Question 1

Perfect price discrimination:

Accepted Answer

A)  requires each customer to pay exactly what they are willing to pay.
B)  maximizes consumer surplus.
C)  is not efficient.
D)  minimizes producer surplus.E) A) and B)
F) All of the above A

Question 2

Producing any quantity of output less than the point where the marginal revenue and marginal cost curves intersect leads to:

Accepted Answer

A)  average total cost that is lower than average variable cost.
B)  marginal cost that is higher than marginal revenue.
C)  marginal revenue that is higher than marginal cost.
D)  a loss of profits when producing the units.E) A) and D)
F) None of the above

Question 3

The table shown represents the revenues faced by a monopolist.

Graphing the first two columns of the table would yield which curve?

Accepted Answer

A)  Marginal revenue
B)  Market supply
C)  Market demand
D)  Total productivityE) A) and B)
F) None of the above

Question 4

If a monopoly wishes to sell more output, it must:

Accepted Answer

A)  find a more cost-effective way to produce its goods.
B)  lower the price of its goods.
C)  be experiencing economies of scale.
D)  eliminate its existing competition.E) All of the above
F) B) and C)

Question 5

Which of the following statements about the practice of price discrimination is true?

Accepted Answer

A)  Firms can easily identify different groups' willingness to pay, so price discrimination is prevalent in every market.
B)  Price discrimination is practiced less today than it was in the mid-1900s.
C)  Perfect price discrimination is impossible.
D)  Price discrimination has only been observed in markets where monopolies are present.E) A) and D)
F) A) and C)

Question 6

For a monopoly, marginal revenue for all units greater than one is always _______ than price because of the _______ effect.

Accepted Answer

A)  lower; price
B)  greater; price
C)  greater; quantity
D)  lower; quantityE) A) and C)
F) B) and D)

Question 7

In theory, placing a price control on a natural monopoly should:

Accepted Answer

A)  have the same outcome as public ownership.
B)  create negative economic profits for the company.
C)  reduce deadweight loss to zero.
D)  be implemented in conjunction with quantity controls.E) A) and D)
F) None of the above

Question 8

The table shown represents the revenues faced by a monopolist.

What is the firm's marginal revenue of the sixth unit?

Accepted Answer

A)  $0
B)  −$200
C)  $3,000
D)  $500E) A) and D)
F) B) and D)

Question 9

The graph shown represents the cost and revenue curves faced by a monopoly.  If Q2 units are being produced, the monopolist:

Accepted Answer

A)  is not maximizing profits.
B)  is producing where marginal costs are less than marginal revenue.
C)  is earning negative profits.
D)  should increase production.E) A) and B)
F) None of the above

Question 10

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay it:

Accepted Answer

A)  can remain in operation by covering its losses with revenue from taxes.
B)  must shut down and leave the industry in the long run.
C)  should expand operations until demand is satisfied.
D)  will seek out more efficiencies.E) A) and B)
F) None of the above A

Question 11

For a monopoly, for all units greater than one the marginal revenue curve:

Accepted Answer

A)  lies above the demand curve.
B)  lies below the average revenue curve.
C)  cannot be negative.
D)  All of these are true.E) None of the above
F) A) and B)

Question 12

With a monopolist's outcome, producer surplus is _______ that of a competitive market.

Accepted Answer

A)  higher than
B)  lower than
C)  the same as
D)  Any of these is possible.E) A) and B)
F) A) and C)

Question 13

A natural monopoly is a market in which a single firm:

Accepted Answer

A)  owns a key resource or input into the production of the good.
B)  can produce the entire market quantity at a lower cost than multiple firms.
C)  is protected from competition through government legislation.
D)  gains market share over time through aggressive tactics.E) A) and B)
F) C) and D)

Question 14

Consider a museum that is trying to decide what price to charge for tickets. It knows that the maximum amount students and the elderly would be willing to pay for a ticket is $10. Suppose there are 5,000 students and elderly individuals who would buy a ticket at this price. There are also 30,000 adults who would be willing to pay $25 for a ticket. If the museum cannot price discriminate, it will charge a price of _______ and earn _______ in revenue. If the museum is able to perfectly price discriminate, it will increase its revenue by _______.

Accepted Answer

A)  $20; $600,000; $200,000
B)  $10; $875,000; $125,000
C)  $25; $750,000; $50,000
D)  $25; $750,000; $125,000E) None of the above
F) A) and C)

Question 15

Some argue that the best government response to monopolies is no response at all, because:

Accepted Answer

A)  they are too powerful to be dealt with effectively.
B)  no one can decide which monopolies to regulate.
C)  the creation of regulation may be too difficult.
D)  left unchecked all monopolies eventually shut down.E) A) and D)
F) A) and C) C

Question 16

Public policy responses to monopolies:

Accepted Answer

A)  sometimes aim to break up existing monopolies.
B)  always have more costs than benefits to society.
C)  always have more benefits than costs to society.
D)  never benefit society in the end.E) A) and B)
F) B) and C)

Question 17

This graph shows the cost and revenue curves faced by a monopoly.  Which of the following statements is true?The profit maximizing quantity is 100.The profit maximizing price is $5.The deadweight loss at the profit maximizing price and quantity is zero.

Accepted Answer

A)  I only
B)  I and II only
C)  III only
D)  I, II, and IIIE) B) and C)
F) A) and B)

Question 18

Perfect price discrimination:

Accepted Answer

A)  eliminates all consumer surplus.
B)  maximizes producer surplus.
C)  creates no deadweight loss.
D)  All of these are true.E) A) and B)
F) None of the above

Question 19

In general, with a monopolist's outcome:

Accepted Answer

A)  consumers lose surplus.
B)  monopolies earn profit.
C)  deadweight loss occurs.
D)  All of these are true.E) All of the above
F) B) and D)

Question 20

Consider a market in which one firm controls 80 percent of the market. Suppose a new firm tries to enter the market, and the firm with market power responds by temporarily cutting its prices to very low levels. This practice is known as:

Accepted Answer

A)  predatory pricing.
B)  monopoly pricing.
C)  aggressive pricing.
D)  All of these are exemplified by this practice.E) C) and D)
F) None of the above

Exam 14: Monopoly

Perfect price discrimination:

Correct Answer
verified
A

Producing any quantity of output less than the point where the marginal revenue and marginal cost curves intersect leads to:

Correct Answer
verified

The table shown represents the revenues faced by a monopolist. Graphing the first two columns of the table would yield which curve?

Correct Answer
verified

If a monopoly wishes to sell more output, it must:

Correct Answer
verified

Which of the following statements about the practice of price discrimination is true?

Correct Answer
verified

For a monopoly, marginal revenue for all units greater than one is always _ than price because of the _ effect.

Correct Answer
verified

In theory, placing a price control on a natural monopoly should:

Correct Answer
verified

The table shown represents the revenues faced by a monopolist. What is the firm's marginal revenue of the sixth unit?

Correct Answer
verified

The graph shown represents the cost and revenue curves faced by a monopoly. If Q2 units are being produced, the monopolist:

Correct Answer
verified

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay it:

Correct Answer
verified
A

For a monopoly, for all units greater than one the marginal revenue curve:

Correct Answer
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With a monopolist's outcome, producer surplus is _______ that of a competitive market.

Correct Answer
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A natural monopoly is a market in which a single firm:

Correct Answer
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Correct Answer
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Some argue that the best government response to monopolies is no response at all, because:

Correct Answer
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C

Public policy responses to monopolies:

Correct Answer
verified

This graph shows the cost and revenue curves faced by a monopoly. Which of the following statements is true?The profit maximizing quantity is 100.The profit maximizing price is $5.The deadweight loss at the profit maximizing price and quantity is zero.

Correct Answer
verified

Perfect price discrimination:

Correct Answer
verified

In general, with a monopolist's outcome:

Correct Answer
verified

Consider a market in which one firm controls 80 percent of the market. Suppose a new firm tries to enter the market, and the firm with market power responds by temporarily cutting its prices to very low levels. This practice is known as:

Correct Answer
verified

Exam 14: Monopoly

Perfect price discrimination:

Correct AnswerverifiedA

Producing any quantity of output less than the point where the marginal revenue and marginal cost curves intersect leads to:

Correct AnswerverifiedShow Answer

The table shown represents the revenues faced by a monopolist. Graphing the first two columns of the table would yield which curve?

Correct AnswerverifiedShow Answer

If a monopoly wishes to sell more output, it must:

Correct AnswerverifiedShow Answer

Which of the following statements about the practice of price discrimination is true?

Correct AnswerverifiedShow Answer

For a monopoly, marginal revenue for all units greater than one is always _______ than price because of the _______ effect.

Correct AnswerverifiedShow Answer

In theory, placing a price control on a natural monopoly should:

Correct AnswerverifiedShow Answer

The table shown represents the revenues faced by a monopolist. What is the firm's marginal revenue of the sixth unit?

Correct AnswerverifiedShow Answer

The graph shown represents the cost and revenue curves faced by a monopoly. If Q2 units are being produced, the monopolist:

Correct AnswerverifiedShow Answer

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay it:

Correct AnswerverifiedA

For a monopoly, for all units greater than one the marginal revenue curve:

Correct AnswerverifiedShow Answer

With a monopolist's outcome, producer surplus is _______ that of a competitive market.

Correct AnswerverifiedShow Answer

A natural monopoly is a market in which a single firm:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some argue that the best government response to monopolies is no response at all, because:

Correct AnswerverifiedC

Public policy responses to monopolies:

Correct AnswerverifiedShow Answer

This graph shows the cost and revenue curves faced by a monopoly. Which of the following statements is true?The profit maximizing quantity is 100.The profit maximizing price is $5.The deadweight loss at the profit maximizing price and quantity is zero.

Correct AnswerverifiedShow Answer

Perfect price discrimination:

Correct AnswerverifiedShow Answer

In general, with a monopolist's outcome:

Correct AnswerverifiedShow Answer

Consider a market in which one firm controls 80 percent of the market. Suppose a new firm tries to enter the market, and the firm with market power responds by temporarily cutting its prices to very low levels. This practice is known as:

Correct AnswerverifiedShow Answer

Correct Answer
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A

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For a monopoly, marginal revenue for all units greater than one is always _ than price because of the _ effect.

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A

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C

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