producing the cholesterol drug Lipitor.Lorex can make a profit by selling Lipitor

Accepted Answer

A)  in the short run but not in the long run because new firms will enter the industry in the long run. 
B)  only in the long run because government regulations prevent monopolists from earning profits in the short run. 
C)  in the long run but not the short run because the monopolist will face competition in the short run. 
D)  in the long run because entry into the industry by new firms is blocked until the patent expires. 
A)  in the short run but not in the long run because new firms will enter the industry in the long run. 
B)  only in the long run because government regulations prevent monopolists from earning profits in the short run. 
C)  in the long run but not the short run because the monopolist will face competition in the short run. 
D)  in the long run because entry into the industry by new firms is blocked until the patent expires.

Explain why a firm may choose to price discriminate.

In order for a monopoly to maximize its profit,the monopoly will produce the quantity at which marginal revenue is less than marginal cost.

A firm can effectively practice price discrimination and increase profit if

In a monopoly,the market demand curve is

Which of the following is an example of price discrimination?

A profit-maximizing monopolist will produce an output level at which

Given that a firm can divide its customers into two groups with different price elasticities of demand,a firm will charge a lower price to the group with the inelastic demand.

Suppose Coca Cola Company uses heat sensors and microchips to automatically change prices of its products.Which of the following economic concepts describes Coca Cola's goal to charge higher prices for a can of Coke on a hot day?

Another source of inefficiency from a monopoly is the use of resources to acquire monopoly power.

Relative to a perfectly competitive market,a monopoly produces

Explain what economists mean when they refer to rent-seeking behavior.

A local cable company has a monopoly on cable service.If it sells 20 of its packages its total revenue is $10,000,and if it sells 21 packages its total revenue is $10,600.When the local cable company sells 21 packages,the price per package is closest to

-Refer to Figure 10.4.The Exclusive Gift Company has a monopoly over the sale of gold hula hoops.This company is currently selling 50 gold hula hoops at a price of $5,000.You are hired as an economic consultant to this company.You should advise this monopolist to

A firm has an opportunity of price discrimination if

One barrier to entry is a patent granted by consumer associations.

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

What three conditions must be met in order for a firm to be able to price discriminate?

-Figure 10.7 shows the demand and cost conditions for a monopolist.What is the firm's maximum profit?

A Colombian emerald mine has a monopoly over the production of emeralds in Colombia.The mine will find it profitable to increase the mining production of emeralds as long as marginal cost

Assume that Lorex is the only pharmaceutical company that has a patent in producing the cholesterol drug Lipitor.Lorex can make a profit by selling Lipitor

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 10: Monopoly and Price Discrimination

Explain why a firm may choose to price discriminate.

In order for a monopoly to maximize its profit,the monopoly will produce the quantity at which marginal revenue is less than marginal cost.

A firm can effectively practice price discrimination and increase profit if

In a monopoly,the market demand curve is

Which of the following is an example of price discrimination?

A profit-maximizing monopolist will produce an output level at which

Given that a firm can divide its customers into two groups with different price elasticities of demand,a firm will charge a lower price to the group with the inelastic demand.

Suppose Coca Cola Company uses heat sensors and microchips to automatically change prices of its products.Which of the following economic concepts describes Coca Cola's goal to charge higher prices for a can of Coke on a hot day?

Another source of inefficiency from a monopoly is the use of resources to acquire monopoly power.

Relative to a perfectly competitive market,a monopoly produces

Explain what economists mean when they refer to rent-seeking behavior.

A local cable company has a monopoly on cable service.If it sells 20 of its packages its total revenue is $10,000,and if it sells 21 packages its total revenue is $10,600.When the local cable company sells 21 packages,the price per package is closest to

-Refer to Figure 10.4.The Exclusive Gift Company has a monopoly over the sale of gold hula hoops.This company is currently selling 50 gold hula hoops at a price of $5,000.You are hired as an economic consultant to this company.You should advise this monopolist to

A firm has an opportunity of price discrimination if

One barrier to entry is a patent granted by consumer associations.

Because the marginal revenue curve for a monopolist lies below its demand curve,the profit-maximizing price of the monopolist will be above marginal cost.

What three conditions must be met in order for a firm to be able to price discriminate?

-Figure 10.7 shows the demand and cost conditions for a monopolist.What is the firm's maximum profit?

A Colombian emerald mine has a monopoly over the production of emeralds in Colombia.The mine will find it profitable to increase the mining production of emeralds as long as marginal cost

Assume that Lorex is the only pharmaceutical company that has a patent in producing the cholesterol drug Lipitor.Lorex can make a profit by selling Lipitor

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters