Question 1

One necessary condition for effective price discrimination is:

Accepted Answer

A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them. 
A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them.

Question 2

If pizza used to be produced in a perfectly competitive market,and now the pizza market has become a monopoly,we can expect:

Accepted Answer

A)  less pizza to be sold at a higher price. 
B)  more pizza to be sold at a higher price. 
C)  less pizza to be sold at a lower price. 
D)  more pizza to be sold at a lower price. 
E)  the same amount of pizza to be sold at the same price. 
A)  less pizza to be sold at a higher price. 
B)  more pizza to be sold at a higher price. 
C)  less pizza to be sold at a lower price. 
D)  more pizza to be sold at a lower price. 
E)  the same amount of pizza to be sold at the same price.

Question 3

In contrast to a perfectly competitive firm,a monopolist earns:

Accepted Answer

A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  earns positive economic profit in the short run. 
A)  negative economic profit in the long run. 
B)  zero economic profit in the long run. 
C)  positive economic profit in the long run. 
D)  earns positive economic profit in the short run.

Question 4

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine
  
-As shown in Exhibit 8-3,in order to maximize its profit,what price should GeneTech charge for its vaccine?

Accepted Answer

A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose. 
A)  $20 per dose. 
B)  $25 per dose. 
C)  $35 per dose 
D)  $50 per dose.

Question 5

Exhibit 8-4 Demand and cost curves for a monopolist
  
-As shown in Exhibit 8-4,in order to maximize its profit (or minimize its loss),how much output should the monopoly produce?

Accepted Answer

A)  2 units per hour. 
B)  4 units per hour. 
C)  6 units per hour. 
D)  8 units per hour. 
A)  2 units per hour. 
B)  4 units per hour. 
C)  6 units per hour. 
D)  8 units per hour.

Question 6

In order for a monopolist to earn a pure economic profit in short-run equilibrium,price must exceed average total cost.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 8-5 Demand and cost data for a monopolist
  
-Refer to Exhibit 8-5.The demand schedule and cost schedule for a monopolist are provided.Which output level maximizes profit?

Accepted Answer

A)  2. 
B)  6. 
C)  4. 
D)  5. 
E)  7. 
A)  2. 
B)  6. 
C)  4. 
D)  5. 
E)  7.

Question 8

Exhibit 8-1 Monopolist's demand curve
  
-In Exhibit 8-1,the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

Accepted Answer

A)  A to B. 
B)  A to C. 
C)  A to D. 
D)  C to B. 
E)  C to D. 
A)  A to B. 
B)  A to C. 
C)  A to D. 
D)  C to B. 
E)  C to D.

Question 9

A monopolist earning economic profit in the short run determines that at its present level of output,marginal revenue is $23 and marginal cost is $30.Which of the following should the firm do to increase profit?

Accepted Answer

A)  Raise price and lower output. 
B)  Lower price and lower output. 
C)  Raise price and raise output. 
D)  Lower price and raise output. 
E)  Lower output, but leave price unchanged. 
A)  Raise price and lower output. 
B)  Lower price and lower output. 
C)  Raise price and raise output. 
D)  Lower price and raise output. 
E)  Lower output, but leave price unchanged.

Question 10

If marginal cost exceeds marginal revenue,a profit-maximizing monopolist will:

Accepted Answer

A)  restrict output to increase the price even higher. 
B)  raise price and expand output to increase profit. 
C)  lower price and expand output to increase profit. 
D)  attempt to maintain this position because it is consistent with profit maximization. 
A)  restrict output to increase the price even higher. 
B)  raise price and expand output to increase profit. 
C)  lower price and expand output to increase profit. 
D)  attempt to maintain this position because it is consistent with profit maximization.

Question 11

Exhibit 8-8 Profit maximizing for a monopolist
  
-The profit-maximizing output for the monopolist in Exhibit 8-8 is:

Accepted Answer

A)  zero. 
B)  OQ₁. 
C)  OQ₂ 
D)  OQ₃. 
A)  zero. 
B)  OQ₁. 
C)  OQ₂ 
D)  OQ₃.

Question 12

Which of the following best explains an economic criticism of unregulated monopolists?

Accepted Answer

A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them. 
A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumer's waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.

Question 13

Price discrimination occurs when:

Accepted Answer

A)  firms maximize their profit by setting price equal to marginal cost. 
B)  a seller charges different prices to different consumers of the same product or service. 
C)  a seller charges the same price to consumers of a different product or service. 
D)  a seller charges different prices to consumers, discriminating by race or gender of the consumer. 
A)  firms maximize their profit by setting price equal to marginal cost. 
B)  a seller charges different prices to different consumers of the same product or service. 
C)  a seller charges the same price to consumers of a different product or service. 
D)  a seller charges different prices to consumers, discriminating by race or gender of the consumer.

Question 14

A monopolist will be able to earn positive pure economic profits regardless of the price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 15

A monopoly is:

Accepted Answer

A)  a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run. 
B)  the only seller of a good for which there are no good substitutes in a market with high barriers to entry. 
C)  the only buyer of a unique raw material. 
D)  the producer of a product subsidized by the government. 
A)  a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run. 
B)  the only seller of a good for which there are no good substitutes in a market with high barriers to entry. 
C)  the only buyer of a unique raw material. 
D)  the producer of a product subsidized by the government.

Question 16

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

Accepted Answer

A)  natural monopoly. 
B)  competitive monopoly. 
C)  patent monopoly. 
D)  limit monopoly. 
A)  natural monopoly. 
B)  competitive monopoly. 
C)  patent monopoly. 
D)  limit monopoly.

Question 17

In a natural monopoly,the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Accepted Answer

A) True 
 B)False

Question 18

Which barrier to entry results in the creation of a natural monopoly?

Accepted Answer

A)  Legal barriers like government franchises. 
B)  Economies of scale. 
C)  Ownership of a vital resource. 
D)  Patents and copyrights. 
A)  Legal barriers like government franchises. 
B)  Economies of scale. 
C)  Ownership of a vital resource. 
D)  Patents and copyrights.

Question 19

A monopolist will operate in the short run if which of the following is above average variable cost?

Accepted Answer

A)  Marginal cost. 
B)  Marginal revenue. 
C)  Price. 
D)  All of the above. 
A)  Marginal cost. 
B)  Marginal revenue. 
C)  Price. 
D)  All of the above.

Question 20

What are the conditions for price discrimination?

Accepted Answer

The firm must possess some ability to co

Exam 8: Monopoly

One necessary condition for effective price discrimination is:

If pizza used to be produced in a perfectly competitive market,and now the pizza market has become a monopoly,we can expect:

In contrast to a perfectly competitive firm,a monopolist earns:

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 8-3,in order to maximize its profit,what price should GeneTech charge for its vaccine?

Exhibit 8-4 Demand and cost curves for a monopolist -As shown in Exhibit 8-4,in order to maximize its profit (or minimize its loss),how much output should the monopoly produce?

In order for a monopolist to earn a pure economic profit in short-run equilibrium,price must exceed average total cost.

Exhibit 8-5 Demand and cost data for a monopolist -Refer to Exhibit 8-5.The demand schedule and cost schedule for a monopolist are provided.Which output level maximizes profit?

Exhibit 8-1 Monopolist's demand curve -In Exhibit 8-1,the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

A monopolist earning economic profit in the short run determines that at its present level of output,marginal revenue is $23 and marginal cost is $30.Which of the following should the firm do to increase profit?

If marginal cost exceeds marginal revenue,a profit-maximizing monopolist will:

Exhibit 8-8 Profit maximizing for a monopolist -The profit-maximizing output for the monopolist in Exhibit 8-8 is:

Which of the following best explains an economic criticism of unregulated monopolists?

Price discrimination occurs when:

A monopolist will be able to earn positive pure economic profits regardless of the price elasticity of demand.

A monopoly is:

An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:

In a natural monopoly,the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Which barrier to entry results in the creation of a natural monopoly?

A monopolist will operate in the short run if which of the following is above average variable cost?

What are the conditions for price discrimination?

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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