Question 1

One reason why airlines charge business travelers and leisure travelers different prices is

Accepted Answer

A)  business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute. 
B)  business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers. 
C)  business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay. 
D)  business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers. 
A)  business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute. 
B)  business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers. 
C)  business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay. 
D)  business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers.

Question 2

The 10-year protection period from generic competition for drug manufacturers is a form of

Accepted Answer

A)  copyright. 
B)  trademark. 
C)  hallmark. 
D)  patent. 
A)  copyright. 
B)  trademark. 
C)  hallmark. 
D)  patent.

Question 3

Compared to a monopolistic competitor, a monopolist faces

Accepted Answer

A)  a more elastic demand curve. 
B)  a more inelastic demand curve. 
C)  a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D)  a demand curve that has a price elasticity coefficient of zero. 
A)  a more elastic demand curve. 
B)  a more inelastic demand curve. 
C)  a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D)  a demand curve that has a price elasticity coefficient of zero.

Question 4

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

Accepted Answer

A)  $1116. 
B)  $1488. 
C)  $1726.40 
D)  $1826. 
A)  $1116. 
B)  $1488. 
C)  $1726.40 
D)  $1826.

Question 5

Successful price discrimination cannot take place if

Accepted Answer

A)  the market is perfectly competitive. 
B)  the market can be segmented into different buyer groups. 
C)  customers are not able to resell the product. 
D)  the demand curve facing the firm is downward sloping. 
A)  the market is perfectly competitive. 
B)  the market can be segmented into different buyer groups. 
C)  customers are not able to resell the product. 
D)  the demand curve facing the firm is downward sloping.

Question 6

-Refer to Figure 9-4. What is likely to happen to this monopoly in the long run?

Accepted Answer

A)  New firms will enter the market to eliminate its profits. 
B)  It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C)  As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D)  It will be regulated by the government because of its excess profits. 
A)  New firms will enter the market to eliminate its profits. 
B)  It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C)  As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D)  It will be regulated by the government because of its excess profits.

Question 7

Which of the following is not a way by which price-discriminating firms can segment a market?

Accepted Answer

A)  on the basis of time of purchase, for example long-distance calling 
B)  by requiring an advance purchase, for example air tickets 
C)  on basis of the buyer's location, for example requiring out-of-state students to pay higher tuition 
D)  on the basis of the supplier's marginal cost of production, for example requiring customers to pay a premium for customising options 
A)  on the basis of time of purchase, for example long-distance calling 
B)  by requiring an advance purchase, for example air tickets 
C)  on basis of the buyer's location, for example requiring out-of-state students to pay higher tuition 
D)  on the basis of the supplier's marginal cost of production, for example requiring customers to pay a premium for customising options

Question 8

If price discrimination occurs in a market,

Accepted Answer

A)  the law of one price does not hold. 
B)  the firm earns arbitrage profits. 
C)  consumers whose demand for the product sold is more elastic pay higher prices than consumers whose demand is less elastic. 
D)  the marginal cost of production is constant. 
A)  the law of one price does not hold. 
B)  the firm earns arbitrage profits. 
C)  consumers whose demand for the product sold is more elastic pay higher prices than consumers whose demand is less elastic. 
D)  the marginal cost of production is constant.

Question 9

Which of the following is not an example of price discrimination?

Accepted Answer

A)  Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B)  Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C)  Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D)  Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities. 
A)  Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B)  Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C)  Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D)  Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities.

Question 10

What is a network externality?

Accepted Answer

A)  It refers to having a network of suppliers and buyers for a good or service. 
B)  It refers to lobbying to form a public enterprise. 
C)  It refers to a situation in which a product's usefulness increases with the number of people using it. 
D)  It refers to a product that requires connection to a network for it to be useful. 
A)  It refers to having a network of suppliers and buyers for a good or service. 
B)  It refers to lobbying to form a public enterprise. 
C)  It refers to a situation in which a product's usefulness increases with the number of people using it. 
D)  It refers to a product that requires connection to a network for it to be useful.

Question 11

-Refer to Figure 9-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF. 
A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF.

Question 12

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

Accepted Answer

A) True 
 B)False

Question 13

-Refer to Figure 9-11. If this industry was organised as a perfectly competitive industry, the market output and market price would be

Accepted Answer

A)  output = 62; price = $24. 
B)  output = 83; price = $22. 
C)  output = 62; price = $18. 
D)  output = 104; price = $20.80. 
A)  output = 62; price = $24. 
B)  output = 83; price = $22. 
C)  output = 62; price = $18. 
D)  output = 104; price = $20.80.

Question 14

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

Accepted Answer

A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost. 
A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost.

Question 15

Consider the following pricing strategies: a. perfect price discrimination
B. charging different prices to different groups of customers
C. optimal two-part tariff
D. single-price monopoly pricing
Which of the pricing strategies allows a producer to capture the entire consumer surplus that would have gone to consumers under perfect competitive pricing?

Accepted Answer

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

Question 16

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Accepted Answer

A) True 
 B)False

Question 17

A monopoly is a firm that is the only seller of a good or service that does not have

Accepted Answer

A)  a patent. 
B)  a close complement. 
C)  a barrier to entry. 
D)  a close substitute. 
A)  a patent. 
B)  a close complement. 
C)  a barrier to entry. 
D)  a close substitute.

Question 18

-Refer to Figure 9-15. What is the consumer surplus received under perfect price discrimination?

Accepted Answer

A)  the area under the demand curve above P1 
B)  the area under the demand curve above P3 
C)  the area under the demand curve above P4 
D)  zero 
A)  the area under the demand curve above P1 
B)  the area under the demand curve above P3 
C)  the area under the demand curve above P4 
D)  zero

Question 19

-Refer to Figure 9-2. The firm's profit-maximising price is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 20

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee. Is Peet's a monopoly?

Accepted Answer

A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's. 
A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's.

One reason why airlines charge business travelers and leisure travelers different prices is

The 10-year protection period from generic competition for drug manufacturers is a form of

Compared to a monopolistic competitor, a monopolist faces

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

Successful price discrimination cannot take place if

-Refer to Figure 9-4. What is likely to happen to this monopoly in the long run?

Which of the following is not a way by which price-discriminating firms can segment a market?

If price discrimination occurs in a market,

Which of the following is not an example of price discrimination?

What is a network externality?

-Refer to Figure 9-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

-Refer to Figure 9-11. If this industry was organised as a perfectly competitive industry, the market output and market price would be

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

A monopoly is a firm that is the only seller of a good or service that does not have

-Refer to Figure 9-15. What is the consumer surplus received under perfect price discrimination?

-Refer to Figure 9-2. The firm's profit-maximising price is

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee. Is Peet's a 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

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Exam 9: Monopoly Markets

One reason why airlines charge business travelers and leisure travelers different prices is

The 10-year protection period from generic competition for drug manufacturers is a form of

Compared to a monopolistic competitor, a monopolist faces

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

Successful price discrimination cannot take place if

-Refer to Figure 9-4. What is likely to happen to this monopoly in the long run?

Which of the following is not a way by which price-discriminating firms can segment a market?

If price discrimination occurs in a market,

Which of the following is not an example of price discrimination?

What is a network externality?

-Refer to Figure 9-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

-Refer to Figure 9-11. If this industry was organised as a perfectly competitive industry, the market output and market price would be

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

A monopoly is a firm that is the only seller of a good or service that does not have

-Refer to Figure 9-15. What is the consumer surplus received under perfect price discrimination?

-Refer to Figure 9-2. The firm's profit-maximising price is

Peet's Coffee and Teas produces some flavourful varieties of Peet's brand coffee. Is Peet's a 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