Question 1

For which of the following firms is patent protection of vital importance?

Accepted Answer

A)  Furniture producers 
B)  Software firms 
C)  Pharmaceutical firms 
D)  Car makers 
A)  Furniture producers 
B)  Software firms 
C)  Pharmaceutical firms 
D)  Car makers

Question 2

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.

Question 3

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.As a result of this change

Accepted Answer

A)  price will be higher, output will be lower and the deadweight loss will be eliminated. 
B)  consumer surplus will be smaller, producer surplus will be greater and there will be a reduction in economic efficiency. 
C)  price will be higher, consumer surplus will be greater and output will be greater. 
D)  consumer surplus will be smaller and producer surplus will be greater. There will be a net increase in economic surplus. 
A)  price will be higher, output will be lower and the deadweight loss will be eliminated. 
B)  consumer surplus will be smaller, producer surplus will be greater and there will be a reduction in economic efficiency. 
C)  price will be higher, consumer surplus will be greater and output will be greater. 
D)  consumer surplus will be smaller and producer surplus will be greater. There will be a net increase in economic surplus.

Question 4

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 price charged at the profit-maximising/loss-minimising output level?

Accepted Answer

A)  $38 
B)  $54 
C)  $68 
D)  $75 
A)  $38 
B)  $54 
C)  $68 
D)  $75

Question 5

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 6

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 7

The demand curve for the monopoly's product is

Accepted Answer

A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined. 
A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined.

Question 8

Table 8-3
   Julie plans to start a pet-sitting service. She surveyed her neighbourhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 8-3 above shows a portion of her survey results.
-Refer to Table 8-3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?

Accepted Answer

A)  Julie is worse off because the demand for her services is reduced. 
B)  Julie has converted the consumer surplus (from a uniform price) into economic profit. 
C)  Julie's customers are better off because their consumer surplus has increased. 
D)  Julie's has converted the producer surplus (from a uniform price) into consumer surplus. 
A)  Julie is worse off because the demand for her services is reduced. 
B)  Julie has converted the consumer surplus (from a uniform price) into economic profit. 
C)  Julie's customers are better off because their consumer surplus has increased. 
D)  Julie's has converted the producer surplus (from a uniform price) into consumer surplus.

Question 9

A public franchise

Accepted Answer

A)  is a corporation that is owned by stockholders. 
B)  results from ownership of a key raw material. 
C)  is a government designation that a private firm is the only legal producer of a good or service. 
D)  is an unregulated monopoly necessary for the public good. 
A)  is a corporation that is owned by stockholders. 
B)  results from ownership of a key raw material. 
C)  is a government designation that a private firm is the only legal producer of a good or service. 
D)  is an unregulated monopoly necessary for the public good.

Question 10

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

Accepted Answer

A)  most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B)  prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C)  other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D)  firms will find ways to obtain additional patent protection-often by making cosmetic changes to drugs that were patented-so that they can continue charging high prices. 
A)  most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B)  prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C)  other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D)  firms will find ways to obtain additional patent protection-often by making cosmetic changes to drugs that were patented-so that they can continue charging high prices.

Question 11

Table 8-1
   A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 8-1.
-Refer to Table 8-1.What is the amount of the firm's profit?

Accepted Answer

A)  $335 
B)  $350 
C)  $880 
D)  $910 
A)  $335 
B)  $350 
C)  $880 
D)  $910

Question 12

Which of the following statements about perfect price discrimination is false?

Accepted Answer

A)  There is no consumer surplus if a firm engages in perfect price discrimination. 
B)  Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C)  A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D)  For the price-discriminating firm, its marginal revenue curve coincides with its demand curve. 
A)  There is no consumer surplus if a firm engages in perfect price discrimination. 
B)  Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C)  A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D)  For the price-discriminating firm, its marginal revenue curve coincides with its demand curve.

Question 13

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 14

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 15

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 16

Yield management and price discrimination have enabled firms to increase profits and,at the same time,

Accepted Answer

A)  reduce the cost of production. 
B)  capture some consumer surplus. 
C)  reduce transaction costs. 
D)  transfer some producer surplus to consumers. 
A)  reduce the cost of production. 
B)  capture some consumer surplus. 
C)  reduce transaction costs. 
D)  transfer some producer surplus to consumers.

Question 17

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 18

Relative to a perfectly competitive market,a monopoly results in

Accepted Answer

A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency. 
A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency.

Question 19

Whenever a firm can charge a price greater than marginal cost

Accepted Answer

A)  the firm must be a monopolist. 
B)  there is some loss of economic efficiency. 
C)  consumers have the ability to choose a close substitute. 
D)  the firm will earn economic profits. 
A)  the firm must be a monopolist. 
B)  there is some loss of economic efficiency. 
C)  consumers have the ability to choose a close substitute. 
D)  the firm will earn economic profits.

Question 20

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Accepted Answer

A) True 
 B)False

For which of the following firms is patent protection of vital importance?

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

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.As a result of this change

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 price charged at the profit-maximising/loss-minimising output level?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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

The demand curve for the monopoly's product is

A public franchise

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

Table 8-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 8-1. -Refer to Table 8-1.What is the amount of the firm's profit?

Which of the following statements about perfect price discrimination is false?

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

If price discrimination occurs in a market,

Yield management and price discrimination have enabled firms to increase profits and,at the same time,

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Relative to a perfectly competitive market,a monopoly results in

Whenever a firm can charge a price greater than marginal cost

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

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

For which of the following firms is patent protection of vital importance?

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

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.As a result of this change

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 price charged at the profit-maximising/loss-minimising output level?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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

The demand curve for the monopoly's product is

A public franchise

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

Table 8-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 8-1. -Refer to Table 8-1.What is the amount of the firm's profit?

Which of the following statements about perfect price discrimination is false?

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

If price discrimination occurs in a market,

Yield management and price discrimination have enabled firms to increase profits and,at the same time,

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Relative to a perfectly competitive market,a monopoly results in

Whenever a firm can charge a price greater than marginal cost

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

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