Question 1

The demand curve for the monopoly's product is

Accepted Answer

A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined. 
A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined.

Question 2

Perfect price discrimination is also known as

Accepted Answer

A)  monopoly. 
B)  first-degree price discrimination. 
C)  third-degree price discrimination. 
D)  yield management. 
A)  monopoly. 
B)  first-degree price discrimination. 
C)  third-degree price discrimination. 
D)  yield management.

Question 3

What is the difference between price discrimination and other forms of discrimination?

Accepted Answer

Discrimination based on race or gender a

Question 4

Which of the following is a reason why airline yield management is an effective method to increase revenue?

Accepted Answer

A)  because airlines have invested heavily in developing computer models that identify optimal pricing strategies in the various market segments 
B)  because airlines have successfully induced customers to reveal their resources and preferences by offering them different versions of the product such as business class and coach plane tickets 
C)  because a ticket is a contract to transport a specific person, and is not transferable 
D)  because airlines have a monopoly in long-distance carriage 
A)  because airlines have invested heavily in developing computer models that identify optimal pricing strategies in the various market segments 
B)  because airlines have successfully induced customers to reveal their resources and preferences by offering them different versions of the product such as business class and coach plane tickets 
C)  because a ticket is a contract to transport a specific person, and is not transferable 
D)  because airlines have a monopoly in long-distance carriage

Question 5

Publishers practice price discrimination when they sell books at high prices to

Accepted Answer

A)  early adopters. 
B)  local bookstores. 
C)  large chain bookstores. 
D)  online book sellers. 
A)  early adopters. 
B)  local bookstores. 
C)  large chain bookstores. 
D)  online book sellers.

Question 6

-Refer to Figure 9-14 to answer the following questions.
a. What quantity will this monopoly produce and what price will it charge?
b. Suppose the monopoly is regulated. If the regulatory agency wants to achieve economic efficiency, what price should it require the monopoly to charge?
c. To achieve economic efficiency, what quantity will the regulated monopoly produce?
d. Will the regulated monopoly make a profit if it charges the price that will achieve economic efficiency?
e. Suppose the government decides to regulate the monopoly by imposing a price ceiling of $35. What quantity will the monopoly produce and what price will the monopoly charge?
f. With the price ceiling of $35, what profit will the monopoly earn?

Accepted Answer

a. Quantity = 835 units and Price = $59.

Question 7

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Accepted Answer

A)  control of a key raw material. 
B)  network externalities. 
C)  economies of scale. 
D)  perfectly inelastic demand curve. 
A)  control of a key raw material. 
B)  network externalities. 
C)  economies of scale. 
D)  perfectly inelastic demand curve.

Question 8

Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1200. Assume that Iris and Daphne do not know each other. If the price is $800 per copy,

Accepted Answer

A)  both Iris and Daphne will purchase Joss's services, and Joss will undertake the job. 
B)  only Daphne will purchase Joss's services, and Joss will undertake the job for her. 
C)  only Daphne will want to purchase Joss's services, but Joss will not be willing to do the work. 
D)  neither Iris nor Daphne will commission the work. 
A)  both Iris and Daphne will purchase Joss's services, and Joss will undertake the job. 
B)  only Daphne will purchase Joss's services, and Joss will undertake the job for her. 
C)  only Daphne will want to purchase Joss's services, but Joss will not be willing to do the work. 
D)  neither Iris nor Daphne will commission the work.

Question 9

Many universities practice yield management to maximise the revenue they receive from tuition and

Accepted Answer

A)  to maximise the amount of aid they receive from the federal government. 
B)  to maximise the amount of their student loans. 
C)  to maximise the size of their endowments. 
D)  to increase the academic quality of the students who enroll in their schools. 
A)  to maximise the amount of aid they receive from the federal government. 
B)  to maximise the amount of their student loans. 
C)  to maximise the size of their endowments. 
D)  to increase the academic quality of the students who enroll in their schools.

Question 10

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case?

Accepted Answer

A)  Telephone companies hope to discourage customers from calling long distance during the day to keep their labour costs down. 
B)  The cost of making long-distance connections is higher during the day than in the evenings. 
C)  Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. 
D)  Increasingly, businesses who must call suppliers or customers during business hours resort to the Internet, thereby reducing demand for long-distance calls. To make up for this fall in demand, telephone companies charge higher rates. 
A)  Telephone companies hope to discourage customers from calling long distance during the day to keep their labour costs down. 
B)  The cost of making long-distance connections is higher during the day than in the evenings. 
C)  Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. 
D)  Increasingly, businesses who must call suppliers or customers during business hours resort to the Internet, thereby reducing demand for long-distance calls. To make up for this fall in demand, telephone companies charge higher rates.

Question 11

A possible advantage of a horizontal merger for the economy is that

Accepted Answer

A)  the merging firms could avoid losses. 
B)  the merged firm might reap economies of scale which could translate into lower prices. 
C)  the degree of competition in the industry will be intensified. 
D)  the government stands to collect more corporate income tax revenue. 
A)  the merging firms could avoid losses. 
B)  the merged firm might reap economies of scale which could translate into lower prices. 
C)  the degree of competition in the industry will be intensified. 
D)  the government stands to collect more corporate income tax revenue.

Question 12

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 13

A patent or copyright is a barrier to entry based on

Accepted Answer

A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities. 
A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities.

Question 14

To maximise profit a monopolist will produce where

Accepted Answer

A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue. 
A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximised. 
D)  average total cost is equal to average revenue.

Question 15

Why might a producer practice price discrimination?

Accepted Answer

A)  to make its products more affordable to those with low incomes 
B)  to maximise economic efficiency 
C)  to maximise profits 
D)  to maximise quantity demanded 
A)  to make its products more affordable to those with low incomes 
B)  to maximise economic efficiency 
C)  to maximise profits 
D)  to maximise quantity demanded

Question 16

-Refer to Figure 9-11. Assume the firm maximises its profits. What is the amount of consumer surplus?

Accepted Answer

A)  $21 
B)  $124 
C)  $186 
D)  $332 
A)  $21 
B)  $124 
C)  $186 
D)  $332

Question 17

The demand curve for a monopoly firm

Accepted Answer

A)  is perfectly inelastic. 
B)  lies below its marginal revenue curve. 
C)  is the same as the market demand curve. 
D)  is horizontal. 
A)  is perfectly inelastic. 
B)  lies below its marginal revenue curve. 
C)  is the same as the market demand curve. 
D)  is horizontal.

Question 18

For a natural monopoly to exist

Accepted Answer

A)  a firm must continually buy up its rivals. 
B)  a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C)  a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D)  a firm must have a government-imposed barrier. 
A)  a firm must continually buy up its rivals. 
B)  a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C)  a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D)  a firm must have a government-imposed barrier.

Question 19

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay. What is the value of consumer surplus by her customers?

Accepted Answer

A)  $39 
B)  $28 
C)  $11 
D)  $0 
A)  $39 
B)  $28 
C)  $11 
D)  $0

Question 20

-Refer to Table 9-1. What is the amount of the firm's profit?

Accepted Answer

A)  $335 
B)  $350 
C)  $880 
D)  $910 
A)  $335 
B)  $350 
C)  $880 
D)  $910

The demand curve for the monopoly's product is

Perfect price discrimination is also known as

What is the difference between price discrimination and other forms of discrimination?

Which of the following is a reason why airline yield management is an effective method to increase revenue?

Publishers practice price discrimination when they sell books at high prices to

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Many universities practice yield management to maximise the revenue they receive from tuition and

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case?

A possible advantage of a horizontal merger for the economy is that

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

A patent or copyright is a barrier to entry based on

To maximise profit a monopolist will produce where

Why might a producer practice price discrimination?

-Refer to Figure 9-11. Assume the firm maximises its profits. What is the amount of consumer surplus?

The demand curve for a monopoly firm

For a natural monopoly to exist

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay. What is the value of consumer surplus by her customers?

-Refer to Table 9-1. What is the amount of the firm's profit?

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

The demand curve for the monopoly's product is

Perfect price discrimination is also known as

What is the difference between price discrimination and other forms of discrimination?

Which of the following is a reason why airline yield management is an effective method to increase revenue?

Publishers practice price discrimination when they sell books at high prices to

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Many universities practice yield management to maximise the revenue they receive from tuition and

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case?

A possible advantage of a horizontal merger for the economy is that

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

A patent or copyright is a barrier to entry based on

To maximise profit a monopolist will produce where

Why might a producer practice price discrimination?

-Refer to Figure 9-11. Assume the firm maximises its profits. What is the amount of consumer surplus?

The demand curve for a monopoly firm

For a natural monopoly to exist

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay. What is the value of consumer surplus by her customers?

-Refer to Table 9-1. What is the amount of the firm's profit?

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