Question 1

With perfect price discrimination, which of the following is true for the marginal revenue curve?

Accepted Answer

A) It is below the demand curve. 
B) It is above the demand curve. 
C) It is equal to the demand curve. 
D) It is horizontal. 
A) It is below the demand curve. 
B) It is above the demand curve. 
C) It is equal to the demand curve. 
D) It is horizontal.

Question 2

Figure 9.9   Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The difference between the monopoly output and the perfectly competitive output is

Accepted Answer

A) 140 units 
B) 240 units 
C) 340 units 
D) 560 units 
A) 140 units 
B) 240 units 
C) 340 units 
D) 560 units

Question 3

Figure 9.3   Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.What happens to the monopolist represented in the diagram in the long run?

Accepted Answer

A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same, it will exit the market. 
C) The government will subsidise the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers. 
A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same, it will exit the market. 
C) The government will subsidise the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers.

Question 4

If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax.

Accepted Answer

A) True 
 B)False

Question 5

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Accepted Answer

A) True 
 B)False

Question 6

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is

Accepted Answer

A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource 
A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource

Question 7

A patent

Accepted Answer

A) grants the creator of a book, film, or piece of music the exclusive right to use the creation for 20 years. 
B) grants the creator of a book, film, or piece of music the exclusive right to use the creation during the creator's lifetime. 
C) gives a firm the exclusive right to a new product for 20 years from the date the product is invented. 
D) gives the firm the exclusive right to a new product during the product inventor's lifetime. 
A) grants the creator of a book, film, or piece of music the exclusive right to use the creation for 20 years. 
B) grants the creator of a book, film, or piece of music the exclusive right to use the creation during the creator's lifetime. 
C) gives a firm the exclusive right to a new product for 20 years from the date the product is invented. 
D) gives the firm the exclusive right to a new product during the product inventor's lifetime.

Question 8

The demand curve for a monopoly firm

Accepted Answer

A) is perfectly inelastic. 
B) lies below its marginal revenue curve. 
C) is the same as the market demand curve. 
D) is horizontal. 
A) is perfectly inelastic. 
B) lies below its marginal revenue curve. 
C) is the same as the market demand curve. 
D) is horizontal.

Question 9

Which of the following statements is true?

Accepted Answer

A) Monopolists are price makers.All other firms are price takers. 
B) Unlike other industries, monopoly industries have high barriers to entry. 
C) Only monopoly firms are granted patents and copyrights. 
D) Unlike other firms, a monopolist's demand curve is the same as the market demand curve. 
A) Monopolists are price makers.All other firms are price takers. 
B) Unlike other industries, monopoly industries have high barriers to entry. 
C) Only monopoly firms are granted patents and copyrights. 
D) Unlike other firms, a monopolist's demand curve is the same as the market demand curve.

Question 10

The 10-year protection period from generic competition for drug manufacturers is a form of

Accepted Answer

A) copyright. 
B) trademark. 
C) hallmark. 
D) patent. 
A) copyright. 
B) trademark. 
C) hallmark. 
D) patent.

Question 11

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A) Yes, there are no substitutes to Peet's coffee. 
B) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C) Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No, Peet's is not a monopoly because there are many branches of Peet's. 
A) Yes, there are no substitutes to Peet's coffee. 
B) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C) Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No, Peet's is not a monopoly because there are many branches of Peet's.

Question 12

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result, the monopoly's profit will fall.

Accepted Answer

A) True 
 B)False

Question 13

Why is price discrimination legal but not discrimination based on race or gender?

Accepted Answer

A) Because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues 
B) Because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss 
C) Because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics 
D) Because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment 
A) Because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues 
B) Because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss 
C) Because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics 
D) Because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment

Question 14

The size of a deadweight loss in a market is reduced by

Accepted Answer

A) government legislating a price ceiling. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction. 
A) government legislating a price ceiling. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction.

Question 15

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 16

Early adopters are consumers who will pay a high price to be among the first to own new products.

Accepted Answer

A) True 
 B)False

Question 17

What are the only firms that do not have market power?

Accepted Answer

A) Firms in industries with low barriers to entry. 
B) Firms that do not advertise their products. 
C) Firms in perfectly competitive markets. 
D) Firms that sell identical products. 
A) Firms in industries with low barriers to entry. 
B) Firms that do not advertise their products. 
C) Firms in perfectly competitive markets. 
D) Firms that sell identical products.

Question 18

When the government wants to give an exclusive right to one firm to produce a product, it

Accepted Answer

A) imposes a tariff on imports of the product. 
B) imposes a quota on imports of the product. 
C) grants a patent or copyright to an individual or firm. 
D) uses antitrust laws to keep other firms from entering the market. 
A) imposes a tariff on imports of the product. 
B) imposes a quota on imports of the product. 
C) grants a patent or copyright to an individual or firm. 
D) uses antitrust laws to keep other firms from entering the market.

Question 19

For a natural monopoly to exist

Accepted Answer

A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier. 
A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier.

Question 20

What do economists call firms that face downward-sloping demand curves for their output in the product market?

Accepted Answer

A) price takers. 
B) price dictators. 
C) monopolists. 
D) price makers. 
A) price takers. 
B) price dictators. 
C) monopolists. 
D) price makers.

With perfect price discrimination, which of the following is true for the marginal revenue curve?

Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist. -Refer to Figure 9.9.The difference between the monopoly output and the perfectly competitive output is

Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.3.What happens to the monopolist represented in the diagram in the long run?

If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax.

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is

A patent

The demand curve for a monopoly firm

Which of the following statements is true?

The 10-year protection period from generic competition for drug manufacturers is a form of

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result, the monopoly's profit will fall.

Why is price discrimination legal but not discrimination based on race or gender?

The size of a deadweight loss in a market is reduced by

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Early adopters are consumers who will pay a high price to be among the first to own new products.

What are the only firms that do not have market power?

When the government wants to give an exclusive right to one firm to produce a product, it

For a natural monopoly to exist

What do economists call firms that face downward-sloping demand curves for their output in the product market?

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

With perfect price discrimination, which of the following is true for the marginal revenue curve?

Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist. -Refer to Figure 9.9.The difference between the monopoly output and the perfectly competitive output is

Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.3.What happens to the monopolist represented in the diagram in the long run?

If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax.

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is

A patent

The demand curve for a monopoly firm

Which of the following statements is true?

The 10-year protection period from generic competition for drug manufacturers is a form of

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee.Is Peet's a monopoly?

Suppose a monopoly is producing its profit-maximising output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result, the monopoly's profit will fall.

Why is price discrimination legal but not discrimination based on race or gender?

The size of a deadweight loss in a market is reduced by

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Early adopters are consumers who will pay a high price to be among the first to own new products.

What are the only firms that do not have market power?

When the government wants to give an exclusive right to one firm to produce a product, it

For a natural monopoly to exist

What do economists call firms that face downward-sloping demand curves for their output in the product market?

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