Question 1

If a monopoly holds a patent over a good, it is often because they paid the most money for it.

Accepted Answer

A) True 
 B)False  False

Question 2

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay. Which of the following may explain this?

Accepted Answer

A)  Monopolists can charge whatever they want. 
B)  The high price allows the company to recoup their substantial research and development costs. 
C)  The company must have engaged in price discrimination. 
D)  The company must have engaged in predatory pricing. 
A)  Monopolists can charge whatever they want. 
B)  The high price allows the company to recoup their substantial research and development costs. 
C)  The company must have engaged in price discrimination. 
D)  The company must have engaged in predatory pricing. B

Question 3

If a good has no close substitutes, the market is likely to be:

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  perfectly competitive. 
A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  perfectly competitive. A

Question 4

Economies of scale means that competition is unsustainable because:

Accepted Answer

A)  competition results in lower quantity and lower price. 
B)  as firms become larger, the inefficiency grows. 
C)  one large scale firm can produce at lower cost than several firms. 
D)  it is easier to control one firm than many firms. 
A)  competition results in lower quantity and lower price. 
B)  as firms become larger, the inefficiency grows. 
C)  one large scale firm can produce at lower cost than several firms. 
D)  it is easier to control one firm than many firms.

Question 5

If a big firm is needed to produce at low cost, then natural monopoly can occur.

Accepted Answer

A) True 
 B)False

Question 6

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

Accepted Answer

A) True 
 B)False

Question 7

One necessary condition for effective price discrimination is:

Accepted Answer

A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them. 
A)  identical tastes among buyers. 
B)  difference in the price elasticity of demand among buyers. 
C)  a single, homogeneous market. 
D)  two or more markets with easy resale of products between them.

Question 8

Narrbegin Exhibit 8.4 Demand and cost curves for a monopolist   
-As shown in Exhibit 8.4, in order to maximise its profit (or minimise its loss), what price should the monopoly charge for its product?

Accepted Answer

A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit. 
A)  $60 per unit. 
B)  $90 per unit. 
C)  $120 per unit. 
D)  $150 per unit.

Question 9

The monopolist:

Accepted Answer

A)  sometimes charges different customers different prices regardless of the cost of supplying the good. 
B)  always charges each buyer the same price. 
C)  charges different customers different prices regardless of the cost of supplying the good. 
D)  never charges each buyer the same price. 
A)  sometimes charges different customers different prices regardless of the cost of supplying the good. 
B)  always charges each buyer the same price. 
C)  charges different customers different prices regardless of the cost of supplying the good. 
D)  never charges each buyer the same price.

Question 10

The condition/s required for a monopolist to engage in price discrimination is/are:

Accepted Answer

A)  that buyers are not able to resell the good. 
B)  when it cannot identify specific groups of consumers with different elasticities. 
C)  that the demand curve must be perfectly elastic. 
D)  for potential competitors to threaten entry into the market. 
A)  that buyers are not able to resell the good. 
B)  when it cannot identify specific groups of consumers with different elasticities. 
C)  that the demand curve must be perfectly elastic. 
D)  for potential competitors to threaten entry into the market.

Question 11

Price discrimination occurs when:

Accepted Answer

A)  for the same product, a seller charges different customers different prices justified by cost differences. 
B)  for a different product, a seller charges different customers different prices not justified by cost differences. 
C)  for a different product, a seller charges the same customers different prices not justified by cost differences. 
D)  for the same product, a seller charges different customers different prices not justified by cost differences. 
A)  for the same product, a seller charges different customers different prices justified by cost differences. 
B)  for a different product, a seller charges different customers different prices not justified by cost differences. 
C)  for a different product, a seller charges the same customers different prices not justified by cost differences. 
D)  for the same product, a seller charges different customers different prices not justified by cost differences.

Question 12

The efficient allocation of resources is based on the fact that:

Accepted Answer

A) firms devote the amount of resources to their good that consumers demand. B) P > MC. C) P < MC. D) economies of scale must exist. E) monopolists can cater for the entire market. A) firms devote the amount of resources to their good that consumers demand. B) P > MC. C) P < MC. D) economies of scale must exist. E) monopolists can cater for the entire market.

Question 13

If the firm owns vital resources, the market is likely to be:

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  perfectly competitive. 
A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  perfectly competitive.

Question 14

When marginal revenue is zero for a monopolist facing a downward-sloping, straight-line demand curve, the price elasticity of demand is:

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  less than 2. 
D)  equal to zero. 
A)  greater than 1. 
B)  equal to 1. 
C)  less than 2. 
D)  equal to zero.

Question 15

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

Accepted Answer

A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less. 
A)  higher price and sell more. 
B)  lower price and sell more. 
C)  higher price and sell less. 
D)  lower price and sell less.

Question 16

A price-discriminating monopoly charges the lowest price to the group that:

Accepted Answer

A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes. 
A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes.

Question 17

The efficient allocation of resources (P = MC) occurs in:

Accepted Answer

A)  perfect competition but not monopoly. 
B)  monopoly but not perfect competition. 
C)  neither market structure. 
D)  in both market structures. 
A)  perfect competition but not monopoly. 
B)  monopoly but not perfect competition. 
C)  neither market structure. 
D)  in both market structures.

Question 18

Mobile phone companies offer alternative pricing plans to consumers, who can then choose the one that suits them best. This is an example of:

Accepted Answer

A)  predatory pricing. 
B)  perfect competition. 
C)  price discrimination. 
D)  arbitrage. 
A)  predatory pricing. 
B)  perfect competition. 
C)  price discrimination. 
D)  arbitrage.

Question 19

A monopolist maximises total revenue.

Accepted Answer

A) True 
 B)False

Question 20

Predatory pricing in monopolies is the practice of:

Accepted Answer

A)  increasing prices to prey on consumers. 
B)  increasing prices to raise revenue. 
C)  decreasing prices to deter potential competitors. 
D)  decreasing prices to deter potential consumers. 
A)  increasing prices to prey on consumers. 
B)  increasing prices to raise revenue. 
C)  decreasing prices to deter potential competitors. 
D)  decreasing prices to deter potential consumers.

If a monopoly holds a patent over a good, it is often because they paid the most money for it.

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay. Which of the following may explain this?

If a good has no close substitutes, the market is likely to be:

Economies of scale means that competition is unsustainable because:

If a big firm is needed to produce at low cost, then natural monopoly can occur.

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

One necessary condition for effective price discrimination is:

Narrbegin Exhibit 8.4 Demand and cost curves for a monopolist -As shown in Exhibit 8.4, in order to maximise its profit (or minimise its loss), what price should the monopoly charge for its product?

The monopolist:

The condition/s required for a monopolist to engage in price discrimination is/are:

Price discrimination occurs when:

The efficient allocation of resources is based on the fact that:

If the firm owns vital resources, the market is likely to be:

When marginal revenue is zero for a monopolist facing a downward-sloping, straight-line demand curve, the price elasticity of demand is:

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

A price-discriminating monopoly charges the lowest price to the group that:

The efficient allocation of resources (P = MC) occurs in:

Mobile phone companies offer alternative pricing plans to consumers, who can then choose the one that suits them best. This is an example of:

A monopolist maximises total revenue.

Predatory pricing in monopolies is the practice of:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

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Exam 9: Monopoly

If a monopoly holds a patent over a good, it is often because they paid the most money for it.

The physical production of medicinal drugs is often only a very small fraction of the eventual price consumers pay. Which of the following may explain this?

If a good has no close substitutes, the market is likely to be:

Economies of scale means that competition is unsustainable because:

If a big firm is needed to produce at low cost, then natural monopoly can occur.

In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

One necessary condition for effective price discrimination is:

Narrbegin Exhibit 8.4 Demand and cost curves for a monopolist -As shown in Exhibit 8.4, in order to maximise its profit (or minimise its loss), what price should the monopoly charge for its product?

The monopolist:

The condition/s required for a monopolist to engage in price discrimination is/are:

Price discrimination occurs when:

The efficient allocation of resources is based on the fact that:

If the firm owns vital resources, the market is likely to be:

When marginal revenue is zero for a monopolist facing a downward-sloping, straight-line demand curve, the price elasticity of demand is:

Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:

A price-discriminating monopoly charges the lowest price to the group that:

The efficient allocation of resources (P = MC) occurs in:

Mobile phone companies offer alternative pricing plans to consumers, who can then choose the one that suits them best. This is an example of:

A monopolist maximises total revenue.

Predatory pricing in monopolies is the practice of:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters