Question 1

Figure 9.11   Figure 9.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.11.Assume the firm maximises its profits.The amount of consumer surplus is

Accepted Answer

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

Question 2

What is a price maker?

Accepted Answer

A) a person who actively seeks out the best price for a product that he or she wishes to buy. 
B) a firm that has some control over the price of the product it sells. 
C) a firm that is able to sell any quantity at the highest possible price. 
D) a consumer who participates in an auction where she announces her willingness to pay for a product. 
A) a person who actively seeks out the best price for a product that he or she wishes to buy. 
B) a firm that has some control over the price of the product it sells. 
C) a firm that is able to sell any quantity at the highest possible price. 
D) a consumer who participates in an auction where she announces her willingness to pay for a product.

Question 3

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Accepted Answer

A) True 
 B)False

Question 4

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.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour.What is her marginal revenue?

Accepted Answer

A) It is $7 for the first hour and starts declining thereafter. 
B) It is $7 for the first hour and starts increasing thereafter. 
C) It is constant at $7. 
D) It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth. 
A) It is $7 for the first hour and starts declining thereafter. 
B) It is $7 for the first hour and starts increasing thereafter. 
C) It is constant at $7. 
D) It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth.

Question 5

Economic efficiency requires that a natural monopoly's price be

Accepted Answer

A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit. 
A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit.

Question 6

In which market structure is it not possible to practice price discrimination?

Accepted Answer

A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly 
A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly

Question 7

Why do firms price discriminate?

Accepted Answer

A) To reduce the quantity sold so as to reduce production costs. 
B) To increase profits. 
C) To take advantage of customers. 
D) To increase total economic surplus. 
A) To reduce the quantity sold so as to reduce production costs. 
B) To increase profits. 
C) To take advantage of customers. 
D) To increase total economic surplus.

Question 8

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

Accepted Answer

A) reduce the cost of production. 
B) capture some consumer surplus. 
C) reduce transactions costs. 
D) transfer some producer surplus to consumers. 
A) reduce the cost of production. 
B) capture some consumer surplus. 
C) reduce transactions costs. 
D) transfer some producer surplus to consumers.

Question 9

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.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.How many hours will be purchased and what is her total revenue?

Accepted Answer

A) 5 hours; total revenue = $35 
B) 4 hours; total revenue = $28 
C) 3 hours; total revenue = $21 
D) 2 hours; total revenue = $14 
A) 5 hours; total revenue = $35 
B) 4 hours; total revenue = $28 
C) 3 hours; total revenue = $21 
D) 2 hours; total revenue = $14

Question 10

Figure 9.10  
-Refer to Figure 9.10.The area that represents producer surplus under a monopoly is

Accepted Answer

A) the triangle 0P2E 
B) the triangle 0P3H 
C) the trapezium 0P1FH 
D) the rectangle P1P3HF 
A) the triangle 0P2E 
B) the triangle 0P3H 
C) the trapezium 0P1FH 
D) the rectangle P1P3HF

Question 11

Figure 9.4   Figure 9.4 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.4.The amount of the monopoly's total revenue us

Accepted Answer

A) $21 600 
B) $20 400 
C) $19 740 
D) $7800 
A) $21 600 
B) $20 400 
C) $19 740 
D) $7800

Question 12

Price discrimination is possible in which of the following market structures? 
a.perfect competition
b.monopoly
c.oligopoly
d.monopolistic competition

Accepted Answer

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

Question 13

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is necessary in order for a firm to successfully practice price discrimination?

Accepted Answer

A) The firm must practice product differentiation. 
B) The demand for the firm's product is inelastic. 
C) The firm must be able to segment the market for the product. 
D) The firm's transactions costs must be zero. 
A) The firm must practice product differentiation. 
B) The demand for the firm's product is inelastic. 
C) The firm must be able to segment the market for the product. 
D) The firm's transactions costs must be zero.

Question 15

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Accepted Answer

A) to maximise profit the firm should increase output. 
B) to maximise profit the firm should decrease output. 
C) to maximise profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximise profit. 
A) to maximise profit the firm should increase output. 
B) to maximise profit the firm should decrease output. 
C) to maximise profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximise profit.

Question 16

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Accepted Answer

A) The monopoly firm has control of a key resource necessary to produce a good. 
B) There are important network externalities in supplying a good or service. 
C) large economies of scale that result in a natural monopoly 
D) a high concentration ratio 
A) The monopoly firm has control of a key resource necessary to produce a good. 
B) There are important network externalities in supplying a good or service. 
C) large economies of scale that result in a natural monopoly 
D) a high concentration ratio

Question 17

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Accepted Answer

A) Marginal revenue is less than price. 
B) Marginal revenue equals marginal cost. 
C) Price equals marginal cost. 
D) Average revenue equals average cost. 
A) Marginal revenue is less than price. 
B) Marginal revenue equals marginal cost. 
C) Price equals marginal cost. 
D) Average revenue equals average cost.

Question 19

Figure 9.3   Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is

Accepted Answer

A) loss of $7 per unit 
B) profit of $30 per unit 
C) loss of $21 per unit 
D) profit of $14 per unit 
A) loss of $7 per unit 
B) profit of $30 per unit 
C) loss of $21 per unit 
D) profit of $14 per unit

Question 20

Figure 9.11   Figure 9.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.11.If this industry was organised as a perfectly competitive industry, the market output and market price would be

Accepted Answer

A) output = 62; price = $24. 
B) output = 83; price = $22. 
C) output = 62; price = $18. 
D) output = 104; price = $20.80. 
A) output = 62; price = $24. 
B) output = 83; price = $22. 
C) output = 62; price = $18. 
D) output = 104; price = $20.80.

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.Assume the firm maximises its profits.The amount of consumer surplus is

What is a price maker?

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Economic efficiency requires that a natural monopoly's price be

In which market structure is it not possible to practice price discrimination?

Why do firms price discriminate?

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

Figure 9.10 -Refer to Figure 9.10.The area that represents producer surplus under a monopoly is

Figure 9.4 Figure 9.4 shows the demand and cost curves for a monopolist. -Refer to Figure 9.4.The amount of the monopoly's total revenue us

Price discrimination is possible in which of the following market structures? a.perfect competition b.monopoly c.oligopoly d.monopolistic competition

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Which of the following is necessary in order for a firm to successfully practice price discrimination?

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

A product's price approaches its marginal cost as market concentration increases.

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.If this industry was organised as a perfectly competitive industry, the market output and market price would be

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 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.Assume the firm maximises its profits.The amount of consumer surplus is

What is a price maker?

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Economic efficiency requires that a natural monopoly's price be

In which market structure is it not possible to practice price discrimination?

Why do firms price discriminate?

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

Figure 9.10 -Refer to Figure 9.10.The area that represents producer surplus under a monopoly is

Figure 9.4 Figure 9.4 shows the demand and cost curves for a monopolist. -Refer to Figure 9.4.The amount of the monopoly's total revenue us

Price discrimination is possible in which of the following market structures? a.perfect competition b.monopoly c.oligopoly d.monopolistic competition

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Which of the following is necessary in order for a firm to successfully practice price discrimination?

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

A product's price approaches its marginal cost as market concentration increases.

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.If this industry was organised as a perfectly competitive industry, the market output and market price would be

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