Question 1

Which of the following is NOT a precondition for price discrimination?

Accepted Answer

A)  The product cannot be resold to another customer. 
B)  The price elasticities of demand are different for each group of consumers. 
C)  The product is a durable good. 
D)  The seller must have some market power. 
A)  The product cannot be resold to another customer. 
B)  The price elasticities of demand are different for each group of consumers. 
C)  The product is a durable good. 
D)  The seller must have some market power.

Question 2

A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

Accepted Answer

A)  0.7. 
B)  1. 
C)  1.5. 
D)  10. 
A)  0.7. 
B)  1. 
C)  1.5. 
D)  10.

Question 3

Which of the following is NOT a necessary condition for a firm to price discriminate?

Accepted Answer

A)  The firm must be able to separate markets. 
B)  Buyers in different markets must have different elasticities of demand. 
C)  Resale of the product must be preventable. 
D)  The firm must be a price-taker. 
A)  The firm must be able to separate markets. 
B)  Buyers in different markets must have different elasticities of demand. 
C)  Resale of the product must be preventable. 
D)  The firm must be a price-taker.

Question 4

Which of the following is TRUE of a perfectly competitive firm and a monopoly in the long run?

Accepted Answer

A)  P = MC 
B)  P = ATC 
C)  MR = MC 
D)  P = MR 
A)  P = MC 
B)  P = ATC 
C)  MR = MC 
D)  P = MR

Question 5

-In the above figure, if the firm is producing Q1 units at a price P1, the firm should

Accepted Answer

A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down. 
A)  increase output and decrease price. 
B)  decrease output and increase price. 
C)  not change output or price. 
D)  shut down.

Question 6

A profit-maximizing monopolist earns an economic loss whenever

Accepted Answer

A)  it pays taxes to the government on each unit of output it produces. 
B)  the price it charges for its product exceeds average total cost. 
C)  the demand curve lies completely below the ATC curve. 
D)  it produces along the elastic portion of a demand curve. 
A)  it pays taxes to the government on each unit of output it produces. 
B)  the price it charges for its product exceeds average total cost. 
C)  the demand curve lies completely below the ATC curve. 
D)  it produces along the elastic portion of a demand curve.

Question 7

If a monopolist raises its price

Accepted Answer

A)  it raises the barriers to entry. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases. 
A)  it raises the barriers to entry. 
B)  the quantity demanded increases. 
C)  the quantity demanded remains the same. 
D)  the quantity demanded decreases.

Question 8

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

Accepted Answer

A)  15 
B)  20 
C)  25 
D)  30 
A)  15 
B)  20 
C)  25 
D)  30

Question 9

-Use the above figure. The profit-maximizing or loss minimizing output and price will be

Accepted Answer

A)  Q1 and P2. 
B)  Q2 and P3. 
C)  Q3 and P3. 
D)  Q4 and P1. 
A)  Q1 and P2. 
B)  Q2 and P3. 
C)  Q3 and P3. 
D)  Q4 and P1.

Question 10

The monopolist should NEVER produce in the

Accepted Answer

A)  elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. 
B)  inelastic segment of its demand curve because further lowering of the price reduces total revenue. 
C)  range of output for which the price elasticity of demand is infinity. 
D)  range of output for which there is a price elasticity exceeding one. 
A)  elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. 
B)  inelastic segment of its demand curve because further lowering of the price reduces total revenue. 
C)  range of output for which the price elasticity of demand is infinity. 
D)  range of output for which there is a price elasticity exceeding one.

Question 11

Why is price less than marginal revenue for a monopolist?

Accepted Answer

@#IMG-DLM& Consider the above figure. If the monop

Question 12

The portion of consumer surplus that no one in society is able to obtain in a situation of monopoly is known as

Accepted Answer

A)  a market failure. 
B)  a deadweight loss. 
C)  an unrealized loss. 
D)  a market externality. 
A)  a market failure. 
B)  a deadweight loss. 
C)  an unrealized loss. 
D)  a market externality.

Question 13

For a monopolist to maximize profits, its

Accepted Answer

A)  price exceeds marginal cost. 
B)  price equals marginal revenue. 
C)  price equals average total cost. 
D)  marginal revenue exceeds price. 
A)  price exceeds marginal cost. 
B)  price equals marginal revenue. 
C)  price equals average total cost. 
D)  marginal revenue exceeds price.

Question 14

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Accepted Answer

Disagree. As long as the market demand c

Question 15

Which of the following is TRUE?

Accepted Answer

A)  Monopoly results in a higher quantity of output being sold compared with perfect competition. 
B)  Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. 
C)  Charging all customers the same price when costs vary can actually be a case of price discrimination. 
D)  Price discrimination guarantees that the monopolist will make a profit. 
A)  Monopoly results in a higher quantity of output being sold compared with perfect competition. 
B)  Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. 
C)  Charging all customers the same price when costs vary can actually be a case of price discrimination. 
D)  Price discrimination guarantees that the monopolist will make a profit.

Question 16

Which of the following statements is TRUE?

Accepted Answer

A)  At the monopolist's equilibrium, resources are being efficiently allocated. 
B)  With a monopoly, the value to society of the last unit produced is less than it's production cost. 
C)  Monopolists raise the price and restrict production, compared to a competitive situation. 
D)  A monopolist always produces a higher level of output than would be produced if the market were competitive. 
A)  At the monopolist's equilibrium, resources are being efficiently allocated. 
B)  With a monopoly, the value to society of the last unit produced is less than it's production cost. 
C)  Monopolists raise the price and restrict production, compared to a competitive situation. 
D)  A monopolist always produces a higher level of output than would be produced if the market were competitive.

Question 17

-Referring to the above graphic, which of the following statements is FALSE?

Accepted Answer

A)  In panel (a), a competitive situation is shown in which equilibrium is established at the intersection of D and S at point E. 
B)  In panel (a), the equilibrium price is Pe and the equilibrium quantity Qe. 
C)  The price the monopolist charges in panel (b) at Pm is lower than the price that the competitive producer charges. 
D)  The monopolist produces at Qm, and charges a price ofPm, while maximizing profits at the intersection of MC and MR. 
A)  In panel (a), a competitive situation is shown in which equilibrium is established at the intersection of D and S at point E. 
B)  In panel (a), the equilibrium price is Pe and the equilibrium quantity Qe. 
C)  The price the monopolist charges in panel (b) at Pm is lower than the price that the competitive producer charges. 
D)  The monopolist produces at Qm, and charges a price ofPm, while maximizing profits at the intersection of MC and MR.

Question 18

Other things being equal, a price-discriminating firm will charge more to the customers who

Accepted Answer

A)  have the highest incomes. 
B)  have the least elastic demand for its product. 
C)  have the most elastic demand for the product. 
D)  are the least rational in making their decisions. 
A)  have the highest incomes. 
B)  have the least elastic demand for its product. 
C)  have the most elastic demand for the product. 
D)  are the least rational in making their decisions.

Question 19

-A monopolist would not be able to make a positive profit at any price output combination when

Accepted Answer

A)  marginal cost is less than average total cost for one more unit of output. 
B)  the average variable cost curve is everywhere above the marginal revenue curve. 
C)  the minimum point of the average total cost curve lies to the right of the minimum of the average variable cost curve. 
D)  the average total cost curve is everywhere above the demand curve. 
A)  marginal cost is less than average total cost for one more unit of output. 
B)  the average variable cost curve is everywhere above the marginal revenue curve. 
C)  the minimum point of the average total cost curve lies to the right of the minimum of the average variable cost curve. 
D)  the average total cost curve is everywhere above the demand curve.

Question 20

-The owner of a patented invention

Accepted Answer

A)  may or may not have a legal monopoly. 
B)  is guaranteed a profit since her idea cannot be copied. 
C)  will always have demand high enough and costs low enough to ensure a profit. 
D)  will only earn a profit if average total cost is less than price. 
A)  may or may not have a legal monopoly. 
B)  is guaranteed a profit since her idea cannot be copied. 
C)  will always have demand high enough and costs low enough to ensure a profit. 
D)  will only earn a profit if average total cost is less than price.

Exam 24: Monopoly

Which of the following is NOT a precondition for price discrimination?

A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of

Which of the following is NOT a necessary condition for a firm to price discriminate?

Which of the following is TRUE of a perfectly competitive firm and a monopoly in the long run?

-In the above figure, if the firm is producing Q1 units at a price P1, the firm should

A profit-maximizing monopolist earns an economic loss whenever

If a monopolist raises its price

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

-Use the above figure. The profit-maximizing or loss minimizing output and price will be

The monopolist should NEVER produce in the

Why is price less than marginal revenue for a monopolist?

The portion of consumer surplus that no one in society is able to obtain in a situation of monopoly is known as

For a monopolist to maximize profits, its

"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?

Which of the following is TRUE?

Which of the following statements is TRUE?

-Referring to the above graphic, which of the following statements is FALSE?

Other things being equal, a price-discriminating firm will charge more to the customers who

-A monopolist would not be able to make a positive profit at any price output combination when

-The owner of a patented invention

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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