Question 1

Price discrimination is prohibited by antitrust laws.

Accepted Answer

A) True 
 B)False

Question 2

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Accepted Answer

A)   can prevent children from buying the lower-priced tickets and selling them to adults.
B)   has some degree of monopoly pricing power.
C)   can easily distinguish between the two groups of customers.
D)   All of the above are correct.

Question 3

Which of the following statements is not correct?

Accepted Answer

A)   The competitive firm produces where P = MC.
B)   The monopolist produces where P = MC.
C)   The competitive firm produces where MR = MC.
D)   The monopolist produces where MR = MC.

Question 4

An industry is a natural monopoly when

Accepted Answer

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

Question 5

For a monopolist,marginal revenue is

Accepted Answer

A)   equal to price,as it is for a perfectly competitive firm.
B)   less than price,as it is for a perfectly competitive firm.
C)   equal to price,whereas marginal revenue is less than price for a perfectly competitive firm.
D)   less than price,whereas marginal revenue is equal to price for a perfectly competitive firm.

Question 6

Natural monopolies differ from other forms of monopoly because they

Accepted Answer

A)   are not subject to barriers to entry.
B)   are not regulated by government.
C)   generally don't make a profit.
D)   are generally not worried about competition eroding their monopoly position in the market.

Question 7

Figure 15-8 
-Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Accepted Answer

A)   $150.
B)   $200.
C)   $250.
D)   $500.

Question 8

For a monopolist,

Accepted Answer

A)   average revenue is always greater than the price of the good.
B)   marginal revenue is always less than the price of the good.
C)   marginal cost is always greater than average total cost.
D)   marginal revenue equals marginal cost at the point where total revenue is maximized.

Question 9

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 10

In theory,perfect price discrimination

Accepted Answer

A)   decreases the monopolist's profits.
B)   decreases consumer surplus.
C)   increases deadweight loss.
D)   reduces the number of consumers who purchase the monopoly's product.

Question 11

Reduced competition through merging of companies will raise social welfare

Accepted Answer

A)   if the cost from the synergies exceeds the benefit of increased market power.
B)   if the benefit from the synergies exceeds the social cost of increased market power.
C)   always.
D)   never.

Question 12

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition.Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi...

Question 13

Perfect price discrimination

Accepted Answer

A)   eliminates deadweight loss.
B)   reduces profits to the monopolist.
C)   decreases the total quantity sold by the monopolist.
D)   requires arbitrage in order for the monopolist to maximize profits.

Question 14

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has

Accepted Answer

A)   less incentive to advertise than it would otherwise have.
B)   less market power than it would otherwise have.
C)   more control over the price of diamonds than it would otherwise have.
D)   higher profits than it would otherwise have.

Question 15

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Accepted Answer

A)   always remains a competitive market.
B)   always remains a monopolistic market.
C)   switches from competitive to monopolistic once the firm's patent runs out.
D)   switches from monopolistic to competitive once the firm's patent runs out.

Question 16

Figure 15-4 
-Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.

Question 17

Figure 15-12 
-Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Accepted Answer

A)   $0.
B)   $1,562.50.
C)   $3,125.
D)   $6,250.

Question 18

A natural monopoly occurs when

Accepted Answer

A)   the product is sold in its natural state,such as water or diamonds.
B)   there are economies of scale over the relevant range of output.
C)   the firm is characterized by a rising marginal cost curve.
D)   production requires the use of free natural resources,such as water or air.

Question 19

Table 15-1
 
-Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Accepted Answer

A)   4
B)   5
C)   6
D)   8

Question 20

For a typical natural monopoly,average total cost is

Accepted Answer

A)   falling,and marginal cost is above average total cost.
B)   falling,and marginal cost is below average total cost.
C)   rising,and marginal cost is below average total cost.
D)   rising,and marginal cost is above average total cost.

Exam 15: Monopoly

Perfect price discrimination

Correct Answer
verified

Figure 15-12 -Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Correct Answer
verified

In theory,perfect price discrimination

Correct Answer
verified

Reduced competition through merging of companies will raise social welfare

Correct Answer
verified

Natural monopolies differ from other forms of monopoly because they

Correct Answer
verified

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Correct Answer
verified

Figure 15-4 -Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve

Correct Answer
verified

For a typical natural monopoly,average total cost is

Correct Answer
verified

An industry is a natural monopoly when

Correct Answer
verified

The deadweight loss associated with a monopoly occurs because the monopolist

Correct Answer
verified

Figure 15-8 -Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct Answer
verified

A natural monopoly occurs when

Correct Answer
verified

For a monopolist,marginal revenue is

Correct Answer
verified

For a monopolist,

Correct Answer
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Correct Answer
verified
The answer should address the three basi...
View Answer

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has

Correct Answer
verified

Price discrimination is prohibited by antitrust laws.

Correct Answer
verified

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Correct Answer
verified

Exam 15: Monopoly

Perfect price discrimination

Correct AnswerverifiedShow Answer

Figure 15-12 -Refer to Figure 15-12.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Correct AnswerverifiedShow Answer

In theory,perfect price discrimination

Correct AnswerverifiedShow Answer

Reduced competition through merging of companies will raise social welfare

Correct AnswerverifiedShow Answer

Natural monopolies differ from other forms of monopoly because they

Correct AnswerverifiedShow Answer

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

Correct AnswerverifiedShow Answer

Figure 15-4 -Refer to Figure 15-4.The average total cost curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

For a typical natural monopoly,average total cost is

Correct AnswerverifiedShow Answer

An industry is a natural monopoly when

Correct AnswerverifiedShow Answer

The deadweight loss associated with a monopoly occurs because the monopolist

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Figure 15-8 -Refer to Figure 15-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Correct AnswerverifiedShow Answer

A natural monopoly occurs when

Correct AnswerverifiedShow Answer

For a monopolist,marginal revenue is

Correct AnswerverifiedShow Answer

For a monopolist,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe answer should address the three basi...View AnswerShow Answer

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has

Correct AnswerverifiedShow Answer

Price discrimination is prohibited by antitrust laws.

Correct AnswerverifiedShow Answer

Due to the nature of the patent laws on pharmaceuticals,the market for such drugs

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Table 15-1 -Refer to Table 15-1.If the monopolist wants to maximize its revenue,how many units of its product should it sell?

Correct AnswerverifiedShow Answer

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Correct Answer
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The answer should address the three basi...
View Answer

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