Question 1

The long-run equilibrium price-output combination for a monopolist is economically inefficient because:

Accepted Answer

A) it does not operate on the minimum point of its marginal-cost curve. 
B) it does not produce the level of output at which price equals marginal cost. 
C) consumer surplus is maximized but not producer surplus. 
D) producer surplus is maximized but not consumer surplus. 
E) it operates on the downward sloping portion of the average-total-cost curve. 
A) it does not operate on the minimum point of its marginal-cost curve. 
B) it does not produce the level of output at which price equals marginal cost. 
C) consumer surplus is maximized but not producer surplus. 
D) producer surplus is maximized but not consumer surplus. 
E) it operates on the downward sloping portion of the average-total-cost curve.

Question 2

Which of the following is true of a firm that can successfully practice price discrimination?

Accepted Answer

A) Its total revenue is often reduced. 
B) It appropriates a part of the consumer surplus. 
C) It has no way of distinguishing between types of customers. 
D) It has no market power in the industry. 
E) It must be a perfectly competitive firm. 
A) Its total revenue is often reduced. 
B) It appropriates a part of the consumer surplus. 
C) It has no way of distinguishing between types of customers. 
D) It has no market power in the industry. 
E) It must be a perfectly competitive firm.

Question 3

Which of the following is true of the demand curve faced by a monopolist?

Accepted Answer

A) A monopolist's demand curve is infinitely elastic. 
B) A monopolist's demand curve is more elastic than a competitive firm's demand curve. 
C) A monopolist faces a relatively inelastic demand curve. 
D) A monoplist's demand curve coincides with its marginal revenue curve. 
E) A monopolist faces a positively sloped demand curve. 
A) A monopolist's demand curve is infinitely elastic. 
B) A monopolist's demand curve is more elastic than a competitive firm's demand curve. 
C) A monopolist faces a relatively inelastic demand curve. 
D) A monoplist's demand curve coincides with its marginal revenue curve. 
E) A monopolist faces a positively sloped demand curve.

Question 4

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4   
DS1U1B11S1U1B0: Demand curve of group 1
DS1U1B12S1U1B0: Demand curve of group 2
MRS1U1B11S1U1B0: Marginal revenue of group 1
MRS1U1B12S1U1B0: Marginal revenue of group 2
MC: Marginal cost
-In Figure 10.4,the demand curve D2:

Accepted Answer

A) has a price elasticity of demand greater than 1. 
B) is relatively less price elastic than D1. 
C) is the inverse of the demand curve D1. 
D) has a price elasticity of demand less than 1. 
E) represents the demand of the group that is more responsive to price changes. 
A) has a price elasticity of demand greater than 1. 
B) is relatively less price elastic than D1. 
C) is the inverse of the demand curve D1. 
D) has a price elasticity of demand less than 1. 
E) represents the demand of the group that is more responsive to price changes.

Question 5

Price discrimination is best described as a monopolist:

Accepted Answer

A) selling a product at the fixed market determined price. 
B) charging buyers an excessive price for the product. 
C) charging different customers different prices when the costs are equal. 
D) selling a product for different prices during two different periods of time. 
E) charging same prices to different customers when the costs are different. 
A) selling a product at the fixed market determined price. 
B) charging buyers an excessive price for the product. 
C) charging different customers different prices when the costs are equal. 
D) selling a product for different prices during two different periods of time. 
E) charging same prices to different customers when the costs are different.

Question 6

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4   
DS1U1B11S1U1B0: Demand curve of group 1
DS1U1B12S1U1B0: Demand curve of group 2
MRS1U1B11S1U1B0: Marginal revenue of group 1
MRS1U1B12S1U1B0: Marginal revenue of group 2
MC: Marginal cost
-Refer to Figure 10.4.What price must be charged to both the groups to maximize profits?

Accepted Answer

A) P1 
B) P2 
C) Group 1 must be charged P1 and group 2 must be charged P2. 
D) Group 1 must be charged P2 and group 2 must be charged P1. 
E) Both the groups must be charged a price that is equal to the marginal cost. 
A) P1 
B) P2 
C) Group 1 must be charged P1 and group 2 must be charged P2. 
D) Group 1 must be charged P2 and group 2 must be charged P1. 
E) Both the groups must be charged a price that is equal to the marginal cost.

Question 7

Firms that have downward-sloping demand curves:

Accepted Answer

A) earn positive economic profits even in the long run. 
B) produce homogeneous products. 
C) operate in a perfectly competitive market structure. 
D) enjoy monopoly or market power. 
E) be price takers. 
A) earn positive economic profits even in the long run. 
B) produce homogeneous products. 
C) operate in a perfectly competitive market structure. 
D) enjoy monopoly or market power. 
E) be price takers.

Question 8

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2
  
-Assume that the firm described in Table 10.2 is incurring a total cost of $25 at the profit-maximizing output level.The firm will:

Accepted Answer

A) lose $10 in the short run. 
B) break even. 
C) earn a profit of $50. 
D) earn a profit of $30. 
E) earn a profit of $55. 
A) lose $10 in the short run. 
B) break even. 
C) earn a profit of $50. 
D) earn a profit of $30. 
E) earn a profit of $55.

Question 9

Barriers to entry do not occur when:

Accepted Answer

A) economies of scale in production exist in an industry. 
B) the government requires a professional license or franchise agreement. 
C) the firm that introduces a product is granted a patent. 
D) a firm controls a scarce resource. 
E) diseconomies of scale in production exist in an industry. 
A) economies of scale in production exist in an industry. 
B) the government requires a professional license or franchise agreement. 
C) the firm that introduces a product is granted a patent. 
D) a firm controls a scarce resource. 
E) diseconomies of scale in production exist in an industry.

Question 10

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9   
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-In Figure 10.9,what is the consumer surplus at the profit-maximizing levels of output and price?

Accepted Answer

A) JNM 
B) 0JNV 
C) HMQ 
D) 0HQX 
E) JHQN 
A) JNM 
B) 0JNV 
C) HMQ 
D) 0HQX 
E) JHQN

Question 11

The following figure shows revenue and cost curves of a monopolist. Figure 10.8   AR: Average revenue curve
MR: Marginal revenue curve
MC: Marginal cost curve
-According to Figure 10.8,the deadweight loss of monopoly is:

Accepted Answer

A) the area ABC. 
B) the area BCD. 
C) the area ACD. 
D) the area P3P2AC. 
E) the area P3P4DC. 
A) the area ABC. 
B) the area BCD. 
C) the area ACD. 
D) the area P3P2AC. 
E) the area P3P4DC.

Question 12

If a monopolist is producing at that output where price equals average variable cost in the short run,then it is earning a negative profit.

Accepted Answer

A) True 
 B)False

Question 13

In order to practice price discrimination successfully,a monopolist must ensure that there is no resale of the product.

Accepted Answer

A) True 
 B)False

Question 14

By discriminating between the consumers,the monopolist actually takes away a portion of the consumer surplus.

Accepted Answer

A) True 
 B)False

Question 15

The following figure shows revenue and cost curves of a monopolist. Figure 10.8   
AR: Average revenue curve
MR: Marginal revenue curve
MC: Marginal cost curve
-According to Figure 10.8,what will be the price charged by a perfectly competitive firm?

Accepted Answer

A) P4 
B) P3 
C) P2 
D) P1 
E) 0 
A) P4 
B) P3 
C) P2 
D) P1 
E) 0

Question 16

As a perfectly competitive firm produces at the point where price equals marginal cost,it has no supply curve,only a supply point.

Accepted Answer

A) True 
 B)False

Question 17

The price charged by a monopolist is the point on the demand curve that corresponds to the output where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 18

If a monopolist's demand curve shifts to the left such that it becomes tangent to the ATC curve at the output for which marginal revenue equals marginal cost,the monopolist will make only a normal profit.

Accepted Answer

A) True 
 B)False

Question 19

The only types of firms that cannot theoretically practice price discrimination are perfectly competitive firms.

Accepted Answer

A) True 
 B)False

Question 20

Grocery store coupons,mail-in rebates,senior discounts,and in-state versus out-of-state tuition fees are all examples of:

Accepted Answer

A) government intervention. 
B) price neutrality. 
C) arbitrage pricing. 
D) price discrimination. 
E) illegal business practice. 
A) government intervention. 
B) price neutrality. 
C) arbitrage pricing. 
D) price discrimination. 
E) illegal business practice.

The long-run equilibrium price-output combination for a monopolist is economically inefficient because:

Which of the following is true of a firm that can successfully practice price discrimination?

Which of the following is true of the demand curve faced by a monopolist?

Price discrimination is best described as a monopolist:

Firms that have downward-sloping demand curves:

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2 -Assume that the firm described in Table 10.2 is incurring a total cost of $25 at the profit-maximizing output level.The firm will:

Barriers to entry do not occur when:

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -In Figure 10.9,what is the consumer surplus at the profit-maximizing levels of output and price?

The following figure shows revenue and cost curves of a monopolist. Figure 10.8 AR: Average revenue curve MR: Marginal revenue curve MC: Marginal cost curve -According to Figure 10.8,the deadweight loss of monopoly is:

If a monopolist is producing at that output where price equals average variable cost in the short run,then it is earning a negative profit.

In order to practice price discrimination successfully,a monopolist must ensure that there is no resale of the product.

By discriminating between the consumers,the monopolist actually takes away a portion of the consumer surplus.

The following figure shows revenue and cost curves of a monopolist. Figure 10.8 AR: Average revenue curve MR: Marginal revenue curve MC: Marginal cost curve -According to Figure 10.8,what will be the price charged by a perfectly competitive firm?

As a perfectly competitive firm produces at the point where price equals marginal cost,it has no supply curve,only a supply point.

The price charged by a monopolist is the point on the demand curve that corresponds to the output where marginal revenue equals marginal cost.

If a monopolist's demand curve shifts to the left such that it becomes tangent to the ATC curve at the output for which marginal revenue equals marginal cost,the monopolist will make only a normal profit.

The only types of firms that cannot theoretically practice price discrimination are perfectly competitive firms.

Grocery store coupons,mail-in rebates,senior discounts,and in-state versus out-of-state tuition fees are all examples of:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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Exam 10: Monopoly

The long-run equilibrium price-output combination for a monopolist is economically inefficient because:

Which of the following is true of a firm that can successfully practice price discrimination?

Which of the following is true of the demand curve faced by a monopolist?

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4 D1: Demand curve of group 1 D2: Demand curve of group 2 MR1: Marginal revenue of group 1 MR2: Marginal revenue of group 2 MC: Marginal cost -In Figure 10.4,the demand curve D2:

Price discrimination is best described as a monopolist:

Firms that have downward-sloping demand curves:

The table given below shows the price charged by a firm and the marginal cost incurred by it for the different levels of the output. Table 10.2 -Assume that the firm described in Table 10.2 is incurring a total cost of $25 at the profit-maximizing output level.The firm will:

Barriers to entry do not occur when:

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9 D: Average revenue MR: Marginal revenue ATC: Average total cost MC: Marginal cost -In Figure 10.9,what is the consumer surplus at the profit-maximizing levels of output and price?

The following figure shows revenue and cost curves of a monopolist. Figure 10.8 AR: Average revenue curve MR: Marginal revenue curve MC: Marginal cost curve -According to Figure 10.8,the deadweight loss of monopoly is:

If a monopolist is producing at that output where price equals average variable cost in the short run,then it is earning a negative profit.

In order to practice price discrimination successfully,a monopolist must ensure that there is no resale of the product.

By discriminating between the consumers,the monopolist actually takes away a portion of the consumer surplus.

The following figure shows revenue and cost curves of a monopolist. Figure 10.8 AR: Average revenue curve MR: Marginal revenue curve MC: Marginal cost curve -According to Figure 10.8,what will be the price charged by a perfectly competitive firm?

As a perfectly competitive firm produces at the point where price equals marginal cost,it has no supply curve,only a supply point.

The price charged by a monopolist is the point on the demand curve that corresponds to the output where marginal revenue equals marginal cost.

If a monopolist's demand curve shifts to the left such that it becomes tangent to the ATC curve at the output for which marginal revenue equals marginal cost,the monopolist will make only a normal profit.

The only types of firms that cannot theoretically practice price discrimination are perfectly competitive firms.

Grocery store coupons,mail-in rebates,senior discounts,and in-state versus out-of-state tuition fees are all examples of:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters