Question 1

The practice of charging different prices on the basis of varying customer preferences is known as:

Accepted Answer

A) arbitrage. 
B) discounting. 
C) price discrimination. 
D) rationing. 
A) arbitrage. 
B) discounting. 
C) price discrimination. 
D) rationing.

Question 2

The following figure shows the demand and marginal revenue for a monopolist, who has many buyers with different valuations of the good.Each buyer demands only one unit of the good, and only two are willing to pay $6.5 for it.The valuation decreases for each additional buyer as shown in the figure.The marginal cost of production is $3 per unit.

-Refer to Figure .How much profit will the monopolist earn if he practices price discrimination?

Accepted Answer

A) $10 
B) $25 
C) $15 
D) $22 
A) $10 
B) $25 
C) $15 
D) $22

Question 3

The following figure shows the demand, marginal revenue, and marginal cost curves for a profit maximizing monopolist.
   
-Refer to Figure .Which of the following conclusions can be drawn from this figure?

Accepted Answer

A) The monopolist produces at the point where marginal cost is zero. 
B) The monopolist incurs a fixed marginal cost of OC'. 
C) The monopolist charges a price of OP' and total revenue is OP'D'Q'. 
D) The consumer surplus enjoyed by customers is PC'D". 
A) The monopolist produces at the point where marginal cost is zero. 
B) The monopolist incurs a fixed marginal cost of OC'. 
C) The monopolist charges a price of OP' and total revenue is OP'D'Q'. 
D) The consumer surplus enjoyed by customers is PC'D".

Question 4

A monopolist serves two markets with constant elasticity demand curves.However, the elasticities vary between the two markets.Graphically show how price discrimination benefits the monopolist in this case.

Accepted Answer

The following figure sets forth the gene

Question 5

What are the main differences between a monopolist and a perfectly competitive firm?

Accepted Answer

A monopolist is a price maker, while a c

Question 6

A single-price monopolist produces closer to the competitive level than a discriminating monopolist.

Accepted Answer

A) True 
 B)False

Question 7

What is the general principle of price discrimination?

Accepted Answer

The general principle of price

Question 8

The peak of the total revenue curve is achieved at the point where:

Accepted Answer

A) marginal revenue is the highest. 
B) price is the highest. 
C) marginal revenue is zero. 
D) marginal cost is zero. 
A) marginal revenue is the highest. 
B) price is the highest. 
C) marginal revenue is zero. 
D) marginal cost is zero.

Question 9

When a monopolist faces a fixed marginal cost of production, profit is maximized if:

Accepted Answer

A) the slope of the tangent to the total revenue curve is equal to the slope of the total cost curve. 
B) the slope of the total cost curve is 1. 
C) the marginal revenue is zero. 
D) the slope of the tangent to the total revenue curve is equal to the slope of the marginal revenue curve. 
A) the slope of the tangent to the total revenue curve is equal to the slope of the total cost curve. 
B) the slope of the total cost curve is 1. 
C) the marginal revenue is zero. 
D) the slope of the tangent to the total revenue curve is equal to the slope of the marginal revenue curve.

Question 10

A monopolist always decides on how much to produce by equating marginal revenue to zero.

Accepted Answer

A) True 
 B)False

Question 11

The following table shows the price and revenue for a monopolist at different levels of production.The monopolist incurs no marginal cost of production.

$$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Price } & \text { Revenue } \
\hline 2 & 16 & 32 \
\hline 3 & 15 & 45 \
\hline 4 & 14.5 & 58 \
\hline 5 & 11.6 & 58 \
\hline 6 & 9.5 & 57 \
\hline 7 & 8 & 56\
\hline
\end{array}$$

-Refer to Table .The profit maximizing output level in this case is determined by which of the following criteria?

Accepted Answer

A) The monopolist will produce where marginal revenue = 0 
B) The monopolist will produce where marginal cost = 0 
C) The monopolist will produce where total revenue is highest. 
D) The monopolist will produce where per unit price is highest. 
A) The monopolist will produce where marginal revenue = 0 
B) The monopolist will produce where marginal cost = 0 
C) The monopolist will produce where total revenue is highest. 
D) The monopolist will produce where per unit price is highest.

Question 12

A group of firms in competitive market produced 20 units of a good when the market price was $2.They incurred no marginal cost.Eventually they realized the benefits they could get by teaming up and acting as a monopolist.The following figure shows the demand curve and marginal revenue curve for this profit maximizing monopolist.

-Refer to Figure .Calculate the total revenue from production for the monopolist.

Accepted Answer

A) $96 
B) $72 
C) $40 
D) $80 
A) $96 
B) $72 
C) $40 
D) $80

Question 13

The following figure depicts the demand curves for vacation cruises of four individuals A, B, C, and D.

-Refer to Figure .A monopoly provider of cruise services recognizes the opportunity to price discriminate and will charge the highest price to individual _____.

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 14

Why does rent-seeking behavior lead to deadweight loss?

Accepted Answer

A monopoly firm is insulated from direct

Question 15

The following figure shows the demand curve and marginal revenue curve for a monopolist who incurs a marginal cost of $2 per unit.
   
-Refer to Figure .What is the monopolist's revenue when he incurs a marginal cost of $2 per unit?

Accepted Answer

A) $99 
B) $88 
C) $96 
D) $72 
A) $99 
B) $88 
C) $96 
D) $72

Question 16

The total revenue curve of a monopolist is:

Accepted Answer

A) U-shaped. 
B) inverted U-shaped. 
C) upward sloping. 
D) downward sloping. 
A) U-shaped. 
B) inverted U-shaped. 
C) upward sloping. 
D) downward sloping.

Question 17

The Wells Fargo Bank Tower in downtown Los Angeles displays a sign at its parking entrance that clearly shows that the per-hour parking charges are higher for people who visit the building for a short while.How is this consistent with the general principle of price discrimination?

Accepted Answer

A document courier whose customers want

Question 18

When a monopolist's marginal cost of production is zero:

Accepted Answer

A) the deadweight loss is reduced. 
B) production is lower than if marginal cost were positive. 
C) the price charged is higher than if marginal cost were positive. 
D) maximizing profit is same as maximizing revenue. 
A) the deadweight loss is reduced. 
B) production is lower than if marginal cost were positive. 
C) the price charged is higher than if marginal cost were positive. 
D) maximizing profit is same as maximizing revenue.

Question 19

A group of firms in competitive market produced 20 units of a good when the market price was $2.They incurred no marginal cost.Eventually they realized the benefits they could get by teaming up and acting as a monopolist.The following figure shows the demand curve and marginal revenue curve for this profit maximizing monopolist.

-Refer to Figure .Calculate the deadweight loss in this market caused by monopoly.

Accepted Answer

A) $64 
B) $32 
C) $40 
D) $24 
A) $64 
B) $32 
C) $40 
D) $24

Question 20

Which of the following statements is NOT true regarding DeBeers' rise to monopoly power in the diamond market?

Accepted Answer

A) DeBeers produces about 40 percent of the world's raw diamonds and controls another 30 percent. 
B) DeBeers achieved dominance in this market by gaining control of South Africa's Kimberley "pipe," the world's largest source in the late nineteenth century. 
C) DeBeers carefully limited the amount of diamonds it released into the market. 
D) DeBeers did not worry about diamonds being discovered elsewhere because it already had full control of the industry in South Africa. 
A) DeBeers produces about 40 percent of the world's raw diamonds and controls another 30 percent. 
B) DeBeers achieved dominance in this market by gaining control of South Africa's Kimberley "pipe," the world's largest source in the late nineteenth century. 
C) DeBeers carefully limited the amount of diamonds it released into the market. 
D) DeBeers did not worry about diamonds being discovered elsewhere because it already had full control of the industry in South Africa.

The practice of charging different prices on the basis of varying customer preferences is known as:

The following figure shows the demand, marginal revenue, and marginal cost curves for a profit maximizing monopolist. -Refer to Figure .Which of the following conclusions can be drawn from this figure?

A monopolist serves two markets with constant elasticity demand curves.However, the elasticities vary between the two markets.Graphically show how price discrimination benefits the monopolist in this case.

What are the main differences between a monopolist and a perfectly competitive firm?

A single-price monopolist produces closer to the competitive level than a discriminating monopolist.

What is the general principle of price discrimination?

The peak of the total revenue curve is achieved at the point where:

When a monopolist faces a fixed marginal cost of production, profit is maximized if:

A monopolist always decides on how much to produce by equating marginal revenue to zero.

The following figure depicts the demand curves for vacation cruises of four individuals A, B, C, and D. -Refer to Figure .A monopoly provider of cruise services recognizes the opportunity to price discriminate and will charge the highest price to individual _____.

Why does rent-seeking behavior lead to deadweight loss?

The following figure shows the demand curve and marginal revenue curve for a monopolist who incurs a marginal cost of $2 per unit. -Refer to Figure .What is the monopolist's revenue when he incurs a marginal cost of $2 per unit?

The total revenue curve of a monopolist is:

The Wells Fargo Bank Tower in downtown Los Angeles displays a sign at its parking entrance that clearly shows that the per-hour parking charges are higher for people who visit the building for a short while.How is this consistent with the general principle of price discrimination?

When a monopolist's marginal cost of production is zero:

Which of the following statements is NOT true regarding DeBeers' rise to monopoly power in the diamond market?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 6: Extreme Markets II: Monopoly

The practice of charging different prices on the basis of varying customer preferences is known as:

The following figure shows the demand, marginal revenue, and marginal cost curves for a profit maximizing monopolist. -Refer to Figure .Which of the following conclusions can be drawn from this figure?

A monopolist serves two markets with constant elasticity demand curves.However, the elasticities vary between the two markets.Graphically show how price discrimination benefits the monopolist in this case.

What are the main differences between a monopolist and a perfectly competitive firm?

A single-price monopolist produces closer to the competitive level than a discriminating monopolist.

What is the general principle of price discrimination?

The peak of the total revenue curve is achieved at the point where:

When a monopolist faces a fixed marginal cost of production, profit is maximized if:

A monopolist always decides on how much to produce by equating marginal revenue to zero.

The following figure depicts the demand curves for vacation cruises of four individuals A, B, C, and D. -Refer to Figure .A monopoly provider of cruise services recognizes the opportunity to price discriminate and will charge the highest price to individual _____.

Why does rent-seeking behavior lead to deadweight loss?

The following figure shows the demand curve and marginal revenue curve for a monopolist who incurs a marginal cost of $2 per unit. -Refer to Figure .What is the monopolist's revenue when he incurs a marginal cost of $2 per unit?

The total revenue curve of a monopolist is:

The Wells Fargo Bank Tower in downtown Los Angeles displays a sign at its parking entrance that clearly shows that the per-hour parking charges are higher for people who visit the building for a short while.How is this consistent with the general principle of price discrimination?

When a monopolist's marginal cost of production is zero:

Which of the following statements is NOT true regarding DeBeers' rise to monopoly power in the diamond market?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters