Question 1

For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.

Accepted Answer

A) True 
 B)False

Question 2

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then the firm's total profit is

Accepted Answer

A)  $3150. 
B)  $2709. 
C)  $441. 
D)  $7. 
A)  $3150. 
B)  $2709. 
C)  $441. 
D)  $7.

Question 3

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost. 
A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximise its revenue. 
C)  Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximises profits by producing a quantity for which price equals marginal cost.

Question 4

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 5

-Refer to Figure 9-12. Why won't regulators require that ETSA Power produce the economically efficient output level?

Accepted Answer

A)  because there is insufficient demand at that output level 
B)  because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C)  because Erickson Power will earn zero profit 
D)  because Erickson Power will sustain persistent losses and will not continue in business in the long run 
A)  because there is insufficient demand at that output level 
B)  because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C)  because Erickson Power will earn zero profit 
D)  because Erickson Power will sustain persistent losses and will not continue in business in the long run

Question 6

Equilibrium in a perfectly competitive market results in the greatest amount of economic surplus, or total benefit to society, from the production of a good. Why, then, did Joseph Schumpeter argue that an economy may benefit more from firms that have market power than from firms that are perfectly competitive?

Accepted Answer

Schumpeter did not deny that perfectly c

Question 7

-Refer to figure 9-13. In the absence of any government regulation, the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Accepted Answer

A)  Q0; P0 
B)  Q1; P1 
C)  Q1; P4 
D)  Q3; P3 
A)  Q0; P0 
B)  Q1; P1 
C)  Q1; P4 
D)  Q3; P3

Question 8

Which of the following is a necessary condition for successful price discrimination?

Accepted Answer

A)  The seller must possess market power. 
B)  The buyer must possess market power. 
C)  Transactions costs must be zero. 
D)  Buyers must have identical inelastic demands. 
A)  The seller must possess market power. 
B)  The buyer must possess market power. 
C)  Transactions costs must be zero. 
D)  Buyers must have identical inelastic demands.

Question 9

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 $500 per copy,

Accepted Answer

A)  only Iris will purchase Joss's services, and Joss will undertake the job for her. 
B)  only Daphne will purchase Joss's services, and Joss will undertake the job for her. 
C)  both Iris and Daphne will purchase Joss's services, and Joss will undertake the job. 
D)  both Iris and Daphne will want to purchase Joss's services, but Joss will not be willing to undertake the job. 
A)  only Iris will purchase Joss's services, and Joss will undertake the job for her. 
B)  only Daphne will purchase Joss's services, and Joss will undertake the job for her. 
C)  both Iris and Daphne will purchase Joss's services, and Joss will undertake the job. 
D)  both Iris and Daphne will want to purchase Joss's services, but Joss will not be willing to undertake the job.

Question 10

-Refer to Figure 9-2. To maximise profit, the firm will produce

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 11

A natural monopoly is most likely to occur in which of the following industries?

Accepted Answer

A)  the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  the diamond mining and marketing industry because one firm can control a key resource 
C)  the software industry because of the importance of network externalities 
D)  an industry where fixed costs are very large relative to variable costs 
A)  the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  the diamond mining and marketing industry because one firm can control a key resource 
C)  the software industry because of the importance of network externalities 
D)  an industry where fixed costs are very large relative to variable costs

Question 12

-Refer to Figure 9-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit-maximising/loss-minimising output level?

Accepted Answer

A)  630 units 
B)  800 units 
C)  850 units 
D)  880 units 
A)  630 units 
B)  800 units 
C)  850 units 
D)  880 units

Question 13

What three conditions must hold for a firm to successfully price discriminate?

Accepted Answer

Successful price discrimination has thre

Question 14

Are restaurant coupons a form of price discrimination? Why or why not?

Accepted Answer

Yes, coupons are a form of price discrim

Question 15

Price discrimination is a rational strategy for a profit-maximising firm when

Accepted Answer

A)  it is possible to engage in arbitrage across market segments. 
B)  it is not possible to segment consumers into identifiable markets. 
C)  there is no opportunity for arbitrage across market segments. 
D)  firms want to increase the amount of consumer surplus received by their customers. 
A)  it is possible to engage in arbitrage across market segments. 
B)  it is not possible to segment consumers into identifiable markets. 
C)  there is no opportunity for arbitrage across market segments. 
D)  firms want to increase the amount of consumer surplus received by their customers.

Question 16

-Refer to Figure 9-15. With perfect price discrimination, the firm will produce and sell

Accepted Answer

A)  Q1 units. 
B)  Q2 units. 
C)  Q3 units. 
D)  Q4 units. 
A)  Q1 units. 
B)  Q2 units. 
C)  Q3 units. 
D)  Q4 units.

Question 17

Which of the following are necessary condition(s) for successful price discrimination? a. zero transactions cost
B. a perfectly competitive market structure
C. an imperfectly competitive market structure
D. at least two different markets with different price elasticities of demand
E. at least two different markets with different price elasticities of supply

Accepted Answer

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

Question 18

The size of a deadweight loss in a market is reduced by

Accepted Answer

A)  government legislating a price ceiling. 
B)  government legislating a price floor. 
C)  market price being close to marginal cost. 
D)  creative destruction. 
A)  government legislating a price ceiling. 
B)  government legislating a price floor. 
C)  market price being close to marginal cost. 
D)  creative destruction.

Question 19

Because each customer pays according to her willingness to pay, a consumer maximises her consumer surplus under first-degree price discrimination.

Accepted Answer

A) True 
 B)False

Question 20

A monopoly firm is the only seller of a good or service that

Accepted Answer

A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute. 
A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute.

For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then the firm's total profit is

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

A product's price approaches its marginal cost as market concentration increases.

-Refer to Figure 9-12. Why won't regulators require that ETSA Power produce the economically efficient output level?

-Refer to figure 9-13. In the absence of any government regulation, the profit-maximising owners of this firm will produce units and charge a price of .

Which of the following is a necessary condition for successful price discrimination?

-Refer to Figure 9-2. To maximise profit, the firm will produce

A natural monopoly is most likely to occur in which of the following industries?

-Refer to Figure 9-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit-maximising/loss-minimising output level?

What three conditions must hold for a firm to successfully price discriminate?

Are restaurant coupons a form of price discrimination? Why or why not?

Price discrimination is a rational strategy for a profit-maximising firm when

-Refer to Figure 9-15. With perfect price discrimination, the firm will produce and sell

The size of a deadweight loss in a market is reduced by

Because each customer pays according to her willingness to pay, a consumer maximises her consumer surplus under first-degree price discrimination.

A monopoly firm is the only seller of a good or service that

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

For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then the firm's total profit is

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

A product's price approaches its marginal cost as market concentration increases.

-Refer to Figure 9-12. Why won't regulators require that ETSA Power produce the economically efficient output level?

-Refer to figure 9-13. In the absence of any government regulation, the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Which of the following is a necessary condition for successful price discrimination?

-Refer to Figure 9-2. To maximise profit, the firm will produce

A natural monopoly is most likely to occur in which of the following industries?

-Refer to Figure 9-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit-maximising/loss-minimising output level?

What three conditions must hold for a firm to successfully price discriminate?

Are restaurant coupons a form of price discrimination? Why or why not?

Price discrimination is a rational strategy for a profit-maximising firm when

-Refer to Figure 9-15. With perfect price discrimination, the firm will produce and sell

The size of a deadweight loss in a market is reduced by

Because each customer pays according to her willingness to pay, a consumer maximises her consumer surplus under first-degree price discrimination.

A monopoly firm is the only seller of a good or service that

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. In the absence of any government regulation, the profit-maximising owners of this firm will produce units and charge a price of .