Question 1

Figure 8-1  
-Refer to Figure 8-1.Which of the following statements about the firm depicted in the diagram is true?

Accepted Answer

A)  The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B)  The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C)  The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D)  The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits. 
A)  The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. 
B)  The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises. 
C)  The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. 
D)  The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits.

Question 2

A price maker is

Accepted Answer

A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product. 
A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product.

Question 3

A natural monopoly is characterised by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

A price-discriminating firm charges the highest price to

Accepted Answer

A)  the group with the largest demand. 
B)  the group with the most elastic demand. 
C)  the group with the least elastic demand. 
D)  the group with demand that is unit-elastic. 
A)  the group with the largest demand. 
B)  the group with the most elastic demand. 
C)  the group with the least elastic demand. 
D)  the group with demand that is unit-elastic.

Question 6

Figure 8-10  
-Refer to Figure 8-10.What is the area that represents producer surplus under a monopoly?

Accepted Answer

A)  The triangle 0P2E 
B)  The triangle 0P3H 
C)  The trapezium 0P1FH 
D)  The rectangle P1P3HF 
A)  The triangle 0P2E 
B)  The triangle 0P3H 
C)  The trapezium 0P1FH 
D)  The rectangle P1P3HF

Question 7

Which of the following undermines a firm's ability to engage in price discrimination?

Accepted Answer

A)  The seller's market power. 
B)  The inability to prevent resale of the product from one market segment to another. 
C)  Buyers having different elasticities of demand for the product. 
D)  The seller's ability to segment the total market. 
A)  The seller's market power. 
B)  The inability to prevent resale of the product from one market segment to another. 
C)  Buyers having different elasticities of demand for the product. 
D)  The seller's ability to segment the total market.

Question 8

Firms price discriminate

Accepted Answer

A)  to reduce the quantity sold so as to reduce production costs. 
B)  to increase profits. 
C)  to take advantage of customers. 
D)  to increase total economic surplus. 
A)  to reduce the quantity sold so as to reduce production costs. 
B)  to increase profits. 
C)  to take advantage of customers. 
D)  to increase total economic surplus.

Question 9

Which of the following is not a requirement for a successful price discrimination strategy?

Accepted Answer

A)  A firm must have market power. 
B)  The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price. 
C)  Managers must practice yield management. 
D)  Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay. 
A)  A firm must have market power. 
B)  The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price. 
C)  Managers must practice yield management. 
D)  Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay.

Question 10

Which of the following statements is true?

Accepted Answer

A)  Monopolists are price makers. All other firms are price takers. 
B)  Unlike other industries, monopoly industries have high barriers to entry. 
C)  Only monopoly firms are granted patents and copyrights. 
D)  Unlike other firms, a monopolist's demand curve is the same as the market demand curve. 
A)  Monopolists are price makers. All other firms are price takers. 
B)  Unlike other industries, monopoly industries have high barriers to entry. 
C)  Only monopoly firms are granted patents and copyrights. 
D)  Unlike other firms, a monopolist's demand curve is the same as the market demand curve.

Question 11

Figure 8-3   Figure 8-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8-3.Suppose the monopolist represented in the diagram 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 12

Why is price discrimination legal but not discrimination based on race or gender?

Accepted Answer

A)  Because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues. 
B)  Because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss. 
C)  Because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics. 
D)  Because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment. 
A)  Because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues. 
B)  Because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss. 
C)  Because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics. 
D)  Because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment.

Question 13

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Accepted Answer

A) True 
 B)False

Question 14

What is a public franchise? Are all public franchises natural monopolies?

Accepted Answer

A public franchise is a firm which the g

Question 15

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Accepted Answer

A) True 
 B)False

Question 16

Figure 8-4   Figure 8-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 8-4.What is the amount of the monopoly's profit?

Accepted Answer

A)  $2700 
B)  $4200 
C)  $10 400 
D)  $12 600 
A)  $2700 
B)  $4200 
C)  $10 400 
D)  $12 600

Question 17

Figure 8-4   Figure 8-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 8-4.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.

Figure 8-1 -Refer to Figure 8-1.Which of the following statements about the firm depicted in the diagram is true?

A price maker is

A natural monopoly is characterised by large fixed costs relative to variable costs.

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

A price-discriminating firm charges the highest price to

Figure 8-10 -Refer to Figure 8-10.What is the area that represents producer surplus under a monopoly?

Which of the following undermines a firm's ability to engage in price discrimination?

Firms price discriminate

Which of the following is not a requirement for a successful price discrimination strategy?

Which of the following statements is true?

Figure 8-3 Figure 8-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8-3.Suppose the monopolist represented in the diagram produces positive output.What is the profit-maximising/loss-minimising output level?

Why is price discrimination legal but not discrimination based on race or gender?

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

What is a public franchise? Are all public franchises natural monopolies?

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Figure 8-4 Figure 8-4 shows the demand and cost curves for a monopolist. -Refer to Figure 8-4.What is the amount of the monopoly's profit?

Figure 8-4 Figure 8-4 shows the demand and cost curves for a monopolist. -Refer to Figure 8-4.What is likely to happen to this monopoly in the long run?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 8: Technology, production, and Costs

Figure 8-1 -Refer to Figure 8-1.Which of the following statements about the firm depicted in the diagram is true?

A price maker is

A natural monopoly is characterised by large fixed costs relative to variable costs.

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

A price-discriminating firm charges the highest price to

Figure 8-10 -Refer to Figure 8-10.What is the area that represents producer surplus under a monopoly?

Which of the following undermines a firm's ability to engage in price discrimination?

Firms price discriminate

Which of the following is not a requirement for a successful price discrimination strategy?

Which of the following statements is true?

Figure 8-3 Figure 8-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8-3.Suppose the monopolist represented in the diagram produces positive output.What is the profit-maximising/loss-minimising output level?

Why is price discrimination legal but not discrimination based on race or gender?

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

What is a public franchise? Are all public franchises natural monopolies?

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Figure 8-4 Figure 8-4 shows the demand and cost curves for a monopolist. -Refer to Figure 8-4.What is the amount of the monopoly's profit?

Figure 8-4 Figure 8-4 shows the demand and cost curves for a monopolist. -Refer to Figure 8-4.What is likely to happen to this monopoly in the long run?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters