Question 1

Airlines often charge customers more if they don't stay over at their destination on a Saturday night.The best explanation for this is that the airline is engaging in:

Accepted Answer

A)  predatory pricing.
B)  arbitrage.
C)  price discrimination.
D)  perfect competition.

Question 2

A monopolist that lowers its price and increases output,even at the expense of short-run profits,is engaging in:

Accepted Answer

A)  predatory pricing.
B)  price discrimination.
C)  predatory discrimination.
D)  multi-purpose pricing.
E)  a flexible pricing strategy.

Question 3

If the monopolist can discriminate between buyers,then it is optimal to charge:

Accepted Answer

A)  a higher price to the buyers with high elasticity of demand, and a lower price to the buyers with low elasticity of demand.
B)  a lower price to all buyers.
C)  a higher price to all buyers.
D)  a lower price to the buyers with high elasticity of demand, and a higher price to the buyers with low elasticity of demand.

Question 4

When is a monopolist able to charge a lower price than a competitive firm?

Accepted Answer

A)  Never.
B)  If the monopolist is a natural monopolist.
C)  If the monopolist is able to price discriminate.
D)  If the monopolist has enough profit.

Question 5

Exhibit 8-7
 0 to P1 and output to rise from Q1 to Q2. B) Price to fall from P1 to P2 and output to fall from Q2 to Q1. C) Price to fall from P0 to P2 and output to fall from Q2 to Q1. D) Price to rise from P1 to P0 and output to rise from Q1 to Q2. E) Price to fall from P1 to P0 and output to fall from Q2 to Q1." class="answers-bank-image d-inline" rel="preload" >
-According to Exhibit 8-7,if competition was introduced in a monopoly market,we could expect which of the following to occur?

Accepted Answer

A)  Price to fall from P0 to P1 and output to rise from Q1 to Q2.
B)  Price to fall from P1 to P2 and output to fall from Q2 to Q1.
C)  Price to fall from P0 to P2 and output to fall from Q2 to Q1.
D)  Price to rise from P1 to P0 and output to rise from Q1 to Q2.
E)  Price to fall from P1 to P0 and output to fall from Q2 to Q1.

Question 6

A monopolist can engage in price discrimination:

Accepted Answer

A)  if it faces a perfectly elastic demand curve.
B)  if it is able to buy a good at a low price and resell it at a higher price.
C)  if it is a price maker, can segment the market and prevent customers from reselling.
D)  if it faces a perfectly inelastic demand curve.

Question 7

What is the major difference between perfect competition and monopoly?

Accepted Answer

A)  The slope of the supply curve faced by the firm.
B)  The slope of the demand curve faced by the industry.
C)  The slope of the supply curve faced by the industry.
D)  The slope of the demand curve faced by the firm.

Question 8

Legal barriers protect firms from:

Accepted Answer

A)  losses.
B)  high prices.
C)  potential competitors.
D)  taxes.

Question 9

Given similar market conditions,we would expect a monopolist to:

Accepted Answer

A)  charge a higher price and produce a lower output than under perfect competition.
B)  charge a lower price and produce a lower output than under perfect competition.
C)  charge a higher price and produce a higher output than under perfect competition.
D)  charge the same price and produce the same output as in perfect competition.
E)  charge a lower price and produce a higher output than under perfect competition.

Question 10

Exhibit 8-7
 0. B) P1. C) P2. D) indeterminate as there is not enough information provided." class="answers-bank-image d-inline" rel="preload" >
-According to Exhibit 8-7,the price a monopolist would charge is:

Accepted Answer

A)  P0.
B)  P1.
C)  P2.
D)  indeterminate as there is not enough information provided.

Question 11

A price-discriminating monopoly charges the lowest price to the group that:

Accepted Answer

A)  has the most elastic demand.
B)  purchases the largest quantity.
C)  engages in the most arbitrage.
D)  is least responsive to price changes.

Question 12

Exhibit 8-4 Demand and cost curves for a monopolist
 
-As shown in Exhibit 8-4,in order to maximise its profit (or minimise its loss) ,how much output should the monopoly produce?

Accepted Answer

A)  2 units per hour.
B)  4 units per hour.
C)  6 units per hour.
D)  8 units per hour.

Question 13

In order for a monopolist to earn a positive economic profit in short-run equilibrium,price must exceed average total cost.

Accepted Answer

A) True 
 B)False

Question 14

If the firm owns vital resources,the market is likely to be:

Accepted Answer

A)  a monopoly.
B)  an oligopoly.
C)  monopolistically competitive.
D)  perfectly competitive.

Question 15

Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine
 
-As shown in Exhibit 8-3,in order to maximise its profit,what price should GeneTech charge for its vaccine?

Accepted Answer

A)  $20 per dose.
B)  $25 per dose.
C)  $35 per dose
D)  $50 per dose.

Question 16

A natural monopoly occurs because:

Accepted Answer

A)  of the lack of competition.
B)  of ownership of vital resources.
C)  its long-run average cost of production declines throughout the entire range of output.
D)  of the patent.

Question 17

Monopolies misallocate the resources because:

Accepted Answer

A)  a monopoly means less output at lower price.
B)  price is equal to the marginal cost.
C)  the marginal benefit of the last unit produced is equal to the marginal cost of the last unit.
D)  perfect competition means more output for less price.

Question 18

Which of the following statements is true?

Accepted Answer

A)  One reason a monopoly can earn economic profits is because it can raise price and restrict output.
B)  A perfectly competitive firm can earn economic profits because it can raise price and restrict output.
C)  Income is transferred from producers to consumers in a monopoly compared to perfect competition.
D)  Monopolists who price-discriminate rarely earn positive economic profits in the long run.
E)  A monopolist misallocates resources because P = MC.

Question 19

The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

Accepted Answer

A)  buying long.
B)  selling short.
C)  a tariff.
D)  arbitrage.

Question 20

Water is often provided to households by one supplier because:

Accepted Answer

A)  there is not enough competition in the market.
B)  the single supplier cannot supply the entire market demand at a lower cost than two or more smaller firms could.
C)  long-run average total cost increases over the entire range of output.
D)  it is a natural monopoly.

Exam 8: Monopoly

Legal barriers protect firms from:

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In order for a monopolist to earn a positive economic profit in short-run equilibrium,price must exceed average total cost.

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Water is often provided to households by one supplier because:

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Exhibit 8-7 -According to Exhibit 8-7,if competition was introduced in a monopoly market,we could expect which of the following to occur?

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Airlines often charge customers more if they don't stay over at their destination on a Saturday night.The best explanation for this is that the airline is engaging in:

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When is a monopolist able to charge a lower price than a competitive firm?

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Monopolies misallocate the resources because:

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If the monopolist can discriminate between buyers,then it is optimal to charge:

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Exhibit 8-4 Demand and cost curves for a monopolist -As shown in Exhibit 8-4,in order to maximise its profit (or minimise its loss) ,how much output should the monopoly produce?

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If the firm owns vital resources,the market is likely to be:

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Given similar market conditions,we would expect a monopolist to:

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Which of the following statements is true?

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The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:

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Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine -As shown in Exhibit 8-3,in order to maximise its profit,what price should GeneTech charge for its vaccine?

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What is the major difference between perfect competition and monopoly?

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A price-discriminating monopoly charges the lowest price to the group that:

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A monopolist that lowers its price and increases output,even at the expense of short-run profits,is engaging in:

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A natural monopoly occurs because:

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A monopolist can engage in price discrimination:

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Exhibit 8-7 -According to Exhibit 8-7,the price a monopolist would charge is:

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