Question 1

If a good has no close substitutes,the market is likely to be:

Accepted Answer

A)  a monopoly.
B)  an oligopoly.
C)  monopolistically competitive.
D)  perfectly competitive.
E)  perfectly monopolistic.F) A) and B)
G) A) and C)

Question 2

At a price of $5,24 units of a good would be sold.At a price of $10,25 units of output would be sold.The marginal revenue of the 25th unit of output is:

Accepted Answer

A)  $14.
B)  $55.
C)  $100.
D)  $130.
E)  $175.F) A) and B)
G) A) and C)

Question 3

A monopoly can successfully price-discriminate as long as there is no competition.

Accepted Answer

A) True 
 B)False

Question 4

Price discrimination occurs when:

Accepted Answer

A)  for the same product, a seller charges different customers different prices justified by cost differences.
B)  for the different product, a seller charges different customers different prices not justified by cost differences.
C)  for the different product, a seller charges the same customers different prices not justified by cost differences.
D)  for the same product, a seller charges different customers different prices not justified by cost differences.E) None of the above
F) B) and C)

Question 5

The only hairdresser in a small town is an example of:

Accepted Answer

A)  monopsy.
B)  luxury.
C)  monopoly.
D)  oligopoly.
E)  competition.F) B) and D)
G) All of the above

Question 6

The efficient allocation of resources (P = MC) occurs in:

Accepted Answer

A)  perfect competition but not monopoly.
B)  monopoly but not perfect competition.
C)  neither market structure.
D)  in both market structures.E) A) and D)
F) C) and D)

Question 7

The case against monopoly is based on the following?

Accepted Answer

A)  Monopolies are successful producers.
B)  Monopolies are efficient resource allocators.
C)  Monopolies are very innovative.
D)  Monopolies charge a higher price than would be under perfect competition.E) None of the above
F) C) and D)

Question 8

In contrast to a perfectly competitive firm,a monopolist operates in the long run at a quantity of output at which:

Accepted Answer

A)  P = MC.
B)  MR = MC.
C)  P = ATC.
D)  P > MR.E) B) and D)
F) B) and C)

Question 9

A monopolist earning economic profit in the short run determines that,at its present level of output,marginal revenue is $23 and marginal cost is $30.Which of the following should the firm do to increase profit?

Accepted Answer

A)  Raise price or lower output.
B)  Lower price.
C)  Raise output.
D)  Lower price and raise output.
E)  Lower output but leave price unchanged.F) B) and D)
G) A) and B)

Question 10

A common criticism of price discrimination is that it seems to:

Accepted Answer

A)  cost some people more for similar goods or services.
B)  cost some people more for the exact same good or service.
C)  decrease a monopolist's profits.
D)  make monopoly unviable.E) A) and D)
F) B) and D)

Question 11

Exhibit 8-6 Monopolist
 
-According to the information provided in Exhibit 8-6,if the Rudd Ice Company is a monopoly and is currently charging a price of $8,what would you advise Rudd to do?

Accepted Answer

A)  Stay where he is currently operating because he is charging the profit-maximising price.
B)  Increase price and increase output.
C)  Decrease price and increase output.
D)  Increase output and hold price constant.
E)  Increase price and hold output constant.F) A) and B)
G) A) and C)

Question 12

Perfect competition is considered more efficient than monopoly because,in perfect competition:

Accepted Answer

A)  P = MC, while in monopoly P 
B)  P = MC, while in monopoly P > MC.
C)  they sell a homogeneous product.
D)  entry is prohibited.E) B) and C)
F) A) and D)

Question 13

The only one bakery in a small regional town would face:

Accepted Answer

A)  strong competition.
B)  a downward-sloping demand curve.
C)  barriers to entry.
D)  a horizontal demand curve.E) All of the above
F) None of the above

Question 14

Arbitrage will occur:

Accepted Answer

A)  when a person can buy the good at one price and then resell it at a higher price.
B)  when the monopolist wants to employ it to increase profits.
C)  when the monopolist is able to practise price discrimination.
D)  when the monopolist faces a downward-sloping demand curve.E) B) and D)
F) None of the above

Question 15

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 one firm were to buy all of the other firms in the market and become a monopoly,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.F) A) and B)
G) A) and C)

Question 16

For every level of output,marginal revenue is:

Accepted Answer

A)  higher than price.
B)  less than price.
C)  equal to price.
D)  undetermined.E) A) and D)
F) A) and C)

Question 17

Exhibit 8-1 Monopolist's demand curve
 
-Which of the following points in Exhibit 8-1 would not lie on the marginal revenue curve corresponding to the monopolist's straight-line demand curve?

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   C and B.E) A) and C)
F) A) and B)

Question 18

Price discrimination often permits some consumers,who otherwise would be excluded from a market,to buy a good or service.

Accepted Answer

A) True 
 B)False

Question 19

At the point where the marginal revenue equals zero for a monopolist facing a downward-sloping straight-line demand curve,total revenue is:

Accepted Answer

A)  greater than 1.
B)  maximum.
C)  less than 1.
D)  equal to zero.
E)  not determinable.F) B) and D)
G) D) and E)

Question 20

Arbitrage is the practice of:

Accepted Answer

A)  earning a profit by buying and reselling goods and services.
B)  redistributing the profit from monopoly to consumers.
C)  losing a profit by buying and reselling goods and services.
D)  producing goods and services for reselling.E) None of the above
F) All of the above

Exam 8: Monopoly

Price discrimination occurs when:

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The case against monopoly is based on the following?

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For every level of output,marginal revenue is:

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In contrast to a perfectly competitive firm,a monopolist operates in the long run at a quantity of output at which:

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At the point where the marginal revenue equals zero for a monopolist facing a downward-sloping straight-line demand curve,total revenue is:

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The only one bakery in a small regional town would face:

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A common criticism of price discrimination is that it seems to:

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Exhibit 8-6 Monopolist -According to the information provided in Exhibit 8-6,if the Rudd Ice Company is a monopoly and is currently charging a price of $8,what would you advise Rudd to do?

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The only hairdresser in a small town is an example of:

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If a good has no close substitutes,the market is likely to be:

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A monopolist earning economic profit in the short run determines that,at its present level of output,marginal revenue is $23 and marginal cost is $30.Which of the following should the firm do to increase profit?

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Exhibit 8-7 -According to Exhibit 8-7,if one firm were to buy all of the other firms in the market and become a monopoly,we could expect which of the following to occur?

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At a price of $5,24 units of a good would be sold.At a price of $10,25 units of output would be sold.The marginal revenue of the 25th unit of output is:

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Perfect competition is considered more efficient than monopoly because,in perfect competition:

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Arbitrage is the practice of:

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A monopoly can successfully price-discriminate as long as there is no competition.

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Arbitrage will occur:

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Price discrimination often permits some consumers,who otherwise would be excluded from a market,to buy a good or service.

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Exhibit 8-1 Monopolist's demand curve -Which of the following points in Exhibit 8-1 would not lie on the marginal revenue curve corresponding to the monopolist's straight-line demand curve?

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The efficient allocation of resources (P = MC) occurs in:

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