Question 1

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

Accepted Answer

A) True 
 B)False

Question 2

Identify two ways by which the government controls monopolies?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The government control monopol

Question 3

Figure 9.15  
-Refer to Figure 9.15.The economically efficient output level is

Accepted Answer

A) Q1 units 
B) Q2 units 
C) Q3 units 
D) Q4 units 
A) Q1 units 
B) Q2 units 
C) Q3 units 
D) Q4 units

Question 4

Governments grant patents to encourage

Accepted Answer

A) research and development on new products. 
B) competition. 
C) low prices. 
D) firms to form public enterprises. 
A) research and development on new products. 
B) competition. 
C) low prices. 
D) firms to form public enterprises.

Question 5

A firm that can effectively price discriminate will charge a higher price to

Accepted Answer

A) customers who have the more elastic demand for the product. 
B) customers who have the more inelastic demand for the product. 
C) buyers who belong to the largest market segment. 
D) buyers who are members of the smallest market segment. 
A) customers who have the more elastic demand for the product. 
B) customers who have the more inelastic demand for the product. 
C) buyers who belong to the largest market segment. 
D) buyers who are members of the smallest market segment.

Question 6

To be a natural monopoly a firm must

Accepted Answer

A) control a key resource input. 
B) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. 
C) have significant network externalities. 
D) be very large relative to the total market. 
A) control a key resource input. 
B) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. 
C) have significant network externalities. 
D) be very large relative to the total market.

Question 7

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?
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Accepted Answer

A monopoly's marginal revenue curve lies

Question 8

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) the triangle P0P1F 
B) the triangle P0P2E 
C) the trapezium P1P2EF 
D) the rectangle P1P3HF 
A) the triangle P0P1F 
B) the triangle P0P2E 
C) the trapezium P1P2EF 
D) the rectangle P1P3HF

Question 10

In the short run, even if a monopoly's total revenue does not cover its variable costs, it should continue to produce because ultimately in the long run, the monopoly will start earning profits.

Accepted Answer

A) True 
 B)False

Question 11

Most movie theatres charge different prices to different groups of customers for movie admission but not for movie popcorn.Which of the following is a reason for this?

Accepted Answer

A) Because the markup on movie popcorn is very high and movie theatres do not want to forego this source of revenue 
B) Because the demand for popcorn is very high relative to the demand for movie admissions 
C) Because it is easier to limit resale in movie admissions but not in popcorn 
D) Because the cost of operating a concession stand in a movie theatre is very high compared to the cost of showing a movie 
A) Because the markup on movie popcorn is very high and movie theatres do not want to forego this source of revenue 
B) Because the demand for popcorn is very high relative to the demand for movie admissions 
C) Because it is easier to limit resale in movie admissions but not in popcorn 
D) Because the cost of operating a concession stand in a movie theatre is very high compared to the cost of showing a movie

Question 12

What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?
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Accepted Answer

Perfect price discrimination, also known

Question 13

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

Accepted Answer

A) the firm must set different prices for different regions where the product is sold. 
B) the firm must be willing to offer price discounts for senior citizens and children. 
C) the firm must be able to divide the market in a way that makes arbitrage impossible. 
D) the firm must choose a marketing strategy that appeals to different segments of the economy. 
A) the firm must set different prices for different regions where the product is sold. 
B) the firm must be willing to offer price discounts for senior citizens and children. 
C) the firm must be able to divide the market in a way that makes arbitrage impossible. 
D) the firm must choose a marketing strategy that appeals to different segments of the economy.

Question 14

Which of the following products allows the seller to identify different groups of consumers (segment the market)at virtually no cost?

Accepted Answer

A) Early bird dinner specials 
B) Books sold online 
C) A pair of Bose speakers 
D) iPhones 
A) Early bird dinner specials 
B) Books sold online 
C) A pair of Bose speakers 
D) iPhones

Question 15

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 leads to the economically efficient output level?

Accepted Answer

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

Question 16

Suppose an industry is made up of 25 firms, all with equal market share.What is the four-firm concentration ratio of this industry?

Accepted Answer

A) 16%. 
B) 20%. 
C) 25%. 
D) It cannot be determined from the information given. 
A) 16%. 
B) 20%. 
C) 25%. 
D) It cannot be determined from the information given.

Question 17

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

Accepted Answer

A) True 
 B)False

Question 18

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

Accepted Answer

A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even. 
A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even.

Question 19

What is a network externality?

Accepted Answer

A) It refers to having a network of suppliers and buyers for a good or service. 
B) It refers to lobbying to form a public enterprise. 
C) It refers to a situation in which a product's usefulness increases with the number of people using it. 
D) It refers to a product that requires connection to a network for it to be useful. 
A) It refers to having a network of suppliers and buyers for a good or service. 
B) It refers to lobbying to form a public enterprise. 
C) It refers to a situation in which a product's usefulness increases with the number of people using it. 
D) It refers to a product that requires connection to a network for it to be useful.

Question 20

Figure 9.15  
-Refer to Figure 9.15.With perfect price discrimination, the firm will produce and sell

Accepted Answer

A) Q1 units. 
B) Q2 units. 
C) Q3 units. 
D) Q4 units. 
A) Q1 units. 
B) Q2 units. 
C) Q3 units. 
D) Q4 units.

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

Identify two ways by which the government controls monopolies? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 9.15 -Refer to Figure 9.15.The economically efficient output level is

Governments grant patents to encourage

A firm that can effectively price discriminate will charge a higher price to

To be a natural monopoly a firm must

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

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

In the short run, even if a monopoly's total revenue does not cover its variable costs, it should continue to produce because ultimately in the long run, the monopoly will start earning profits.

Most movie theatres charge different prices to different groups of customers for movie admission but not for movie popcorn.Which of the following is a reason for this?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

Which of the following products allows the seller to identify different groups of consumers (segment the market)at virtually no cost?

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 leads to the economically efficient output level?

Suppose an industry is made up of 25 firms, all with equal market share.What is the four-firm concentration ratio of this industry?

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

What is a network externality?

Figure 9.15 -Refer to Figure 9.15.With perfect price discrimination, the firm will produce and sell

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

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

Identify two ways by which the government controls monopolies? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 9.15 -Refer to Figure 9.15.The economically efficient output level is

Governments grant patents to encourage

A firm that can effectively price discriminate will charge a higher price to

To be a natural monopoly a firm must

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

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

In the short run, even if a monopoly's total revenue does not cover its variable costs, it should continue to produce because ultimately in the long run, the monopoly will start earning profits.

Most movie theatres charge different prices to different groups of customers for movie admission but not for movie popcorn.Which of the following is a reason for this?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product.This means that

Which of the following products allows the seller to identify different groups of consumers (segment the market)at virtually no cost?

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 leads to the economically efficient output level?

Suppose an industry is made up of 25 firms, all with equal market share.What is the four-firm concentration ratio of this industry?

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,

What is a network externality?

Figure 9.15 -Refer to Figure 9.15.With perfect price discrimination, the firm will produce and sell

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