Question 1

Figure 9.10  
-Refer to Figure 9.10.What is the area that represents the deadweight loss?

Accepted Answer

A) FHE. 
B) FGE. 
C) GEH. 
D) FQ1Q2E. 
A) FHE. 
B) FGE. 
C) GEH. 
D) FQ1Q2E.

Question 2

The ability of a firm to charge a price greater than marginal cost is called

Accepted Answer

A) monopoly power. 
B) price-making power. 
C) cost-plus pricing. 
D) market power. 
A) monopoly power. 
B) price-making power. 
C) cost-plus pricing. 
D) market power.

Question 3

Table 9.1   A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1.
-Refer to Table 9.1.The amount of the firm's profit is

Accepted Answer

A) $335 
B) $350 
C) $880 
D) $910 
A) $335 
B) $350 
C) $880 
D) $910

Question 4

Figure 9.13   Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 9.13.Suppose the government regulates this industry in order to remove the inefficiency implied by the behaviour of the profit-maximising owners.If regulators require that the firm produces the economically efficient output level, what is this level and what price will be charged?

Accepted Answer

A) Q4 units; P4 
B) Q1 units; P4 
C) Q1 units; P1 
D) Q3 units; P3 
A) Q4 units; P4 
B) Q1 units; P4 
C) Q1 units; P1 
D) Q3 units; P3

Question 5

A public franchise

Accepted Answer

A) is a corporation that is owned by stockholders. 
B) results from ownership of a key raw material. 
C) is a government designation that a private firm is the only legal producer of a good or service. 
D) is an unregulated monopoly necessary for the public good. 
A) is a corporation that is owned by stockholders. 
B) results from ownership of a key raw material. 
C) is a government designation that a private firm is the only legal producer of a good or service. 
D) is an unregulated monopoly necessary for the public good.

Question 6

Many universities practice yield management to maximise the revenue they receive from tuition and

Accepted Answer

A) to maximise the amount of aid they receive from the federal government. 
B) to maximise the amount of their student loans. 
C) to maximise the size of their endowments. 
D) to increase the academic quality of the students who enrol in their schools. 
A) to maximise the amount of aid they receive from the federal government. 
B) to maximise the amount of their student loans. 
C) to maximise the size of their endowments. 
D) to increase the academic quality of the students who enrol in their schools.

Question 7

Figure 9.11   Figure 9.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.11.What is the amount of consumer surplus if, instead of monopoly, the industry was organised as a perfectly competitive industry?

Accepted Answer

A) $21 
B) $124 
C) $186 
D) $332 
A) $21 
B) $124 
C) $186 
D) $332

Question 8

Figure 9.4   Figure 9.4 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.4.The profit-maximising/loss-minimising output level is

Accepted Answer

A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units 
A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units

Question 9

Assume that a monopolist practices perfect price discrimination.The firm will produce an output rate

Accepted Answer

A) that is less than the efficient level of output. 
B) that is greater than the efficient level of output. 
C) that is equal to the efficient level of output. 
D) that converts consumer surplus into a deadweight loss. 
A) that is less than the efficient level of output. 
B) that is greater than the efficient level of output. 
C) that is equal to the efficient level of output. 
D) that converts consumer surplus into a deadweight loss.

Question 10

To what does the term 'early adopters' refer?

Accepted Answer

A) Firms that are the first to implement a new technology that is used to produce new goods or services. 
B) Book clubs that are first to recommend best-selling books to their members. 
C) Consumers who respond quickly to fads, seasonal changes, etc. 
D) Consumers who are willing to pay high prices to be among the first to own new products. 
A) Firms that are the first to implement a new technology that is used to produce new goods or services. 
B) Book clubs that are first to recommend best-selling books to their members. 
C) Consumers who respond quickly to fads, seasonal changes, etc. 
D) Consumers who are willing to pay high prices to be among the first to own new products.

Question 11

Consider the following pricing strategies: 
a.perfect price discrimination
b.charging different prices to different groups of customers
c.optimal two-part tariff
d.single-price monopoly pricing
Which of the pricing strategies allows a producer to capture the entire consumer surplus that would have gone to consumers under perfect competitive pricing?

Accepted Answer

A) a, b, c, and d 
B) a, b, and c only 
C) a and b only 
D) a and c only 
A) a, b, c, and d 
B) a, b, and c only 
C) a and b only 
D) a and c only

Question 12

A monopoly is a firm that is the only seller of a good or service that does not have

Accepted Answer

A) a patent. 
B) a close complement. 
C) a barrier to entry. 
D) a close substitute. 
A) a patent. 
B) a close complement. 
C) a barrier to entry. 
D) a close substitute.

Question 13

Figure 9.13   Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 9.13.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Accepted Answer

A) This results in a misallocation of resources. 
B) The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C) The firm will sustain persistent losses and will not continue in business in the long run. 
D) The firm will break even. 
A) This results in a misallocation of resources. 
B) The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C) The firm will sustain persistent losses and will not continue in business in the long run. 
D) The firm will break even.

Question 14

Table 9.3   Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9.3 above shows a portion of her survey results.
-Refer to Table 9.3.If Julie charges $10 per hour, what is the value of the consumer surplus received by Dawn?

Accepted Answer

A) $2 
B) $10 
C) $12 
D) $22 
A) $2 
B) $10 
C) $12 
D) $22

Question 15

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A monopoly is the only seller

Question 16

To have a monopoly in an industry there must be

Accepted Answer

A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise, making the monopoly the exclusive legal provider of a good or service. 
A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise, making the monopoly the exclusive legal provider of a good or service.

Question 17

Figure 9.13   Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 9.13.In the absence of any government regulation, the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Accepted Answer

A) Q0; P0 
B) Q1; P1 
C) Q1; P4 
D) Q3; P3 
A) Q0; P0 
B) Q1; P1 
C) Q1; P4 
D) Q3; P3

Question 18

The airline industry routinely engages in price discrimination across time.

Accepted Answer

A) True 
 B)False

Question 19

Insurance companies typically charge women lower prices than men for automobile insurance.Is this an example of price discrimination?

Accepted Answer

A) No, because, on average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women. 
B) Yes, because the costs of selling insurance to men and women are the same. 
C) Yes, because insurance companies can prevent arbitrage; that is, women cannot transfer their insurance coverage to men. 
D) No, because there are too many insurance companies for any one company to have market power.A firm must possess market power in order to practice price discrimination. 
A) No, because, on average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women. 
B) Yes, because the costs of selling insurance to men and women are the same. 
C) Yes, because insurance companies can prevent arbitrage; that is, women cannot transfer their insurance coverage to men. 
D) No, because there are too many insurance companies for any one company to have market power.A firm must possess market power in order to practice price discrimination.

Question 20

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A network externality exists where the u

Figure 9.10 -Refer to Figure 9.10.What is the area that represents the deadweight loss?

The ability of a firm to charge a price greater than marginal cost is called

Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1. -Refer to Table 9.1.The amount of the firm's profit is

A public franchise

Many universities practice yield management to maximise the revenue they receive from tuition and

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.What is the amount of consumer surplus if, instead of monopoly, the industry was organised as a perfectly competitive industry?

Figure 9.4 Figure 9.4 shows the demand and cost curves for a monopolist. -Refer to Figure 9.4.The profit-maximising/loss-minimising output level is

Assume that a monopolist practices perfect price discrimination.The firm will produce an output rate

To what does the term 'early adopters' refer?

A monopoly is a firm that is the only seller of a good or service that does not have

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 9.13.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists? __________________________________________________________________________________________________________________________________________________________________________________________

To have a monopoly in an industry there must be

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to figure 9.13.In the absence of any government regulation, the profit-maximising owners of this firm will produce units and charge a price of .

The airline industry routinely engages in price discrimination across time.

Insurance companies typically charge women lower prices than men for automobile insurance.Is this an example of price discrimination?

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain. __________________________________________________________________________________________________________________________________________________________________________________________

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 9: Monopoly Markets

Figure 9.10 -Refer to Figure 9.10.What is the area that represents the deadweight loss?

The ability of a firm to charge a price greater than marginal cost is called

Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1. -Refer to Table 9.1.The amount of the firm's profit is

A public franchise

Many universities practice yield management to maximise the revenue they receive from tuition and

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.What is the amount of consumer surplus if, instead of monopoly, the industry was organised as a perfectly competitive industry?

Figure 9.4 Figure 9.4 shows the demand and cost curves for a monopolist. -Refer to Figure 9.4.The profit-maximising/loss-minimising output level is

Assume that a monopolist practices perfect price discrimination.The firm will produce an output rate

To what does the term 'early adopters' refer?

A monopoly is a firm that is the only seller of a good or service that does not have

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 9.13.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists? __________________________________________________________________________________________________________________________________________________________________________________________

To have a monopoly in an industry there must be

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to figure 9.13.In the absence of any government regulation, the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

The airline industry routinely engages in price discrimination across time.

Insurance companies typically charge women lower prices than men for automobile insurance.Is this an example of price discrimination?

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain. __________________________________________________________________________________________________________________________________________________________________________________________

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to figure 9.13.In the absence of any government regulation, the profit-maximising owners of this firm will produce units and charge a price of .