Question 1

Which would definitely not be an example of price discrimination?

Accepted Answer

A)  A movie theater charges children less than adults for a movie ticket.
B)  Universities charge higher tuition for out-of-state residents than for in-state students.
C)  A doctor charges for services according to the income of individual patients.
D)  An electric power company charges less for electricity used during off-peak hours, when production costs are lower.E) B) and C)
F) A) and B)

Question 2

A monopolist can use its pricing strategy as a barrier to entry by other firms.

Accepted Answer

A) True 
 B)False

Question 3

Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

Accepted Answer

A)  patent protection.
B)  X-inefficiency.
C)  price discrimination.
D)  rent-seeking.E) All of the above
F) A) and B)

Question 4

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Accepted Answer

A) True 
 B)False

Question 5

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

Accepted Answer

A)  incurs a loss.
B)  earns an economic profit of $250.
C)  earns a normal profit of $250.
D)  earns an economic profit of $150.E) C) and D)
F) B) and C)

Question 6

What are network effects? How do they contribute to economies of scale?

Accepted Answer

Network effects are present if a product...

Question 7

Which case 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.E) C) and D)
F) B) and C)

Question 8

Answer the question on the basis of the demand and cost data for a pure monopolist. At the profit-maximizing price and quantity of output, the monopolist will realize profit of

Accepted Answer

A)  $11.25.
B)  $10.00.
C)  $6.50.
D)  $4.50.E) None of the above
F) B) and C)

Question 9

Which of the following is correct?

Accepted Answer

A)  Both purely competitive and monopolistic firms are "price takers."
B)  Both purely competitive and monopolistic firms are "price makers."
C)  A purely competitive firm is a "price taker," while a monopolist is a "price maker."
D)  A purely competitive firm is a "price maker," while a monopolist is a "price taker."E) None of the above
F) All of the above

Question 10

At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

Accepted Answer

A)  incurs a loss.
B)  earns an economic profit of $250.
C)  earns a normal profit of $250.
D)  earns an economic profit of $150.E) B) and C)
F) All of the above

Question 11

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

Accepted Answer

A)  copyright.
B)  franchise.
C)  patent.
D)  license.E) A) and D)
F) All of the above

Question 12

A pure monopolist is selling nine units at a price of $50. If the marginal revenue of the tenth unit is $30, then the

Accepted Answer

A)  price of the tenth unit is $49.
B)  price of the tenth unit is $48.
C)  price of the tenth unit is greater than $50.
D)  firm's demand curve is perfectly elastic.E) All of the above
F) B) and D)

Question 13

X-inefficiency refers to a situation in which a firm

Accepted Answer

A)  is not as technologically progressive as it might be.
B)  encounters diseconomies of scale.
C)  fails to realize all existing economies of scale.
D)  fails to achieve the minimum average total costs attainable at each level of output.E) B) and C)
F) A) and B)

Question 14

The economic incentive for price discrimination is based upon

Accepted Answer

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

Question 15

Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be

Accepted Answer

A)  positive and demand is elastic.
B)  negative and demand is elastic.
C)  positive and demand is inelastic.
D)  negative and demand is inelastic.E) A) and B)
F) None of the above

Question 16

Answer the question on the basis of the provided demand and cost data for a pure monopolist.  The profit-maximizing level of output will be

Accepted Answer

A)  4 units.
B)  7 units.
C)  6 units.
D)  5 units.E) None of the above
F) A) and B)

Question 17

If marginal costs decrease and the MC curve shifts down, 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.E) A) and D)
F) A) and C)

Question 18

The table shows the demand schedule facing Nina, a monopolist selling baskets. What is the change in total revenue if she raises the price from $10 to $12?

Accepted Answer

A)  $−300
B)  $300
C)  $−120
D)  $120E) A) and B)
F) A) and C)

Question 19

Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?

Accepted Answer

A)  The area 0 QVS is greater than the area 0 RWT.
B)  The demand curve has unit price elasticity at W.
C)  The price elasticity of demand is less at U than at V.
D)  The price elasticity of demand is greater at W than at V.E) A) and B)
F) A) and C)

Question 20

Natural monopolies result from

Accepted Answer

A)  patents and copyrights.
B)  pricing strategies.
C)  extensive economies of scale in production.
D)  control over an essential natural resource.E) All of the above
F) B) and C)

Exam 12: Pure Monopoly

A monopolist can use its pricing strategy as a barrier to entry by other firms.

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Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?

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Which would definitely not be an example of price discrimination?

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Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be

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X-inefficiency refers to a situation in which a firm

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An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

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Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

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At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

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Answer the question on the basis of the demand and cost data for a pure monopolist. At the profit-maximizing price and quantity of output, the monopolist will realize profit of

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At its profit-maximizing output, the nondiscriminating pure monopolist whose information is in the accompanying table

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The economic incentive for price discrimination is based upon

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Natural monopolies result from

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Which of the following is correct?

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Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing level of output will be

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Which case best represents a case of price discrimination?

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What are network effects? How do they contribute to economies of scale?

Correct AnswerverifiedNetwork effects are present if a product...View AnswerShow Answer

The table shows the demand schedule facing Nina, a monopolist selling baskets. What is the change in total revenue if she raises the price from $10 to $12?

Correct AnswerverifiedShow Answer

A pure monopolist is selling nine units at a price of $50. If the marginal revenue of the tenth unit is $30, then the

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At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

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If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Correct AnswerverifiedShow Answer

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Network effects are present if a product...
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