Question 1

Price discrimination refers to:

Accepted Answer

A)  charging different prices to different groups on the basis of production cost differences. 
B)  charging different prices to different groups without a basis for doing so because of differences in production costs. 
C)  the ability of a firm to charge a price in excess of marginal cost. 
D)  consumer bargain hunting. 
A)  charging different prices to different groups on the basis of production cost differences. 
B)  charging different prices to different groups without a basis for doing so because of differences in production costs. 
C)  the ability of a firm to charge a price in excess of marginal cost. 
D)  consumer bargain hunting.

Question 2

Price ____ occurs when producers charge different customers different prices for the same good or service.

Accepted Answer

A)  maximization 
B)  discrimination 
C)  regulation 
D)  management 
A)  maximization 
B)  discrimination 
C)  regulation 
D)  management

Question 3

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

Accepted Answer

A)  Sherman Act 
B)  Robinson-Patman Act 
C)  Cellar-Kefauver Act 
D)  Clayton Act 
A)  Sherman Act 
B)  Robinson-Patman Act 
C)  Cellar-Kefauver Act 
D)  Clayton Act

Question 4

When a monopolist is able to price-discriminate:

Accepted Answer

A)  its profits tend to increase and its output tends to fall. 
B)  both its profits and output tend to increase. 
C)  both its profits and output tend to decrease. 
D)  its profits tend to fall and its output tends to increase. 
A)  its profits tend to increase and its output tends to fall. 
B)  both its profits and output tend to increase. 
C)  both its profits and output tend to decrease. 
D)  its profits tend to fall and its output tends to increase.

Question 5

What conditions should be met to practice price discrimination in a market?

Accepted Answer

To practice price discrimination,the fol

Question 6

A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:

Accepted Answer

A)  have a lower willingness to pay than other demanders. 
B)  have a greater willingness to pay than other demanders. 
C)  have very elastic demand curves. 
D)  have nearly vertical demand curves. 
A)  have a lower willingness to pay than other demanders. 
B)  have a greater willingness to pay than other demanders. 
C)  have very elastic demand curves. 
D)  have nearly vertical demand curves.

Question 7

Exhibit 13-6   Refer to Exhibit 13-6.In perfect competition,consumer surplus is area:

Accepted Answer

A)  a 
B)  a + b 
C)  a + b + c 
D)  a + b + d 
A)  a 
B)  a + b 
C)  a + b + c 
D)  a + b + d

Question 8

If a monopolist could sell 5 units at $6 and 6 units at $5:

Accepted Answer

A)  marginal revenue for the 6th unit is $5. 
B)  marginal revenue for the 6th unit is zero. 
C)  demand is unit elastic over that range of prices. 
D)  both (b) and (c) are true. 
A)  marginal revenue for the 6th unit is $5. 
B)  marginal revenue for the 6th unit is zero. 
C)  demand is unit elastic over that range of prices. 
D)  both (b) and (c) are true.

Question 9

Exhibit 13-6   Refer to Exhibit 13-6.In perfect competition total welfare is area:

Accepted Answer

A)  a + b + c 
B)  d + e 
C)  a + b + c + d + e 
D)  zero 
A)  a + b + c 
B)  d + e 
C)  a + b + c + d + e 
D)  zero

Question 10

A monopolist will shut down in the short run if:

Accepted Answer

A)  price exceeds marginal revenue. 
B)  price is less than marginal revenue. 
C)  price is less than average total cost. 
D)  total revenue is less than total variable cost. 
A)  price exceeds marginal revenue. 
B)  price is less than marginal revenue. 
C)  price is less than average total cost. 
D)  total revenue is less than total variable cost.

Question 11

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly.   Refer to Exhibit 13-4.If regulators set a price according to average-cost pricing,the firm will:

Accepted Answer

A)  earn positive economic profits. 
B)  make zero economic profits. 
C)  suffer an economic loss. 
D)  earn the same level of profits as it would absent regulation. 
A)  earn positive economic profits. 
B)  make zero economic profits. 
C)  suffer an economic loss. 
D)  earn the same level of profits as it would absent regulation.

Question 12

Graphically which of the following is true for a monopoly?

Accepted Answer

A)  The marginal revenue curve lies below the demand curve and is steeper than the demand curve. 
B)  The marginal revenue curve lies above the demand curve and is steeper than the demand curve. 
C)  The marginal revenue curve lies below the demand curve and is flatter than the demand curve. 
D)  The marginal revenue curve lies above the demand curve and is flatter than the demand curve. 
A)  The marginal revenue curve lies below the demand curve and is steeper than the demand curve. 
B)  The marginal revenue curve lies above the demand curve and is steeper than the demand curve. 
C)  The marginal revenue curve lies below the demand curve and is flatter than the demand curve. 
D)  The marginal revenue curve lies above the demand curve and is flatter than the demand curve.

Question 13

If a monopolist's marginal revenue is less than zero over a range of output,then price elasticity of demand must be:

Accepted Answer

A)  greater than one. 
B)  equal to one. 
C)  less than one. 
D)  equal to zero. 
A)  greater than one. 
B)  equal to one. 
C)  less than one. 
D)  equal to zero.

Question 14

The aim of antitrust policy is to:

Accepted Answer

A)  provide adequate incentives for inventors and entrepreneurs. 
B)  prevent firms from acquiring or exercising undue market power. 
C)  protect established firms by deterring new entry into industries. 
D)  regulate the prices charged by perfectly competitive firms. 
A)  provide adequate incentives for inventors and entrepreneurs. 
B)  prevent firms from acquiring or exercising undue market power. 
C)  protect established firms by deterring new entry into industries. 
D)  regulate the prices charged by perfectly competitive firms.

Question 15

A natural monopoly is likely to arise when:

Accepted Answer

A)  the government restricts entry through licensing. 
B)  patents provide protection of intellectual property. 
C)  economies of scale exist over the relevant range of demand. 
D)  a firm controls a crucial input to production. 
A)  the government restricts entry through licensing. 
B)  patents provide protection of intellectual property. 
C)  economies of scale exist over the relevant range of demand. 
D)  a firm controls a crucial input to production.

Question 16

Which of the following is an example where price discrimination occurs?

Accepted Answer

A)  quantity discounts 
B)  Disney World 
C)  theatres in New York City 
D)  all of the above 
A)  quantity discounts 
B)  Disney World 
C)  theatres in New York City 
D)  all of the above

Question 17

How can economies of scale lead to monopoly?

Accepted Answer

A single firm,which experiences economie

Question 18

Monopolists,unlike perfectly competitive firms,can continue to earn positive economic profits over time.

Accepted Answer

A) True 
 B)False

Question 19

At his current level of output,a monopolist has a MR of $10,a MC of $6,and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve is upward sloping,the monopolist:

Accepted Answer

A)  is producing at the profit-maximizing level of output. 
B)  could increase profit by increasing output. 
C)  could increase profit by increasing his price. 
D)  should exit the market if significant fixed costs have been incurred. 
A)  is producing at the profit-maximizing level of output. 
B)  could increase profit by increasing output. 
C)  could increase profit by increasing his price. 
D)  should exit the market if significant fixed costs have been incurred.

Question 20

Under marginal cost pricing by a natural monopoly,

Accepted Answer

A)  price is less than average cost. 
B)  there will be a welfare cost. 
C)  the producer will earn a higher than normal rate of return. 
D)  there is little or no incentive for the producer to hold down costs. 
A)  price is less than average cost. 
B)  there will be a welfare cost. 
C)  the producer will earn a higher than normal rate of return. 
D)  there is little or no incentive for the producer to hold down costs.

Exam 13: Monopoly and Antitrust

Price discrimination refers to:

Price ____ occurs when producers charge different customers different prices for the same good or service.

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

When a monopolist is able to price-discriminate:

What conditions should be met to practice price discrimination in a market?

A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect competition,consumer surplus is area:

If a monopolist could sell 5 units at $6 and 6 units at $5:

Exhibit 13-6 Refer to Exhibit 13-6.In perfect competition total welfare is area:

A monopolist will shut down in the short run if:

Exhibit 13-4 The following diagram contains information on cost and revenue curves facing a regulated monopoly. Refer to Exhibit 13-4.If regulators set a price according to average-cost pricing,the firm will:

Graphically which of the following is true for a monopoly?

If a monopolist's marginal revenue is less than zero over a range of output,then price elasticity of demand must be:

The aim of antitrust policy is to:

A natural monopoly is likely to arise when:

Which of the following is an example where price discrimination occurs?

How can economies of scale lead to monopoly?

Monopolists,unlike perfectly competitive firms,can continue to earn positive economic profits over time.

At his current level of output,a monopolist has a MR of $10,a MC of $6,and an economic profit of zero.If the market demand curve is downward sloping and his marginal cost curve is upward sloping,the monopolist:

Under marginal cost pricing by a natural monopoly,

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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