Question 1

For price discrimination to exist, all of the following are necessary EXCEPT

Accepted Answer

A)  a downward sloping demand curve. 
B)  an identifiable group of buyers with different elasticities of demand. 
C)  an upward sloping marginal cost curve. 
D)  there can be no resale of the product. 
A)  a downward sloping demand curve. 
B)  an identifiable group of buyers with different elasticities of demand. 
C)  an upward sloping marginal cost curve. 
D)  there can be no resale of the product.

Question 2

A single supplier of a good or service for which there is no close substitute is referred to as a(n)

Accepted Answer

A)  strategic competitor. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistic competitor. 
A)  strategic competitor. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistic competitor.

Question 3

If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist will

Accepted Answer

A)  be able to make higher profits by using price discrimination. 
B)  charge a single price in all markets. 
C)  go out of business. 
D)  sell the product in only one of the markets with inelastic demand curves. 
A)  be able to make higher profits by using price discrimination. 
B)  charge a single price in all markets. 
C)  go out of business. 
D)  sell the product in only one of the markets with inelastic demand curves.

Question 4

Which is NOT a necessary condition for price discrimination to exist?

Accepted Answer

A)  The firm must face a downward sloping demand curve. 
B)  The firm must identify buyers with different elasticities of demand. 
C)  The firm must be able to prevent resale of the product or service. 
D)  The firm must establish different prices to reflect marginal cost. 
A)  The firm must face a downward sloping demand curve. 
B)  The firm must identify buyers with different elasticities of demand. 
C)  The firm must be able to prevent resale of the product or service. 
D)  The firm must establish different prices to reflect marginal cost.

Question 5

Profits can be maximized by equating MR = MC = Price,

Accepted Answer

A)  only in perfectly competitive markets. 
B)  only in monopoly markets. 
C)  only in discriminating monopoly markets. 
D)  only with government price controls. 
A)  only in perfectly competitive markets. 
B)  only in monopoly markets. 
C)  only in discriminating monopoly markets. 
D)  only with government price controls.

Question 6

Monopoly producers face

Accepted Answer

A)  many competitors producing the same product. 
B)  only a few competitors producing the same product. 
C)  at least one competitive producer of the same product. 
D)  no competitive producers of the same product. 
A)  many competitors producing the same product. 
B)  only a few competitors producing the same product. 
C)  at least one competitive producer of the same product. 
D)  no competitive producers of the same product.

Question 7

A monopoly misallocates resources when it

Accepted Answer

A)  restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. 
B)  makes an above-normal profit. 
C)  sells the same product to different groups of customers at different prices. 
D)  exploits scale economies. 
A)  restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. 
B)  makes an above-normal profit. 
C)  sells the same product to different groups of customers at different prices. 
D)  exploits scale economies.

Question 8

A firm that is the only seller of a good with no close substitutes is a(n)

Accepted Answer

A)  perfect competitor. 
B)  monopolistic competitor. 
C)  oligopolist. 
D)  monopolist. 
A)  perfect competitor. 
B)  monopolistic competitor. 
C)  oligopolist. 
D)  monopolist.

Question 9

-In the above figure, a monopolist will set its level of output and price at

Accepted Answer

A)  Q2 and C, respectively. 
B)  Q3 and F, respectively. 
C)  Q1 and A, respectively. 
D)  Q1 and B, respectively. 
A)  Q2 and C, respectively. 
B)  Q3 and F, respectively. 
C)  Q1 and A, respectively. 
D)  Q1 and B, respectively.

Question 10

One problem associated with a monopoly firm is that it

Accepted Answer

A)  produces too little output but also charges a low price. 
B)  produces too much output and charges too low a price. 
C)  restricts output and charges a relatively higher price than a purely competitive firm. 
D)  is just as good as a purely competitive firm in terms of output and price. 
A)  produces too little output but also charges a low price. 
B)  produces too much output and charges too low a price. 
C)  restricts output and charges a relatively higher price than a purely competitive firm. 
D)  is just as good as a purely competitive firm in terms of output and price.

Question 11

Entry barriers are most significant in

Accepted Answer

A)  pure competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  pure monopoly. 
A)  pure competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  pure monopoly.

Question 12

A patent provides legal protection for an invention for

Accepted Answer

A)  20 years. 
B)  9 years. 
C)  5 years. 
D)  3 years. 
A)  20 years. 
B)  9 years. 
C)  5 years. 
D)  3 years.

Question 13

The more substitutes there are for a monopolist's product

Accepted Answer

A)  the less elastic is the demand curve. 
B)  the more elastic is the demand curve. 
C)  the steeper is the demand curve. 
D)  the more positively sloped the demand curve becomes. 
A)  the less elastic is the demand curve. 
B)  the more elastic is the demand curve. 
C)  the steeper is the demand curve. 
D)  the more positively sloped the demand curve becomes.

Question 14

Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm should

Accepted Answer

A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down. 
A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down.

Question 15

A monopolist is defined as

Accepted Answer

A)  a firm with annual sales over $10 million. 
B)  a large firm, making substantial profits, that is able to make other firms do what it wants. 
C)  a single supplier of a good or service for which there is no close substitute. 
D)  a producer of a good or service that is expensive to produce, requiring large amounts of capital equipment. 
A)  a firm with annual sales over $10 million. 
B)  a large firm, making substantial profits, that is able to make other firms do what it wants. 
C)  a single supplier of a good or service for which there is no close substitute. 
D)  a producer of a good or service that is expensive to produce, requiring large amounts of capital equipment.

Question 16

Which of the following is INCORRECT regarding monopoly and profits?

Accepted Answer

A)  The mere existence of a monopoly does not guarantee high profits. 
B)  Numerous monopolies have gone bankrupt. 
C)  A monopolist will never experience economic losses. 
D)  The monopolist reaches profit-maximizing output by trial and error. 
A)  The mere existence of a monopoly does not guarantee high profits. 
B)  Numerous monopolies have gone bankrupt. 
C)  A monopolist will never experience economic losses. 
D)  The monopolist reaches profit-maximizing output by trial and error.

Question 17

A barrier to entry

Accepted Answer

A)  makes it illegal for firms to enter the industry. 
B)  can be thought of as unrelated to monopoly. 
C)  slows or even prevents entry into a market. 
D)  usually takes the form of a cartel. 
A)  makes it illegal for firms to enter the industry. 
B)  can be thought of as unrelated to monopoly. 
C)  slows or even prevents entry into a market. 
D)  usually takes the form of a cartel.

Question 18

"Price discrimination is the same as price differentiation." Do you agree or disagree? Why?

Accepted Answer

Disagree. Price discrimination is the ac

Question 19

Some electrical utilities are monopolies because of

Accepted Answer

A)  government restrictions that prevent new firms from entering the market. 
B)  ownership of resources without close substitutes. 
C)  diseconomies of scale. 
D)  their inability to earn profits. 
A)  government restrictions that prevent new firms from entering the market. 
B)  ownership of resources without close substitutes. 
C)  diseconomies of scale. 
D)  their inability to earn profits.

Question 20

A monopolistic firm will shut down if

Accepted Answer

A) P ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output. A) P ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output.

Exam 24: Monopoly

For price discrimination to exist, all of the following are necessary EXCEPT

A single supplier of a good or service for which there is no close substitute is referred to as a(n)

If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist will

Which is NOT a necessary condition for price discrimination to exist?

Profits can be maximized by equating MR = MC = Price,

Monopoly producers face

A monopoly misallocates resources when it

A firm that is the only seller of a good with no close substitutes is a(n)

-In the above figure, a monopolist will set its level of output and price at

One problem associated with a monopoly firm is that it

Entry barriers are most significant in

A patent provides legal protection for an invention for

The more substitutes there are for a monopolist's product

Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm should

A monopolist is defined as

Which of the following is INCORRECT regarding monopoly and profits?

A barrier to entry

"Price discrimination is the same as price differentiation." Do you agree or disagree? Why?

Some electrical utilities are monopolies because of

A monopolistic firm will shut down if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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