Question 1

Which of the following is a reason why a firm would not engage in price discrimination?

Accepted Answer

A)  Price discrimination is illegal in some western states and the owners of firms in these states face civil or criminal prosecution if they engage in price discrimination. 
B)  Some firms are not able to segment the market for the products they sell. 
C)  Some firms do not want to violate the law of one price. 
D)  The transactions costs associated with selling the product exceed the price of the product. 
A)  Price discrimination is illegal in some western states and the owners of firms in these states face civil or criminal prosecution if they engage in price discrimination. 
B)  Some firms are not able to segment the market for the products they sell. 
C)  Some firms do not want to violate the law of one price. 
D)  The transactions costs associated with selling the product exceed the price of the product.

Question 2

-Refer to Figure 9-6. The monopolist's total cost is

Accepted Answer

A)  $1116. 
B)  $1240. 
C)  $1660. 
D)  $1726.40. 
A)  $1116. 
B)  $1240. 
C)  $1660. 
D)  $1726.40.

Question 3

Which of the following is not a requirement for a successful price discrimination strategy?

Accepted Answer

A)  A firm must have the ability to charge a price greater than marginal cost. 
B)  Some consumers must have a greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay. 
C)  The firm must be able to prevent arbitrage. 
D)  Transactions costs must be the same for all consumers. 
A)  A firm must have the ability to charge a price greater than marginal cost. 
B)  Some consumers must have a greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay. 
C)  The firm must be able to prevent arbitrage. 
D)  Transactions costs must be the same for all consumers.

Question 4

Why does a monopoly cause a deadweight loss?

Accepted Answer

A)  because it does not produce some output for which marginal benefit exceeds marginal cost 
B)  because it appropriates a portion of consumer surplus for itself 
C)  because it increases producer surplus at the expense of consumer surplus 
D)  because it does not produce some output for which demand exceeds supply 
A)  because it does not produce some output for which marginal benefit exceeds marginal cost 
B)  because it appropriates a portion of consumer surplus for itself 
C)  because it increases producer surplus at the expense of consumer surplus 
D)  because it does not produce some output for which demand exceeds supply

Question 5

Suppose that a price-discriminating producer divides its market into two segments. If the firm sells its product at a price of $34 in the market segment with relatively less-elastic customer demand, the price in the market segment with more-elastic customer demand will be

Accepted Answer

A)  greater than $34. 
B)  less than $34. 
C)  less than marginal revenue in that market segment. 
D)  equal to marginal revenue in that market segment. 
A)  greater than $34. 
B)  less than $34. 
C)  less than marginal revenue in that market segment. 
D)  equal to marginal revenue in that market segment.

Question 6

Which of the following undermines a firm's ability to engage in price discrimination?

Accepted Answer

A)  the seller's market power 
B)  the inability to prevent resale of the product from one market segment to another 
C)  buyers having different elasticities of demand for the product 
D)  the seller's ability to segment the total market 
A)  the seller's market power 
B)  the inability to prevent resale of the product from one market segment to another 
C)  buyers having different elasticities of demand for the product 
D)  the seller's ability to segment the total market

Question 7

Which of the following pricing strategies allows a firm to earn economic profit?

Accepted Answer

A)  price discrimination 
B)  charging a price equal to marginal cost 
C)  charging a price equal to the average total cost of production 
D)  charging a price equal to the average variable cost of production 
A)  price discrimination 
B)  charging a price equal to marginal cost 
C)  charging a price equal to the average total cost of production 
D)  charging a price equal to the average variable cost of production

Question 8

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

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 9

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Accepted Answer

A)  to maximise profit the firm should increase output. 
B)  to maximise profit the firm should decrease output. 
C)  to maximise profit the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit. 
A)  to maximise profit the firm should increase output. 
B)  to maximise profit the firm should decrease output. 
C)  to maximise profit the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit.

Question 10

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 11

If you own the only bookstore in a small town, do you have a monopoly?

Accepted Answer

Because consumers in your town could buy

Question 12

Long-run economic profits would most likely exist in which market structure?

Accepted Answer

A)  monopoly, monopolistic competition and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only 
A)  monopoly, monopolistic competition and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only

Question 13

A monopoly firm's demand curve

Accepted Answer

A)  is the same as the market demand curve. 
B)  is perfectly inelastic. 
C)  is more inelastic than the demand curve for the product. 
D)  is inelastic at high prices and elastic at lower prices. 
A)  is the same as the market demand curve. 
B)  is perfectly inelastic. 
C)  is more inelastic than the demand curve for the product. 
D)  is inelastic at high prices and elastic at lower prices.

Question 14

The only firms that do not have market power are

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 15

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 16

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

Accepted Answer

A) True 
 B)False

Question 17

A price-discriminating firm charges the highest price to

Accepted Answer

A)  the group with the largest demand. 
B)  the group with the most elastic demand. 
C)  the group with the least elastic demand. 
D)  the group with demand that is unit-elastic. 
A)  the group with the largest demand. 
B)  the group with the most elastic demand. 
C)  the group with the least elastic demand. 
D)  the group with demand that is unit-elastic.

Question 18

For which of the following firms is patent protection of vital importance?

Accepted Answer

A)  furniture producers 
B)  software firms 
C)  pharmaceutical firms 
D)  auto makers 
A)  furniture producers 
B)  software firms 
C)  pharmaceutical firms 
D)  auto makers

Question 19

A monopoly is characterised by all of the following except

Accepted Answer

A)  there are only a few sellers each selling a unique product. 
B)  entry barriers are high. 
C)  there are no close substitutes to the firm's product. 
D)  the firm has market power. 
A)  there are only a few sellers each selling a unique product. 
B)  entry barriers are high. 
C)  there are no close substitutes to the firm's product. 
D)  the firm has market power.

Question 20

A price maker is

Accepted Answer

A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product. 
A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product.

Which of the following is a reason why a firm would not engage in price discrimination?

-Refer to Figure 9-6. The monopolist's total cost is

Which of the following is not a requirement for a successful price discrimination strategy?

Why does a monopoly cause a deadweight loss?

Suppose that a price-discriminating producer divides its market into two segments. If the firm sells its product at a price of $34 in the market segment with relatively less-elastic customer demand, the price in the market segment with more-elastic customer demand will be

Which of the following undermines a firm's ability to engage in price discrimination?

Which of the following pricing strategies allows a firm to earn economic profit?

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

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

A monopolist's demand curve is the same as the marginal revenue curve for the product.

If you own the only bookstore in a small town, do you have a monopoly?

Long-run economic profits would most likely exist in which market structure?

A monopoly firm's demand curve

The only firms that do not have market power are

Which of the following statements is true?

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

A price-discriminating firm charges the highest price to

For which of the following firms is patent protection of vital importance?

A monopoly is characterised by all of the following except

A price maker is

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

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Exam 9: Monopoly Markets

Which of the following is a reason why a firm would not engage in price discrimination?

-Refer to Figure 9-6. The monopolist's total cost is

Which of the following is not a requirement for a successful price discrimination strategy?

Why does a monopoly cause a deadweight loss?

Suppose that a price-discriminating producer divides its market into two segments. If the firm sells its product at a price of $34 in the market segment with relatively less-elastic customer demand, the price in the market segment with more-elastic customer demand will be

Which of the following undermines a firm's ability to engage in price discrimination?

Which of the following pricing strategies allows a firm to earn economic profit?

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

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

A monopolist's demand curve is the same as the marginal revenue curve for the product.

If you own the only bookstore in a small town, do you have a monopoly?

Long-run economic profits would most likely exist in which market structure?

A monopoly firm's demand curve

The only firms that do not have market power are

Which of the following statements is true?

A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented.

A price-discriminating firm charges the highest price to

For which of the following firms is patent protection of vital importance?

A monopoly is characterised by all of the following except

A price maker is

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