Question 1

Figure 8-15  
-Refer to Figure 8-15.What is the price charged under perfect price discrimination?

Accepted Answer

A)  P3 
B)  P4 
C)  A range of prices corresponding to the demand curve from P3 and above. 
D)  A range of prices corresponding to the demand curve from P4 and above. 
A)  P3 
B)  P4 
C)  A range of prices corresponding to the demand curve from P3 and above. 
D)  A range of prices corresponding to the demand curve from P4 and above.

Question 2

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately,in the long run,the monopoly will start earning profits.

Accepted Answer

A) True 
 B)False

Question 3

Figure 8-9   Figure 8-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 8-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

Accepted Answer

A)  $8 
B)  $11.50 
C)  $21 
D)  There is no difference. 
A)  $8 
B)  $11.50 
C)  $21 
D)  There is no difference.

Question 4

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Accepted Answer

A natural monopoly arises when the produ

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

Figure 8-16  
-Refer to Figure 8-16.Graph (a)represents a monopolist who cannot price discriminate and graph (b)represents a monopolist practising perfect price discrimination.On each graph,identify the monopoly price,the monopoly output,the efficient output,and the areas representing profit,consumer surplus,and deadweight loss.

Accepted Answer

In graph (b),the monopoly output is equa

Question 7

Which of the following is necessary in order for a firm to successfully practice price discrimination?

Accepted Answer

A)  The firm must practice product differentiation. 
B)  The demand for the firm's product is inelastic. 
C)  The firm must be able to segment the market for the product. 
D)  The firm's transaction costs must be zero. 
A)  The firm must practice product differentiation. 
B)  The demand for the firm's product is inelastic. 
C)  The firm must be able to segment the market for the product. 
D)  The firm's transaction costs must be zero.

Question 8

A market economy benefits from market power

Accepted Answer

A)  if the majority of the population are entrepreneurs. 
B)  if firms with market power do research and development with the profits earned. 
C)  if market power gets so bad the government creates public enterprises. 
D)  under no circumstances. 
A)  if the majority of the population are entrepreneurs. 
B)  if firms with market power do research and development with the profits earned. 
C)  if market power gets so bad the government creates public enterprises. 
D)  under no circumstances.

Question 9

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 $7 per hour.What is her marginal revenue?

Accepted Answer

A)  It is $7 for the first hour and starts declining thereafter. 
B)  It is $7 for the first hour and starts increasing thereafter. 
C)  It is constant at $7. 
D)  It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth. 
A)  It is $7 for the first hour and starts declining thereafter. 
B)  It is $7 for the first hour and starts increasing thereafter. 
C)  It is constant at $7. 
D)  It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth.

Question 10

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

Accepted Answer

A)  odd pricing. 
B)  cost-plus pricing. 
C)  price discrimination. 
D)  mark-up pricing. 
A)  odd pricing. 
B)  cost-plus pricing. 
C)  price discrimination. 
D)  mark-up pricing.

Question 11

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A monopoly is a seller of a product

Accepted Answer

A)  with many substitutes. 
B)  without a close substitute. 
C)  with a perfectly inelastic demand. 
D)  without a well-defined demand curve. 
A)  with many substitutes. 
B)  without a close substitute. 
C)  with a perfectly inelastic demand. 
D)  without a well-defined demand curve.

Question 14

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

Accepted Answer

A) True 
 B)False

Question 15

One reason patent protection is vitally important to pharmaceutical firms is that

Accepted Answer

A)  successful new drugs are not profitable. If firms are not granted patents, many would go out of business and health care would be severely diminished. 
B)  the approval process for new drugs through the Therapeutic Goods Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. 
C)  taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes. 
D)  the high salaries pharmaceutical firms pay to scientists and doctors make their labour costs higher than for any other business. Profits from patents are needed to pay these labour costs. 
A)  successful new drugs are not profitable. If firms are not granted patents, many would go out of business and health care would be severely diminished. 
B)  the approval process for new drugs through the Therapeutic Goods Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. 
C)  taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes. 
D)  the high salaries pharmaceutical firms pay to scientists and doctors make their labour costs higher than for any other business. Profits from patents are needed to pay these labour costs.

Question 16

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 17

Equilibrium in a perfectly competitive market results in the greatest amount of economic surplus,or total benefit to society,from the production of a good.Why,then,did Joseph Schumpeter argue that an economy may benefit more from firms that have market power than from firms that are perfectly competitive?

Accepted Answer

Schumpeter did not deny that perfectly c

Question 18

Identify two ways by which the government controls monopolies?

Accepted Answer

The government deters monopoli

Question 19

Identify four reasons for high entry barriers.Briefly explain each reason.

Accepted Answer

1.Economies of scale.This occurs when a

Question 20

Figure 8-15  
-Refer to Figure 8-15.With perfect price discrimination,the firm will produce and sell

Accepted Answer

A)  Q1 units. 
B)  Q2 units. 
C)  Q3 units. 
D)  Q4 units. 
A)  Q1 units. 
B)  Q2 units. 
C)  Q3 units. 
D)  Q4 units.

Figure 8-15 -Refer to Figure 8-15.What is the price charged under perfect price discrimination?

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately,in the long run,the monopoly will start earning profits.

Figure 8-9 Figure 8-9 shows the demand and cost curves for a monopolist. -Refer to Figure 8-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Successful price discrimination cannot take place if

Which of the following is necessary in order for a firm to successfully practice price discrimination?

A market economy benefits from market power

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

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

A monopoly is a seller of a product

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

One reason patent protection is vitally important to pharmaceutical firms is that

Which of the following does not arise from price discrimination?

Identify two ways by which the government controls monopolies?

Identify four reasons for high entry barriers.Briefly explain each reason.

Figure 8-15 -Refer to Figure 8-15.With perfect price discrimination,the firm will produce and sell

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 8-15 -Refer to Figure 8-15.What is the price charged under perfect price discrimination?

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately,in the long run,the monopoly will start earning profits.

Figure 8-9 Figure 8-9 shows the demand and cost curves for a monopolist. -Refer to Figure 8-9.At the profit-maximising quantity,what is the difference between the monopoly's price and the marginal cost of production?

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Successful price discrimination cannot take place if

Which of the following is necessary in order for a firm to successfully practice price discrimination?

A market economy benefits from market power

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations,then it is engaging in

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

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

A monopoly is a seller of a product

Both first-degree price discrimination and optimal two-part tariff pricing maximise economic surplus.

One reason patent protection is vitally important to pharmaceutical firms is that

Which of the following does not arise from price discrimination?

Identify two ways by which the government controls monopolies?

Identify four reasons for high entry barriers.Briefly explain each reason.

Figure 8-15 -Refer to Figure 8-15.With perfect price discrimination,the firm will produce and sell

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