Question 1

Perfect price discrimination

Accepted Answer

A)   increases profits to the firm.
B)   increases total surplus.
C)   decreases consumer surplus.
D)   All of the above are correct.

Question 2

Figure 14-15 
-Refer to Figure 14-15.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Accepted Answer

A)   $0.
B)   $250.
C)   $500.
D)   $1,000.

Question 3

Table 14-6
A monopolist faces the following demand curve:
 
-Refer to Table 14-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Accepted Answer

A)   $1
B)   $7
C)   $9
D)   $11

Question 4

By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

Accepted Answer

A) True 
 B)False

Question 5

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 6

If a monopoly lowers its price,its

Accepted Answer

A)   total revenue must increase.
B)   total revenue must decrease.
C)   marginal revenue must increase.
D)   marginal revenue must decrease. D

Question 7

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is correct?

Accepted Answer

A)   The demand curve facing a competitive firm is horizontal,as is the demand curve facing a monopolist.
B)   The demand curve facing a competitive firm is downward sloping,whereas the demand curve facing a monopolist is horizontal.
C)   The demand curve facing a competitive firm is horizontal,whereas the demand curve facing a monopolist is downward sloping.
D)   The demand curve facing a competitive firm is downward sloping,as is the demand curve facing a monopolist. C

Question 9

Which of the following is an example of a barrier to entry?

Accepted Answer

A)   Tom charges a higher price than his competitors for his house-painting services.
B)   Dick obtains a copyright for the new computer game that he invented.
C)   Harry offers free concerts on Sunday afternoons as a form of advertising.
D)   Larry charges a lower price than his competitors for his lawn-mowing services.

Question 10

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because (i) almost all people fear the generic drug companies are devoting too few resources to research and development.
(ii) some people fear that generic drugs are inferior.
(iii) some people are loyal to the name brand.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (i) and (iii) only
D)   (i) ,(ii) ,and (iii)

Question 11

The deadweight loss associated with a monopoly occurs because the monopolist

Accepted Answer

A)   maximizes profits.
B)   produces an output level less than the socially optimal level.
C)   produces an output level greater than the socially optimal level.
D)   equates marginal revenue with marginal cost.

Question 12

When a firm experiences continually declining average total costs,

Accepted Answer

A)   the firm is a price taker.
B)   society is better served by having one firm supply the product.
C)   the firm will earn higher profits than if average total costs are increasing.
D)   All of the above are correct.

Question 13

Table 14-9
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 14-9.What is the marginal revenue of the 3rd unit?

Accepted Answer

A)   $4
B)   $12
C)   $20
D)   $28

Question 14

If a monopolist can practice perfect price discrimination,the monopolist will

Accepted Answer

A)   eliminate consumer surplus.
B)   eliminate deadweight loss.
C)   maximize profits.
D)   All of the above are correct.

Question 15

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Accepted Answer

A)   In both cases,total social welfare is the same.
B)   Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly.
C)   In both cases,some potentially mutually beneficial trades do not occur.
D)   Consumer surplus is the same in both cases.

Question 16

A monopolist faces the following demand curve:  The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Accepted Answer

A)   400
B)   500
C)   900
D)   4,200

Question 17

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Accepted Answer

A)   $11.
B)   $22.
C)   $33.
D)   $44.

Question 18

A monopoly

Accepted Answer

A)   can set the price it charges for its output and earn unlimited profits.
B)   takes the market price as given and earns small but positive profits.
C)   can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
D)   can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

Question 19

Figure 14-3 
-Refer to Figure 14-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Accepted Answer

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

Question 20

Price discrimination explains why Ivy League universities often base tuition costs on students'

Accepted Answer

A)   age.
B)   financial resources.
C)   high school GPA.
D)   gender.

Exam 14: Monopoly

Perfect price discrimination

Correct Answer
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Figure 14-15 -Refer to Figure 14-15.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct Answer
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Table 14-6 A monopolist faces the following demand curve: -Refer to Table 14-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Correct Answer
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By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

Correct Answer
verified

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Correct Answer
verified

If a monopoly lowers its price,its

Correct Answer
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D

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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C

Which of the following is an example of a barrier to entry?

Correct Answer
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Correct Answer
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The deadweight loss associated with a monopoly occurs because the monopolist

Correct Answer
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When a firm experiences continually declining average total costs,

Correct Answer
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Table 14-9 Consider the following demand and cost information for a monopoly. -Refer to Table 14-9.What is the marginal revenue of the 3rd unit?

Correct Answer
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If a monopolist can practice perfect price discrimination,the monopolist will

Correct Answer
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How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Correct Answer
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A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct Answer
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When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Correct Answer
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A monopoly

Correct Answer
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Figure 14-3 -Refer to Figure 14-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct Answer
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B

Price discrimination explains why Ivy League universities often base tuition costs on students'

Correct Answer
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Exam 14: Monopoly

Perfect price discrimination

Correct AnswerverifiedShow Answer

Figure 14-15 -Refer to Figure 14-15.If the monopoly firm perfectly price discriminates,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Table 14-6 A monopolist faces the following demand curve: -Refer to Table 14-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the total profit if she operates at her profit-maximizing price?

Correct AnswerverifiedShow Answer

By offering lower prices to customers who buy a large quantity,a monopoly is price discriminating.

Correct AnswerverifiedShow Answer

During the life of a drug patent,the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

If a monopoly lowers its price,its

Correct AnswerverifiedD

By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers,the publisher is able to price discriminate and raise its profits.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedC

Which of the following is an example of a barrier to entry?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The deadweight loss associated with a monopoly occurs because the monopolist

Correct AnswerverifiedShow Answer

When a firm experiences continually declining average total costs,

Correct AnswerverifiedShow Answer

Table 14-9 Consider the following demand and cost information for a monopoly. -Refer to Table 14-9.What is the marginal revenue of the 3rd unit?

Correct AnswerverifiedShow Answer

If a monopolist can practice perfect price discrimination,the monopolist will

Correct AnswerverifiedShow Answer

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

Correct AnswerverifiedShow Answer

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

Correct AnswerverifiedShow Answer

When a certain monopoly sets its price at $8 it sells 64 units.When the monopoly sets its price at $10 it sells 60 units.The marginal revenue for the firm over this range is

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

Figure 14-3 -Refer to Figure 14-3.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct AnswerverifiedB

Price discrimination explains why Ivy League universities often base tuition costs on students'

Correct AnswerverifiedShow Answer

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D

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C

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B

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