Question 1

The practice of price discrimination is associated with pure monopoly because:

Accepted Answer

A)   it can be practiced whenever a firm's demand curve is downsloping.
B)   monopolists have the ability to control both output and price.
C)   monopolists usually realize economies of scale.
D)   most monopolists sell differentiated products.

Question 2

Under conditions of pure monopoly:

Accepted Answer

A)   there are close substitutes.
B)   there is no advertising.
C)   the firm is a price taker.
D)   entry is blocked.

Question 3

1 and point D at output level Q1. B)  A at output level Q1 and point B at output level Q2. C)  E at output level Q2 and point F at output level Q3. D)  D at output level Q1 and point C at output level Q3." class="answers-bank-image d-inline" rel="preload" > If the AC curve in the above graph represents the minimum of the average total cost curve,then examples of X-inefficiency would best be represented by point:

Accepted Answer

A)   A at output level Q1 and point D at output level Q1.
B)   A at output level Q1 and point B at output level Q2.
C)   E at output level Q2 and point F at output level Q3.
D)   D at output level Q1 and point C at output level Q3.

Question 4

Which is true of price discrimination?

Accepted Answer

A)   Successful price discrimination will provide the firm with lower total profits than if it did not discriminate.
B)   Successful price discrimination will provide the firm with more profit than if it did not discriminate.
C)   Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.
D)   It exists when price differences depend critically on differences in the costs of production of serving different groups of buyers.

Question 5

Which statement is correct?

Accepted Answer

A)   In the short run,the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest.
B)   In the short run,the pure monopolist will charge the highest price it can get for its product.
C)   Because of its ability to administer prices,the pure monopolist can increase its price and increase its volume of sales simultaneously.
D)   Pure monopolists do not always realize economic profits.

Question 6

The economic incentive for price discrimination depends on:

Accepted Answer

A)   prejudices of business managers.
B)   differences among sellers' costs.
C)   a desire to evade antitrust legislation.
D)   differences among buyers' demand elasticities.

Question 7

The demand curve confronting a nondiscriminating pure monopolist is:

Accepted Answer

A)   horizontal.
B)   the same as the industry's demand curve.
C)   more elastic than the demand curve confronting a competitive firm.
D)   derived by vertically summing the individual demand curves competitors.

Question 8

Assuming no economies of scale and identical costs,if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist,the likely result would be:

Accepted Answer

A)   an increase in both price and output.
B)   unchanged price and reduced output.
C)   an increase in price and unchanged output.
D)   an increase in price and reduced output.

Question 9

A product's ability to satisfy a large number of consumers at the same time is called:

Accepted Answer

A)   network effects.
B)   rent-seeking.
C)   simultaneous consumption.
D)   consumer sovereignty.

Question 10

Electric utilities sometimes charge higher prices for electricity used for illumination and lower prices for electricity used for heat.These lower prices for electric heat result primarily from:

Accepted Answer

A)   the existence of good heating substitutes.
B)   economies of scale in electric heat generation.
C)   prices for electric heat being set at the socially optimal level.
D)   strict government regulation of the price charged for electric heat.

Question 11

Refer to the above figure.In the short run,this monopolist will:

Accepted Answer

A)   shut down.
B)   produce 0A.
C)   produce 0B.
D)   produce 0C.

Question 12

In response to a cost-reducing technological breakthrough in the production of its product,a profit-maximizing monopolist will normally:

Accepted Answer

A)   increase price and decrease production.
B)   not change its level of output or price.
C)   decrease the price it charges for its product.
D)   increase its output and practice price discrimination.

Question 13

Barriers to entry:

Accepted Answer

A)   usually result in pure competition.
B)   can result from government regulation.
C)   exist in economic theory but not in the real world.
D)   are typically the result of wrongdoing on the part of a firm.

Question 14

Which case below best represents a case of price discrimination?

Accepted Answer

A)   An insurance company offers discounts to safe drivers.
B)   A major airline sells tickets to senior citizens at lower prices than to other passengers.
C)   A professional baseball team pays two players with identical batting averages different salaries.
D)   A utility company charges less for electricity used during "off-peak" hours,when it does not have to operate its less-efficient generating plants.

Question 15

The Sherman Antitrust Act specifically prohibited tying contracts and interlocking directorates.

Accepted Answer

A) True 
 B)False

Question 16

Efforts by corporate lobbyists to obtain a license that would give a firm a monopoly over the making of a product would be an example of:

Accepted Answer

A)   rent-seeking.
B)   price discrimination.
C)   X-efficiency.
D)   network effects.

Question 17

Compared to the purely competitive firm,a pure monopoly:

Accepted Answer

A)   is able to use barriers to entry and maintain positive economic profits in the long run.
B)   produces an equal amount of output but charges higher prices to cover all costs in the market.
C)   is efficient from society's perspective because it has big plants and it uses the newest possible production technology.
D)   will always become competitive in the long run because positive economic profits will induce competitors into the market.

Question 18

If marginal costs decrease,a typical monopolist will:

Accepted Answer

A)   reduce price and reduce quantity of output.
B)   reduce price and increase quantity of output.
C)   increase price and reduce quantity of output.
D)   increase price and increase quantity of output.

Question 19

Which phrase would be most characteristic of pure monopoly?

Accepted Answer

A)   Close substitutes
B)   Efficient advertiser
C)   Price taker
D)   Single seller

Question 20

Refer to the above graph.The profit-maximizing monopolist shown sets its price and output at:

Accepted Answer

A)   0J and 0V,respectively.
B)   0G and 0Y,respectively.
C)   0G and 0V,respectively.
D)   0H and 0X,respectively.

Exam 8: Pure Monopoly

Electric utilities sometimes charge higher prices for electricity used for illumination and lower prices for electricity used for heat.These lower prices for electric heat result primarily from:

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Under conditions of pure monopoly:

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A product's ability to satisfy a large number of consumers at the same time is called:

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Refer to the above figure.In the short run,this monopolist will:

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Refer to the above graph.The profit-maximizing monopolist shown sets its price and output at:

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Which phrase would be most characteristic of pure monopoly?

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The Sherman Antitrust Act specifically prohibited tying contracts and interlocking directorates.

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In response to a cost-reducing technological breakthrough in the production of its product,a profit-maximizing monopolist will normally:

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Assuming no economies of scale and identical costs,if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist,the likely result would be:

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If the AC curve in the above graph represents the minimum of the average total cost curve,then examples of X-inefficiency would best be represented by point:

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The demand curve confronting a nondiscriminating pure monopolist is:

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Which case below best represents a case of price discrimination?

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Which is true of price discrimination?

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Efforts by corporate lobbyists to obtain a license that would give a firm a monopoly over the making of a product would be an example of:

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Compared to the purely competitive firm,a pure monopoly:

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The economic incentive for price discrimination depends on:

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The practice of price discrimination is associated with pure monopoly because:

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Barriers to entry:

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Which statement is correct?

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If marginal costs decrease,a typical monopolist will:

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