Question 1

-Refer to Table 9-2. What is the amount of profit that the firm earns?

Accepted Answer

A)  $34.50 
B)  $42 
C)  $47 
D)  $49 
A)  $34.50 
B)  $42 
C)  $47 
D)  $49

Question 2

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 3

Assume that a monopolist practices perfect price discrimination. The firm will produce an output rate

Accepted Answer

A)  that is less than the efficient level of output. 
B)  that is greater than the efficient level of output. 
C)  that is equal to the efficient level of output. 
D)  that converts consumer surplus into a deadweight loss. 
A)  that is less than the efficient level of output. 
B)  that is greater than the efficient level of output. 
C)  that is equal to the efficient level of output. 
D)  that converts consumer surplus into a deadweight loss.

Question 4

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

Accepted Answer

A)  decrease marginal cost. 
B)  raise average total cost. 
C)  increase total revenue. 
D)  make marginal revenue less elastic. 
A)  decrease marginal cost. 
B)  raise average total cost. 
C)  increase total revenue. 
D)  make marginal revenue less elastic.

Question 5

A monopolist faces

Accepted Answer

A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  a horizontal demand curve. 
D)  a downward-sloping demand curve. 
A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  a horizontal demand curve. 
D)  a downward-sloping demand curve.

Question 6

Relative to a perfectly competitive market, a monopoly results in

Accepted Answer

A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency. 
A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency.

Question 7

-Refer to Figure 9-1. Which of the following statements about the firm depicted in the diagram is true?

Accepted Answer

A)  The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B)  The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C)  The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D)  The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits. 
A)  The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B)  The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C)  The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D)  The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits.

Question 8

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 9

-Refer to Figure 9-13. If the regulators of the natural monopoly allow the owners of the firm to break even on their investment, the firm will produce an output of ________ and charge a price of ________.

Accepted Answer

A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3 
A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3

Question 10

Online companies gather personal information about the customers who shop on their websites, and some of those companies will use the data to estimate price elasticities of the customers. Doing this is a way that these companies might be able to charge a higher price for a product to those customers who have a ________ price elasticity of demand.

Accepted Answer

A)  high 
B)  low 
C)  negative 
D)  unitary 
A)  high 
B)  low 
C)  negative 
D)  unitary

Question 11

The airline industry routinely engages in price discrimination across time.

Accepted Answer

A) True 
 B)False

Question 12

-Refer to Figure 9-10. What is the area that represents producer surplus under a monopoly?

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 13

-Refer to Figure 9-13. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Accepted Answer

A)  This results in a misallocation of resources. 
B)  The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C)  The firm will sustain persistent losses and will not continue in business in the long run. 
D)  The firm will break even. 
A)  This results in a misallocation of resources. 
B)  The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C)  The firm will sustain persistent losses and will not continue in business in the long run. 
D)  The firm will break even.

Question 14

If a restaurant was a natural monopoly, its

Accepted Answer

A)  marginal cost curve would still be declining when it crossed the demand curve. 
B)  average total cost curve would still be declining when it crossed the demand curve. 
C)  marginal revenue curve wold be the same as its demand curve. 
D)  marginal revenue curve would be horizontal. 
A)  marginal cost curve would still be declining when it crossed the demand curve. 
B)  average total cost curve would still be declining when it crossed the demand curve. 
C)  marginal revenue curve wold be the same as its demand curve. 
D)  marginal revenue curve would be horizontal.

Question 15

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 16

-Refer to Table 9-2. What is the profit-maximising quantity and price for the monopolist?

Accepted Answer

A)  Quantity = 8 cases, Price = $9 
B)  Quantity = 7 cases, Price = $10 
C)  Quantity = 9 cases, Price = $8 
D)  Quantity = 10 cases, Price = $7 
A)  Quantity = 8 cases, Price = $9 
B)  Quantity = 7 cases, Price = $10 
C)  Quantity = 9 cases, Price = $8 
D)  Quantity = 10 cases, Price = $7

Question 17

Although some economists believe network externalities are important barriers to entry, other economists disagree because

Accepted Answer

A)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences. 
B)  they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource. 
C)  network externalities are really negative externalities. 
D)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale. 
A)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences. 
B)  they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource. 
C)  network externalities are really negative externalities. 
D)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale.

Question 18

If a firm could practice perfect price discrimination, it would

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 19

With perfect price discrimination there is

Accepted Answer

A)  no deadweight loss. 
B)  no producer surplus. 
C)  one single price. 
D)  an increase in consumer surplus. 
A)  no deadweight loss. 
B)  no producer surplus. 
C)  one single price. 
D)  an increase in consumer surplus.

Question 20

A natural monopoly is characterised by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

-Refer to Table 9-2. What is the amount of profit that the firm earns?

A profit-maximising monopoly's price is

Assume that a monopolist practices perfect price discrimination. The firm will produce an output rate

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

A monopolist faces

Relative to a perfectly competitive market, a monopoly results in

-Refer to Figure 9-1. Which of the following statements about the firm depicted in the diagram is true?

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

-Refer to Figure 9-13. If the regulators of the natural monopoly allow the owners of the firm to break even on their investment, the firm will produce an output of and charge a price of .

The airline industry routinely engages in price discrimination across time.

-Refer to Figure 9-10. What is the area that represents producer surplus under a monopoly?

-Refer to Figure 9-13. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

If a restaurant was a natural monopoly, its

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.

-Refer to Table 9-2. What is the profit-maximising quantity and price for the monopolist?

Although some economists believe network externalities are important barriers to entry, other economists disagree because

If a firm could practice perfect price discrimination, it would

With perfect price discrimination there is

A natural monopoly is characterised by large fixed costs relative to variable costs.

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

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

-Refer to Table 9-2. What is the amount of profit that the firm earns?

A profit-maximising monopoly's price is

Assume that a monopolist practices perfect price discrimination. The firm will produce an output rate

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

A monopolist faces

Relative to a perfectly competitive market, a monopoly results in

-Refer to Figure 9-1. Which of the following statements about the firm depicted in the diagram is true?

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

-Refer to Figure 9-13. If the regulators of the natural monopoly allow the owners of the firm to break even on their investment, the firm will produce an output of ________ and charge a price of ________.

The airline industry routinely engages in price discrimination across time.

-Refer to Figure 9-10. What is the area that represents producer surplus under a monopoly?

-Refer to Figure 9-13. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

If a restaurant was a natural monopoly, its

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.

-Refer to Table 9-2. What is the profit-maximising quantity and price for the monopolist?

Although some economists believe network externalities are important barriers to entry, other economists disagree because

If a firm could practice perfect price discrimination, it would

With perfect price discrimination there is

A natural monopoly is characterised by large fixed costs relative to variable costs.

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

-Refer to Figure 9-13. If the regulators of the natural monopoly allow the owners of the firm to break even on their investment, the firm will produce an output of and charge a price of .