Question 1

Which of the following is a necessary condition for price discrimination?

Accepted Answer

A) The seller must be able to divide the markets according to the different price elasticities of demand. 
B) It must be difficult for one buyer to resell to another buyer. 
C) Both a and b. 
D) Neither a nor b. 
A) The seller must be able to divide the markets according to the different price elasticities of demand. 
B) It must be difficult for one buyer to resell to another buyer. 
C) Both a and b. 
D) Neither a nor b. C

Question 2

In contrast to a perfectly competitive firm,a monopolist operates in the long run at a quantity of output at which:

Accepted Answer

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

Question 3

Regardless of the demand for its product,a monopolist will be able to earn positive economic profits.

Accepted Answer

A) True 
 B)False  False

Question 4

A monopoly will price its product:

Accepted Answer

A)  where total revenue is maximized. 
B)  where total costs are minimized. 
C)  at that point on the market demand curve corresponding to an output level in which marginal revenue equals marginal cost. 
D)  at that point on the market demand curve which intersects the marginal cost curve. 
A)  where total revenue is maximized. 
B)  where total costs are minimized. 
C)  at that point on the market demand curve corresponding to an output level in which marginal revenue equals marginal cost. 
D)  at that point on the market demand curve which intersects the marginal cost curve.

Question 5

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 8-7 Monopolist
  
-According to the information provided in Exhibit 8-7,if the Rudd Ice Company was a monopoly and is currently charging a price of $8,what would you advise Rudd to do?

Accepted Answer

A)  Stay where he is currently operating because he is charging the profit maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant. 
A)  Stay where he is currently operating because he is charging the profit maximizing price. 
B)  Increase price and increase output. 
C)  Decrease price and increase output. 
D)  Increase output and hold price constant. 
E)  Increase price and hold output constant.

Question 7

A monopolist will charge a lower price and produce more output than if it was operating in a competitive market.

Accepted Answer

A) True 
 B)False

Question 8

In order for a monopolist to earn an economic profit in short-run equilibrium,marginal revenue must be equal to zero.

Accepted Answer

A) True 
 B)False

Question 9

A monopolized market is characterized by:

Accepted Answer

A)  a sole seller of a product for which there are few suitable substitutes. 
B)  very strong barriers to entry. 
C)  a single firm facing the market demand curve. 
D)  all of the above. 
A)  a sole seller of a product for which there are few suitable substitutes. 
B)  very strong barriers to entry. 
C)  a single firm facing the market demand curve. 
D)  all of the above.

Question 10

An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true for a monopolist?

Accepted Answer

A)  The firm has a perfectly elastic demand curve. 
B)  The firm has a perfectly inelastic demand curve. 
C)  The straight-line demand curve is above the marginal revenue curve. 
D)  The marginal revenue curve is above the demand curve. 
E)  All of the above. 
A)  The firm has a perfectly elastic demand curve. 
B)  The firm has a perfectly inelastic demand curve. 
C)  The straight-line demand curve is above the marginal revenue curve. 
D)  The marginal revenue curve is above the demand curve. 
E)  All of the above.

Question 12

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine
  
-In Exhibit 8-3,what is the maximum hourly profit that GeneTech can earn from its vaccine?

Accepted Answer

A)  $1,500. 
B)  $3,000. 
C)  $4,500. 
D)  $10,500. 
A)  $1,500. 
B)  $3,000. 
C)  $4,500. 
D)  $10,500.

Question 13

At the level of output where the marginal cost and marginal revenue curves intersect,a monopolist's demand curve passes above its average total cost curve.The firm will:

Accepted Answer

A)  be able to make a pure economic profit. 
B)  stay in operation in the short-run, but shut down. 
C)  shut down in the short-run. 
D)  increase its price. 
A)  be able to make a pure economic profit. 
B)  stay in operation in the short-run, but shut down. 
C)  shut down in the short-run. 
D)  increase its price.

Question 14

The demand curve for a monopolist is:

Accepted Answer

A)  the demand curve for the industry. 
B)  less than the market demand curve. 
C)  below the marginal revenue curve. 
D)  nonexistent. 
E)  the sum of the demand curves of the perfectly competitive firms in the industry. 
A)  the demand curve for the industry. 
B)  less than the market demand curve. 
C)  below the marginal revenue curve. 
D)  nonexistent. 
E)  the sum of the demand curves of the perfectly competitive firms in the industry.

Question 15

An example of price discrimination is the price charged for:

Accepted Answer

A)  a postage stamp. 
B)  theater tickets that offer lower prices for children. 
C)  an economics textbook at a campus bookstore. 
D)  Any of the above. 
A)  a postage stamp. 
B)  theater tickets that offer lower prices for children. 
C)  an economics textbook at a campus bookstore. 
D)  Any of the above.

Question 16

Compared to a perfectly competitive industry,a monopolist with the same marginal cost and demand curve will charge:

Accepted Answer

A)  a higher price and produce a higher volume of output. 
B)  a lower price and produce a higher volume of output. 
C)  a lower price and produce a lower volume of output. 
D)  a higher price and produce a lower volume of output. 
E)  the same price and produce the same volume of output. 
A)  a higher price and produce a higher volume of output. 
B)  a lower price and produce a higher volume of output. 
C)  a lower price and produce a lower volume of output. 
D)  a higher price and produce a lower volume of output. 
E)  the same price and produce the same volume of output.

Question 17

Suppose a monopolist's demand curve lies below its average variable cost curve.The firm will:

Accepted Answer

A)  earn an economic profit. 
B)  stay in operation in the short-run. 
C)  shut down. 
D)  none of the above. 
A)  earn an economic profit. 
B)  stay in operation in the short-run. 
C)  shut down. 
D)  none of the above.

Question 18

____ is the act of buying a commodity in one market at a lower price and selling it in another market at a higher price.

Accepted Answer

A)  Buying short. 
B)  Discounting. 
C)  Tariffing. 
D)  Arbitrage. 
A)  Buying short. 
B)  Discounting. 
C)  Tariffing. 
D)  Arbitrage.

Question 19

Exhibit 8-9 A monopolist
  
-In Exhibit 8-9,at the profit-maximizing or loss-minimizing output,the monopolist's total economic profit is:

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  minimum.

Question 20

At a price of $5,24 units of the good would be sold; at a price of $7,25 units of output would be sold.The marginal revenue of the 25th unit of output is:

Accepted Answer

A)  $14. 
B)  $55. 
C)  $6. 
D)  $168. 
E)  $175. 
A)  $14. 
B)  $55. 
C)  $6. 
D)  $168. 
E)  $175.

Exam 8: Monopoly

Which of the following is a necessary condition for price discrimination?

In contrast to a perfectly competitive firm,a monopolist operates in the long run at a quantity of output at which:

Regardless of the demand for its product,a monopolist will be able to earn positive economic profits.

A monopoly will price its product:

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

Exhibit 8-7 Monopolist -According to the information provided in Exhibit 8-7,if the Rudd Ice Company was a monopoly and is currently charging a price of $8,what would you advise Rudd to do?

A monopolist will charge a lower price and produce more output than if it was operating in a competitive market.

In order for a monopolist to earn an economic profit in short-run equilibrium,marginal revenue must be equal to zero.

A monopolized market is characterized by:

An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service.

Which of the following is true for a monopolist?

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -In Exhibit 8-3,what is the maximum hourly profit that GeneTech can earn from its vaccine?

At the level of output where the marginal cost and marginal revenue curves intersect,a monopolist's demand curve passes above its average total cost curve.The firm will:

The demand curve for a monopolist is:

An example of price discrimination is the price charged for:

Compared to a perfectly competitive industry,a monopolist with the same marginal cost and demand curve will charge:

Suppose a monopolist's demand curve lies below its average variable cost curve.The firm will:

____ is the act of buying a commodity in one market at a lower price and selling it in another market at a higher price.

Exhibit 8-9 A monopolist -In Exhibit 8-9,at the profit-maximizing or loss-minimizing output,the monopolist's total economic profit is:

At a price of $5,24 units of the good would be sold; at a price of $7,25 units of output would be sold.The marginal revenue of the 25th unit of output is:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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