Question 1

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 2

Wendell can sell five motor homes per week at a price of $22 000. If he lowers the price of motor homes to $20 000 per week he will sell six motor homes. What is the marginal revenue of the sixth motor home?

Accepted Answer

A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $22 000 
A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $22 000

Question 3

-Refer to Figure 9-4. What is the profit-maximising/loss-minimising output level?

Accepted Answer

A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units 
A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units

Question 4

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.

Question 5

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour. What is her marginal revenue?

Accepted Answer

A)  It is $7 for the first hour and starts declining thereafter. 
B)  It is $7 for the first hour and starts increasing thereafter. 
C)  It is constant at $7. 
D)  It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth. 
A)  It is $7 for the first hour and starts declining thereafter. 
B)  It is $7 for the first hour and starts increasing thereafter. 
C)  It is constant at $7. 
D)  It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth.

Question 6

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Accepted Answer

A)  equal to average total cost where it intersects the demand curve. 
B)  equal to marginal cost where it intersects the demand curve. 
C)  equal to average variable cost where it intersects the demand curve. 
D)  corresponding to the demand curve where marginal revenue equals zero. 
A)  equal to average total cost where it intersects the demand curve. 
B)  equal to marginal cost where it intersects the demand curve. 
C)  equal to average variable cost where it intersects the demand curve. 
D)  corresponding to the demand curve where marginal revenue equals zero.

Question 7

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

Accepted Answer

A) True 
 B)False

Question 10

Many universities practice yield management. As a result, they offer different financial aid packages to different students. One result of yield management is that universities often

Accepted Answer

A)  offer a less generous financial aid package to students who apply for an early admission decision. 
B)  offer a more generous financial aid package to students who apply for an early admission decision. 
C)  offer a less generous financial aid package to students with relatively high family incomes. 
D)  offer a less generous financial aid package to students who don't participate in many extracurricular activities when they are in high school. 
A)  offer a less generous financial aid package to students who apply for an early admission decision. 
B)  offer a more generous financial aid package to students who apply for an early admission decision. 
C)  offer a less generous financial aid package to students with relatively high family incomes. 
D)  offer a less generous financial aid package to students who don't participate in many extracurricular activities when they are in high school.

Question 11

Price discrimination is possible in which of the following market structures? a. perfect competition
B. monopoly
C. oligopoly
D. monopolistic competition

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Compared to perfect competition, the consumer surplus in a monopoly

Accepted Answer

A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated. 
A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated.

Question 14

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

Accepted Answer

A)  reduce the cost of production. 
B)  capture some consumer surplus. 
C)  reduce transactions costs. 
D)  transfer some producer surplus to consumers. 
A)  reduce the cost of production. 
B)  capture some consumer surplus. 
C)  reduce transactions costs. 
D)  transfer some producer surplus to consumers.

Question 15

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 16

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?

Accepted Answer

A)  5 hours; total revenue = $35 
B)  4 hours; total revenue = $28 
C)  3 hours; total revenue = $21 
D)  2 hours; total revenue = $14 
A)  5 hours; total revenue = $35 
B)  4 hours; total revenue = $28 
C)  3 hours; total revenue = $21 
D)  2 hours; total revenue = $14

Question 17

Explain why the monopolist has no supply curve?

Accepted Answer

A supply curve shows the relationship be

Question 18

What is yield management? How is yield management being used in the airline industry?

Accepted Answer

Yield management is the use of sophistic

Question 19

To have a monopoly in an industry there must be

Accepted Answer

A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service. 
A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service.

Question 20

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Accepted Answer

A natural monopoly arises when the produ

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

Wendell can sell five motor homes per week at a price of $22 000. If he lowers the price of motor homes to $20 000 per week he will sell six motor homes. What is the marginal revenue of the sixth motor home?

-Refer to Figure 9-4. What is the profit-maximising/loss-minimising output level?

Which one of the following about a monopoly is false?

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour. What is her marginal revenue?

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

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

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

Many universities practice yield management. As a result, they offer different financial aid packages to different students. One result of yield management is that universities often

Price discrimination is possible in which of the following market structures? a. perfect competition B. monopoly C. oligopoly D. monopolistic competition

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

Compared to perfect competition, the consumer surplus in a monopoly

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

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

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?

Explain why the monopolist has no supply curve?

What is yield management? How is yield management being used in the airline industry?

To have a monopoly in an industry there must be

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

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

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

Wendell can sell five motor homes per week at a price of $22 000. If he lowers the price of motor homes to $20 000 per week he will sell six motor homes. What is the marginal revenue of the sixth motor home?

-Refer to Figure 9-4. What is the profit-maximising/loss-minimising output level?

Which one of the following about a monopoly is false?

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour. What is her marginal revenue?

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

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

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

Many universities practice yield management. As a result, they offer different financial aid packages to different students. One result of yield management is that universities often

Price discrimination is possible in which of the following market structures? a. perfect competition B. monopoly C. oligopoly D. monopolistic competition

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

Compared to perfect competition, the consumer surplus in a monopoly

Yield management and price discrimination have enabled firms to increase profits and, at the same time,

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

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?

Explain why the monopolist has no supply curve?

What is yield management? How is yield management being used in the airline industry?

To have a monopoly in an industry there must be

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

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