Question 1

Suppose that a local gym can divide its customers into two groups with different price elasticities of demand.Which of the following is true?

Accepted Answer

A)  If a local gym uses price discrimination, it will charge the lower price to the group with the most price elastic demand. 
B)  If a local gym uses price discrimination, it will charge the higher price to the group with the most price elastic demand. 
C)  Although the different groups have different price elasticities of demand, they have the same willingness-to-pay for gym memberships. 
D)  Price discrimination will not benefit a local gym. 
A)  If a local gym uses price discrimination, it will charge the lower price to the group with the most price elastic demand. 
B)  If a local gym uses price discrimination, it will charge the higher price to the group with the most price elastic demand. 
C)  Although the different groups have different price elasticities of demand, they have the same willingness-to-pay for gym memberships. 
D)  Price discrimination will not benefit a local gym.

Question 2

On any given day,Disney World can price discriminate and charge local visitors a ________ price for a ticket than out of state visitors because local visitors have a more ________ demand.

Accepted Answer

A)  lower; inelastic 
B)  lower; elastic 
C)  higher; inelastic 
D)  higher; elastic 
A)  lower; inelastic 
B)  lower; elastic 
C)  higher; inelastic 
D)  higher; elastic

Question 3

-Refer to Figure 10.6.The profit-maximizing (or loss-minimizing)level of output is

Accepted Answer

A)  zero. 
B)  10,000. 
C)  approximately 15,000. 
D)  approximately 25,000. 
A)  zero. 
B)  10,000. 
C)  approximately 15,000. 
D)  approximately 25,000.

Question 4

The trade-offs faced by a monopolist in cutting price to sell a larger quantity leads to marginal revenue being

Accepted Answer

A)  less than price. 
B)  greater than price. 
C)  equal to price. 
D)  none of the above 
A)  less than price. 
B)  greater than price. 
C)  equal to price. 
D)  none of the above

Question 5

Which one of the following is good example of a natural monopoly?

Accepted Answer

A)  electricity 
B)  cable TV service 
C)  water systems 
D)  all of the above 
A)  electricity 
B)  cable TV service 
C)  water systems 
D)  all of the above

Question 6

-Refer to Figure 10.6.At the profit-maximizing level of output,the firm has a

Accepted Answer

A)  profit of $10,000. 
B)  profit of $20,000. 
C)  loss of $10,000. 
D)  break-even position. 
A)  profit of $10,000. 
B)  profit of $20,000. 
C)  loss of $10,000. 
D)  break-even position.

Question 7

Tower Communications,Inc.has a monopoly over local cellphone service.If Tower Communications,Inc.is producing where marginal revenue is greater than marginal cost,the firm

Accepted Answer

A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning a zero profit. 
A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning a zero profit.

Question 8

Price discrimination is best described as a situation where a firm

Accepted Answer

A)  charges buyers an excessive price for its product. 
B)  charges different prices to different groups of buyers. 
C)  sells the same product for different prices from one year to another. 
D)  acts as a price taker. 
A)  charges buyers an excessive price for its product. 
B)  charges different prices to different groups of buyers. 
C)  sells the same product for different prices from one year to another. 
D)  acts as a price taker.

Question 9

Patents are barriers to entry created by

Accepted Answer

A)  contractual agreement. 
B)  consumer associations. 
C)  industry associations. 
D)  governments. 
A)  contractual agreement. 
B)  consumer associations. 
C)  industry associations. 
D)  governments.

Question 10

-Refer to Figure 10.1.The marginal revenue of the sixth pound of cheese is

Accepted Answer

A)  -$4. 
B)  -$1. 
C)  $1. 
D)  $4. 
A)  -$4. 
B)  -$1. 
C)  $1. 
D)  $4.

Question 11

-Refer to Figure 10.2.The marginal revenue of the 10th pound of burritos is

Accepted Answer

A)  -$4. 
B)  -$1. 
C)  $1. 
D)  $4. 
A)  -$4. 
B)  -$1. 
C)  $1. 
D)  $4.

Question 12

When comparing a monopoly to a perfectly competitive industry at the equilibrium point,we find that monopoly is

Accepted Answer

A)  inefficient because it charges higher prices. 
B)  inefficient because it generates less output. 
C)  efficient because it generate more output due to economies of scale. 
D)  neither efficient nor inefficient. 
A)  inefficient because it charges higher prices. 
B)  inefficient because it generates less output. 
C)  efficient because it generate more output due to economies of scale. 
D)  neither efficient nor inefficient.

Question 13

Suppose you buy a 1 gallon can of paint and the manufacturer gives you a $5-off mail-in rebate,which you immediately mail in.You are not willing to pay as much as the typical consumer.

Accepted Answer

A) True 
 B)False

Question 14

-Refer to Figure 10.6.The profit-maximizing price is

Accepted Answer

A)  $2. 
B)  $4. 
C)  approximately $4.50. 
D)  $5. 
A)  $2. 
B)  $4. 
C)  approximately $4.50. 
D)  $5.

Question 15

It is possible for society to gain by awarding 20-year patents to companies.

Accepted Answer

A) True 
 B)False

Question 16

The Rare Bird Company has a monopoly in the sale of macaws in Iowa.When the Rare Bird Company sells three macaws its marginal revenue is $30.When the Rare Bird Company sells four macaws its marginal revenue will be

Accepted Answer

A)  less than $30. 
B)  greater than $30. 
C)  equal to $30. 
D)  greater than $30 if demand is elastic and less than $30 if demand is inelastic. 
A)  less than $30. 
B)  greater than $30. 
C)  equal to $30. 
D)  greater than $30 if demand is elastic and less than $30 if demand is inelastic.

Question 17

Which of the following statements about price discrimination is true?

Accepted Answer

A)  It can only be used by monopolistic firms. 
B)  It is only possible if the good cannot be resold. 
C)  It maximizes consumer welfare since each consumer pays only what he is willing to pay. 
D)  All of the above are true. 
A)  It can only be used by monopolistic firms. 
B)  It is only possible if the good cannot be resold. 
C)  It maximizes consumer welfare since each consumer pays only what he is willing to pay. 
D)  All of the above are true.

Question 18

When patents expire,new firms enter the market and prices fall.

Accepted Answer

A) True 
 B)False

Question 19

Booksellers are able to charge ________ prices to consumers who buy hardback books because their demand for the book is more ________ than consumers who wait until the paperback comes out.

Accepted Answer

A)  lower; inelastic 
B)  lower; elastic 
C)  higher; elastic 
D)  higher; inelastic 
A)  lower; inelastic 
B)  lower; elastic 
C)  higher; elastic 
D)  higher; inelastic

Question 20

Assume that the local bread industry is perfectly competitive and faces constant returns to scale.Draw a graph showing the output of bread (QC)and the price of bread (PC)in a competitive market.Suppose that a monopolist buys all of the independent bread companies in the local area.What will happen to the output of bread? Show this on your graph.(Label it QM.)What will happen to the price of bread? Show this on your graph.(Label it PM.)

Accepted Answer

The competitive market will produce at l

Suppose that a local gym can divide its customers into two groups with different price elasticities of demand.Which of the following is true?

On any given day,Disney World can price discriminate and charge local visitors a price for a ticket than out of state visitors because local visitors have a more demand.

-Refer to Figure 10.6.The profit-maximizing (or loss-minimizing)level of output is

The trade-offs faced by a monopolist in cutting price to sell a larger quantity leads to marginal revenue being

Which one of the following is good example of a natural monopoly?

-Refer to Figure 10.6.At the profit-maximizing level of output,the firm has a

Tower Communications,Inc.has a monopoly over local cellphone service.If Tower Communications,Inc.is producing where marginal revenue is greater than marginal cost,the firm

Price discrimination is best described as a situation where a firm

Patents are barriers to entry created by

-Refer to Figure 10.1.The marginal revenue of the sixth pound of cheese is

-Refer to Figure 10.2.The marginal revenue of the 10th pound of burritos is

When comparing a monopoly to a perfectly competitive industry at the equilibrium point,we find that monopoly is

Suppose you buy a 1 gallon can of paint and the manufacturer gives you a $5-off mail-in rebate,which you immediately mail in.You are not willing to pay as much as the typical consumer.

-Refer to Figure 10.6.The profit-maximizing price is

It is possible for society to gain by awarding 20-year patents to companies.

The Rare Bird Company has a monopoly in the sale of macaws in Iowa.When the Rare Bird Company sells three macaws its marginal revenue is $30.When the Rare Bird Company sells four macaws its marginal revenue will be

Which of the following statements about price discrimination is true?

When patents expire,new firms enter the market and prices fall.

Booksellers are able to charge prices to consumers who buy hardback books because their demand for the book is more than consumers who wait until the paperback comes out.

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

Suppose that a local gym can divide its customers into two groups with different price elasticities of demand.Which of the following is true?

On any given day,Disney World can price discriminate and charge local visitors a ________ price for a ticket than out of state visitors because local visitors have a more ________ demand.

-Refer to Figure 10.6.The profit-maximizing (or loss-minimizing)level of output is

The trade-offs faced by a monopolist in cutting price to sell a larger quantity leads to marginal revenue being

Which one of the following is good example of a natural monopoly?

-Refer to Figure 10.6.At the profit-maximizing level of output,the firm has a

Tower Communications,Inc.has a monopoly over local cellphone service.If Tower Communications,Inc.is producing where marginal revenue is greater than marginal cost,the firm

Price discrimination is best described as a situation where a firm

Patents are barriers to entry created by

-Refer to Figure 10.1.The marginal revenue of the sixth pound of cheese is

-Refer to Figure 10.2.The marginal revenue of the 10th pound of burritos is

When comparing a monopoly to a perfectly competitive industry at the equilibrium point,we find that monopoly is

Suppose you buy a 1 gallon can of paint and the manufacturer gives you a $5-off mail-in rebate,which you immediately mail in.You are not willing to pay as much as the typical consumer.

-Refer to Figure 10.6.The profit-maximizing price is

It is possible for society to gain by awarding 20-year patents to companies.

The Rare Bird Company has a monopoly in the sale of macaws in Iowa.When the Rare Bird Company sells three macaws its marginal revenue is $30.When the Rare Bird Company sells four macaws its marginal revenue will be

Which of the following statements about price discrimination is true?

When patents expire,new firms enter the market and prices fall.

Booksellers are able to charge ________ prices to consumers who buy hardback books because their demand for the book is more ________ than consumers who wait until the paperback comes out.

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

On any given day,Disney World can price discriminate and charge local visitors a price for a ticket than out of state visitors because local visitors have a more demand.

Booksellers are able to charge prices to consumers who buy hardback books because their demand for the book is more than consumers who wait until the paperback comes out.