Question 1

Which of the following does not arise from price discrimination?

Accepted Answer

A)  an increase in producer surplus 
B)  an increase in consumer surplus 
C)  an increase in quantity sold 
D)  an increase in profits 
A)  an increase in producer surplus 
B)  an increase in consumer surplus 
C)  an increase in quantity sold 
D)  an increase in profits

Question 2

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. What is the value of the consumer surplus enjoyed by her customers?

Accepted Answer

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

Question 3

Arnold's Airport Transport provides passenger transportation to and from the local airport. Arnold charges a flat rate of $30 per person for round-trip service, and he gives a $5 discount to senior citizens. Assume Arnold's marginal cost is $3.00 per person. Draw two graphs, one showing demand and marginal cost for his $30 customers, of which he has 300 per month, and the other graph showing demand and marginal cost for his senior citizen customers, of which he has 100 per month. If Arnold charged all of his customers $30, he would have 325 customers per month.

Accepted Answer

The answer of Arnold's Airport Transport provides passenger transportation to...

Question 4

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

Accepted Answer

A)  whether or not there are close substitutes for the products of the two firms. 
B)  how elastic the demand is for each firm's product. 
C)  counting the number of firms that produce the same product. 
D)  how much advertising is done in the industry. 
A)  whether or not there are close substitutes for the products of the two firms. 
B)  how elastic the demand is for each firm's product. 
C)  counting the number of firms that produce the same product. 
D)  how much advertising is done in the industry.

Question 5

Some consumer electronic products such as plasma TVs, DVD players and digital cameras are introduced at very high prices, but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies). Which of the following is the best explanation for this observation?

Accepted Answer

A)  More firms are likely to enter the consumer electronic market over time, forcing market prices down. 
B)  Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. 
C)  Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. 
D)  After satisfying the demand for early adopters, firms lower price to attract the more price sensitive consumers. 
A)  More firms are likely to enter the consumer electronic market over time, forcing market prices down. 
B)  Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. 
C)  Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. 
D)  After satisfying the demand for early adopters, firms lower price to attract the more price sensitive consumers.

Question 6

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

Accepted Answer

A)  marginal revenue of the sixth performance is $48 000. 
B)  marginal revenue of the sixth performance is $38 000. 
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five. 
A)  marginal revenue of the sixth performance is $48 000. 
B)  marginal revenue of the sixth performance is $38 000. 
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five.

Question 7

To maintain a monopoly, a firm must have

Accepted Answer

A)  a perfectly inelastic demand. 
B)  an insurmountable barrier to entry. 
C)  marginal revenue equal to demand. 
D)  few competitors. 
A)  a perfectly inelastic demand. 
B)  an insurmountable barrier to entry. 
C)  marginal revenue equal to demand. 
D)  few competitors.

Question 8

There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?

Accepted Answer

A)  network externalities 
B)  public franchise 
C)  economies of scale 
D)  control of a key resource 
A)  network externalities 
B)  public franchise 
C)  economies of scale 
D)  control of a key resource

Question 9

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product. This means that

Accepted Answer

A)  the firm must set different prices for different regions where the product is sold. 
B)  the firm must be willing to offer price discounts for senior citizens and children. 
C)  the firm must be able to divide the market in a way that makes arbitrage impossible. 
D)  the firm must choose a marketing strategy that appeals to different segments of the economy. 
A)  the firm must set different prices for different regions where the product is sold. 
B)  the firm must be willing to offer price discounts for senior citizens and children. 
C)  the firm must be able to divide the market in a way that makes arbitrage impossible. 
D)  the firm must choose a marketing strategy that appeals to different segments of the economy.

Question 10

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Accepted Answer

A monopoly is the only seller

Question 11

If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of

Accepted Answer

A)  price gouging. 
B)  rational ignorance. 
C)  arbitrage. 
D)  price discrimination. 
A)  price gouging. 
B)  rational ignorance. 
C)  arbitrage. 
D)  price discrimination.

Question 12

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Accepted Answer

A monopoly's marginal revenue curve lies

Question 13

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

Accepted Answer

Profit maximisation is not the same thin

Question 14

Suppose a restaurant is trying to determine how much to charge for a bowl of chili, and decides to run an experiment to see how much its customers are willing to pay by allowing them to set their own price for this menu item.
a. Is charging a customer the price he or she is willing to pay for the bowl of chili an example of price discrimination? Briefly explain.
b. What is it called when a firm knows every consumer's willingness to pay, and can charge every consumer a different price? What happens to consumer surplus in this situation?

Accepted Answer

a. This is an example of price discrimin

Question 15

Consider an industry that is made up of nine firms, each with a market share (per cent of sales) as follows: a. Firm A: 30%
B. Firm B: 20%
C. Firms C, D and E: 10% each
D. Firms F, G, H and J: 5% each
What is the value of the four-firm concentration ratio and how is the industry categorised?

Accepted Answer

A)  50%; monopolistic competition 
B)  70%; oligopoly 
C)  75%; oligopoly 
D)  80%; strongly oligopolistic 
A)  50%; monopolistic competition 
B)  70%; oligopoly 
C)  75%; oligopoly 
D)  80%; strongly oligopolistic

Question 16

-Refer to Figure 9-10. The deadweight loss due to a monopoly is represented by the area

Accepted Answer

A)  FHE. 
B)  FGE. 
C)  GEH. 
D)  FQ1Q2E. 
A)  FHE. 
B)  FGE. 
C)  GEH. 
D)  FQ1Q2E.

Question 17

In a natural monopoly, throughout the range of market demand

Accepted Answer

A)  marginal cost is above average total cost and pulls average total cost upward. 
B)  average total cost is above marginal cost and pulls marginal cost upward. 
C)  marginal cost is below average total cost and pulls average total cost downward. 
D)  there are diseconomies of scale. 
A)  marginal cost is above average total cost and pulls average total cost upward. 
B)  average total cost is above marginal cost and pulls marginal cost upward. 
C)  marginal cost is below average total cost and pulls average total cost downward. 
D)  there are diseconomies of scale.

Question 18

Price discrimination is the practice of

Accepted Answer

A)  charging different prices for the same good when the price differences are not due to differences in cost. 
B)  charging different prices for the same good when the price differences arise because of differences in cost. 
C)  charging different prices for different qualities of a product. 
D)  charging higher prices for brand named goods and lower prices for generic versions of the goods. 
A)  charging different prices for the same good when the price differences are not due to differences in cost. 
B)  charging different prices for the same good when the price differences arise because of differences in cost. 
C)  charging different prices for different qualities of a product. 
D)  charging higher prices for brand named goods and lower prices for generic versions of the goods.

Question 19

From an economic perspective, price discrimination is desirable because

Accepted Answer

A)  the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus. 
B)  it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation. 
C)  the increase in profits results in higher corporate tax revenues received by the government, which could be used to subsidise consumption for low-income individuals. 
D)  it redistributes wealth from wealthy consumers to highly innovative firms. 
A)  the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus. 
B)  it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation. 
C)  the increase in profits results in higher corporate tax revenues received by the government, which could be used to subsidise consumption for low-income individuals. 
D)  it redistributes wealth from wealthy consumers to highly innovative firms.

Question 20

When a monopolist engages in perfect price discrimination, the quantity produced and sold

Accepted Answer

A)  is lower than the quantity produced and sold if it adopted a single price. 
B)  is larger than the quantity produced and sold if it adopted a single price. 
C)  is the same level as that produced and sold if it adopted a single price. 
D)  could be lower, higher or the same as that produced and sold if it adopted a single price. 
A)  is lower than the quantity produced and sold if it adopted a single price. 
B)  is larger than the quantity produced and sold if it adopted a single price. 
C)  is the same level as that produced and sold if it adopted a single price. 
D)  could be lower, higher or the same as that produced and sold if it adopted a single price.

Which of the following does not arise from price discrimination?

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. What is the value of the consumer surplus enjoyed by her customers?

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

To maintain a monopoly, a firm must have

There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product. This means that

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

Consider an industry that is made up of nine firms, each with a market share (per cent of sales) as follows: a. Firm A: 30% B. Firm B: 20% C. Firms C, D and E: 10% each D. Firms F, G, H and J: 5% each What is the value of the four-firm concentration ratio and how is the industry categorised?

-Refer to Figure 9-10. The deadweight loss due to a monopoly is represented by the area

In a natural monopoly, throughout the range of market demand

Price discrimination is the practice of

From an economic perspective, price discrimination is desirable because

When a monopolist engages in perfect price discrimination, the quantity produced and sold

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

Which of the following does not arise from price discrimination?

Refer to Table 9-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. What is the value of the consumer surplus enjoyed by her customers?

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

To maintain a monopoly, a firm must have

There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?

One requirement for a firm pursuing a price-discrimination strategy is the ability to segment the market for its product. This means that

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Explain whether a monopoly that maximises profit will also be maximising revenue and production.

Consider an industry that is made up of nine firms, each with a market share (per cent of sales) as follows: a. Firm A: 30% B. Firm B: 20% C. Firms C, D and E: 10% each D. Firms F, G, H and J: 5% each What is the value of the four-firm concentration ratio and how is the industry categorised?

-Refer to Figure 9-10. The deadweight loss due to a monopoly is represented by the area

In a natural monopoly, throughout the range of market demand

Price discrimination is the practice of

From an economic perspective, price discrimination is desirable because

When a monopolist engages in perfect price discrimination, the quantity produced and sold

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