Question 1

A perfectly competitive firm cannot practice price discrimination because

Accepted Answer

A) a firm that breaks even in the long run cannot afford to engage in yield management. 
B) it does not advertise; this prevents the firm from marketing its product to different segments of the market. 
C) each consumer in a perfectly competitive market has the same willingness to pay. 
D) the firm can only charge the market price. 
A) a firm that breaks even in the long run cannot afford to engage in yield management. 
B) it does not advertise; this prevents the firm from marketing its product to different segments of the market. 
C) each consumer in a perfectly competitive market has the same willingness to pay. 
D) the firm can only charge the market price.

Question 2

Unlike a perfect competitor, a monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9.6   Figure 9.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.6.What is the monopolist's total revenue?

Accepted Answer

A) $1116. 
B) $1488. 
C) $1726.40 
D) $1826. 
A) $1116. 
B) $1488. 
C) $1726.40 
D) $1826.

Question 4

A firm that has the ability to control to some degree the price of the product it sells

Accepted Answer

A) is also able to dictate the quantity purchased. 
B) faces a demand curve that is inelastic throughout the range of market demand. 
C) is a price maker. 
D) faces a perfectly inelastic demand curve. 
A) is also able to dictate the quantity purchased. 
B) faces a demand curve that is inelastic throughout the range of market demand. 
C) is a price maker. 
D) faces a perfectly inelastic demand curve.

Question 5

Successful price discrimination cannot take place if

Accepted Answer

A) the market is perfectly competitive. 
B) the market can be segmented into different buyer groups. 
C) customers are not able to resell the product. 
D) the demand curve facing the firm is downward sloping. 
A) the market is perfectly competitive. 
B) the market can be segmented into different buyer groups. 
C) customers are not able to resell the product. 
D) the demand curve facing the firm is downward sloping.

Question 6

Figure 9.15  
-Refer to Figure 9.15.The price charged under perfect price discrimination is

Accepted Answer

A) P3 
B) P4 
C) a range of prices corresponding to the demand curve from P3 and above 
D) a range of prices corresponding to the demand curve from P4 and above 
A) P3 
B) P4 
C) a range of prices corresponding to the demand curve from P3 and above 
D) a range of prices corresponding to the demand curve from P4 and above

Question 7

Publishers practice price discrimination when they sell books at high prices to

Accepted Answer

A) early adopters. 
B) local bookstores. 
C) large chain bookstores. 
D) online book sellers. 
A) early adopters. 
B) local bookstores. 
C) large chain bookstores. 
D) online book sellers.

Question 8

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would a firm do if it could practice perfect price discrimination?

Accepted Answer

A) Allow resale of its product. 
B) Charge every buyer a different price. 
C) Charge a price based on the quantity of a product bought. 
D) Use odd pricing. 
A) Allow resale of its product. 
B) Charge every buyer a different price. 
C) Charge a price based on the quantity of a product bought. 
D) Use odd pricing.

Question 10

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 11

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 each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?

Accepted Answer

A) Julie is worse off because the demand for her services is reduced. 
B) Julie has converted the consumer surplus (from a uniform price)into economic profit. 
C) Julie's customers are better off because their consumer surplus has increased. 
D) Julie's has converted the producer surplus (from a uniform price)into consumer surplus. 
A) Julie is worse off because the demand for her services is reduced. 
B) Julie has converted the consumer surplus (from a uniform price)into economic profit. 
C) Julie's customers are better off because their consumer surplus has increased. 
D) Julie's has converted the producer surplus (from a uniform price)into consumer surplus.

Question 12

Equilibrium in a perfectly competitive market results in the greatest amount of economic surplus, or total benefit to society, from the production of a good.Why, then, did Joseph Schumpeter argue that an economy may benefit more from firms that have market power than from firms that are perfectly competitive?

Accepted Answer

Schumpeter did not deny that perfectly c

Question 13

A profit-maximising monopoly's price is

Accepted Answer

A) the same as the price that would prevail if the industry was perfectly competitive. 
B) less than the price that would prevail if the industry was perfectly competitive. 
C) greater than the price that would prevail if the industry was perfectly competitive. 
D) not consistently related to price that would prevail if the market was perfectly competitive. 
A) the same as the price that would prevail if the industry was perfectly competitive. 
B) less than the price that would prevail if the industry was perfectly competitive. 
C) greater than the price that would prevail if the industry was perfectly competitive. 
D) not consistently related to price that would prevail if the market was perfectly competitive.

Question 14

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Accepted Answer

A) Under perfectly competitive conditions, economic surplus in this industry equals consumer surplus plus producer surplus.Under monopoly conditions, some consumer surplus is transferred to producer surplus, but economic surplus is the same as it was under perfectly competitive conditions. 
B) Under perfectly competitive conditions, economic surplus in this industry is maximised.Under monopoly conditions, economic surplus is minimised. 
C) Under perfectly competitive conditions, economic surplus is equal to consumer surplus; there is no producer surplus because firms are price-takers.Under monopoly conditions, economic surplus is equal to producer surplus. 
D) Under perfectly competitive conditions, economic surplus is maximised.Under monopoly conditions, economic surplus is less than under perfect competition and there is a deadweight loss. 
A) Under perfectly competitive conditions, economic surplus in this industry equals consumer surplus plus producer surplus.Under monopoly conditions, some consumer surplus is transferred to producer surplus, but economic surplus is the same as it was under perfectly competitive conditions. 
B) Under perfectly competitive conditions, economic surplus in this industry is maximised.Under monopoly conditions, economic surplus is minimised. 
C) Under perfectly competitive conditions, economic surplus is equal to consumer surplus; there is no producer surplus because firms are price-takers.Under monopoly conditions, economic surplus is equal to producer surplus. 
D) Under perfectly competitive conditions, economic surplus is maximised.Under monopoly conditions, economic surplus is less than under perfect competition and there is a deadweight loss.

Question 15

Figure 9.6   Figure 9.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.6.What is the monopolist's total cost?

Accepted Answer

A) $1116. 
B) $1240. 
C) $1660. 
D) $1726.40. 
A) $1116. 
B) $1240. 
C) $1660. 
D) $1726.40.

Question 16

Which of the following is not a characteristic of a monopoly?

Accepted Answer

A) There are only a few sellers each selling a unique product. 
B) Entry barriers are high. 
C) There are no close substitutes to the firm's product. 
D) The firm has market power. 
A) There are only a few sellers each selling a unique product. 
B) Entry barriers are high. 
C) There are no close substitutes to the firm's product. 
D) The firm has market power.

Question 17

Figure 9.11   Figure 9.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.11.If the firm maximises its profits, the deadweight loss to society due to this monopoly is equal to the area

Accepted Answer

A) ABF. 
B) ABEG. 
C) ACE. 
D) EFG. 
A) ABF. 
B) ABEG. 
C) ACE. 
D) EFG.

Question 18

What must a firm have to maintain a monopoly?

Accepted Answer

A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors. 
A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors.

Question 19

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Average revenue is equal to price for an

Question 20

Which one of the following about a monopoly is false?

Accepted Answer

A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary. 
A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary.

A perfectly competitive firm cannot practice price discrimination because

Unlike a perfect competitor, a monopolist faces the market demand curve.

Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist. -Refer to Figure 9.6.What is the monopolist's total revenue?

A firm that has the ability to control to some degree the price of the product it sells

Successful price discrimination cannot take place if

Figure 9.15 -Refer to Figure 9.15.The price charged under perfect price discrimination is

Publishers practice price discrimination when they sell books at high prices to

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

Which of the following would a firm do if it could practice perfect price discrimination?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

A profit-maximising monopoly's price is

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist. -Refer to Figure 9.6.What is the monopolist's total cost?

Which of the following is not a characteristic of a monopoly?

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.If the firm maximises its profits, the deadweight loss to society due to this monopoly is equal to the area

What must a firm have to maintain a monopoly?

Which one of the following about a monopoly is false?

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

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Exam 9: Monopoly Markets

A perfectly competitive firm cannot practice price discrimination because

Unlike a perfect competitor, a monopolist faces the market demand curve.

Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist. -Refer to Figure 9.6.What is the monopolist's total revenue?

A firm that has the ability to control to some degree the price of the product it sells

Successful price discrimination cannot take place if

Figure 9.15 -Refer to Figure 9.15.The price charged under perfect price discrimination is

Publishers practice price discrimination when they sell books at high prices to

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

Which of the following would a firm do if it could practice perfect price discrimination?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

A profit-maximising monopoly's price is

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements regarding economic surplus in each market structure is true?

Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist. -Refer to Figure 9.6.What is the monopolist's total cost?

Which of the following is not a characteristic of a monopoly?

Figure 9.11 Figure 9.11 shows the cost and demand curves for a monopolist. -Refer to Figure 9.11.If the firm maximises its profits, the deadweight loss to society due to this monopoly is equal to the area

What must a firm have to maintain a monopoly?

Which one of the following about a monopoly is false?

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