Question 1

Figure 9.9  Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The difference between the monopoly's price and the perfectly competitive industry's price is

Accepted Answer

A)  The monopoly's price is higher by $9.50.
B)  The monopoly's price is higher by $13.
C)  The monopoly's price is higher by $3.50.
D)  The monopoly's price is higher by $21.E) B) and C)
F) A) and C)

Question 2

The demand curve for the monopoly's product is

Accepted Answer

A)  the market demand for the product.
B)  more elastic than the market demand for the product.
C)  more inelastic than the market demand for the product.
D)  undefined.E) B) and C)
F) A) and D)

Question 3

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Accepted Answer

A) True 
 B)False

Question 4

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Accepted Answer

A)  government antitrust laws.
B)  the pricing decisions of its suppliers.
C)  the pricing decisions of firms that produce complementary products.
D)  the actions of all other firms.E) A) and B)
F) All of the above

Question 5

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

Accepted Answer

A)  whether or not there are close substitutes for the products of the two firms.
B)  how elastic the demand is for each firm's product.
C)  counting the number of firms that produce the same product.
D)  how much advertising is done in the industry.E) A) and D)
F) B) and D)

Question 6

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

Accepted Answer

A)  decrease marginal cost.
B)  raise average total cost.
C)  increase total revenue.
D)  make marginal revenue less elastic.E) B) and C)
F) B) and D)

Question 7

Using a broad definition, a firm would have a monopoly if

Accepted Answer

A)  it produced a product that has substitutes.
B)  it does not have to collude with any other producer to earn an economic profit.
C)  there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run.
D)  it can make decisions regarding price and output without violating antitrust laws.E) All of the above
F) C) and D)

Question 8

Are restaurant coupons a form of price discrimination? Why or why not?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Yes, coupons are a form of price discrim...

Question 9

Why do governments grant patents?

Accepted Answer

A)  To compensate firms for research and development costs.
B)  To encourage competition.
C)  To encourage low prices.
D)  To encourage firms to reveal secret production techniques.E) C) and D)
F) None of the above

Question 10

Figure 9.2 2, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition." class="answers-bank-image d-inline" rel="preload" > Figure 9.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.2.If the firm's average total cost curve is ATC2, the firm will

Accepted Answer

A)  suffer a loss.
B)  break even.
C)  make a profit.
D)  face competition.E) None of the above
F) A) and B)

Question 11

In a natural monopoly, throughout the range of market demand

Accepted Answer

A)  marginal cost is above average total cost and pulls average total cost upward.
B)  average total cost is above marginal cost and pulls marginal cost upward.
C)  marginal cost is below average total cost and pulls average total cost downward.
D)  there are diseconomies of scale.E) A) and C)
F) None of the above

Question 12

A monopolist's profit-maximising price and output correspond to the point on a graph

Accepted Answer

A)  where average total cost is minimised.
B)  where total costs are the smallest relative to price.
C)  where marginal revenue equals marginal cost.
D)  where price is as high as possible.E) None of the above
F) B) and C)

Question 13

What is yield management? How is yield management being used in the airline industry?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Yield management is the use of sophistic...

Question 14

Draw a graph that shows producer surplus, consumer surplus, and deadweight loss in a market where the seller practices perfect price discrimination.Be sure to identify the demand curve, the marginal revenue curve, the marginal cost curve, and the profit-maximising quantity on the graph.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The perfect price discriminator sells Q₃ ...

Question 15

Which of the following is true for a monopolist?

Accepted Answer

A)  Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve.
B)  Being the only seller in the market, the monopolist faces a perfectly elastic demand curve.
C)  Being the only seller in the market, the monopolist faces the market demand curve.
D)  Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve.E) B) and D)
F) None of the above

Question 16

Economic efficiency in a free market occurs when

Accepted Answer

A)  consumer surplus is maximised.
B)  producer surplus is maximised.
C)  the sum of consumer surplus and producer surplus is maximised.
D)  price is as low as possible.E) B) and C)
F) A) and C)

Question 17

A natural monopoly is characterised by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

Question 18

To maximise profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and will charge a price given by the demand curve at that output level.

Accepted Answer

A) True 
 B)False

Question 19

Assume that a monopolist practices perfect price discrimination.The firm's marginal revenue curve will

Accepted Answer

A)  be perfectly elastic.
B)  be equal to its demand curve.
C)  will be perfectly inelastic.
D)  will lie below its demand curve.E) None of the above
F) A) and D)

Question 20

Figure 9.2 3, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition." class="answers-bank-image d-inline" rel="preload" > Figure 9.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.2.If the firm's average total cost curve is ATC3, the firm will

Accepted Answer

A)  suffer a loss.
B)  break even.
C)  make a profit.
D)  face competition.E) None of the above
F) A) and D)

Exam 9: Monopoly Markets

Using a broad definition, a firm would have a monopoly if

Correct Answer
verified

In a natural monopoly, throughout the range of market demand

Correct Answer
verified

A monopolist's profit-maximising price and output correspond to the point on a graph

Correct Answer
verified

Which of the following is true for a monopolist?

Correct Answer
verified

Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist. -Refer to Figure 9.9.The difference between the monopoly's price and the perfectly competitive industry's price is

Correct Answer
verified

What is yield management? How is yield management being used in the airline industry? __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
verified
Yield management is the use of sophistic...
View Answer

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC₃, the firm will

Correct Answer
verified

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Correct Answer
verified

Assume that a monopolist practices perfect price discrimination.The firm's marginal revenue curve will

Correct Answer
verified

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

Correct Answer
verified

Economic efficiency in a free market occurs when

Correct Answer
verified

To maximise profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and will charge a price given by the demand curve at that output level.

Correct Answer
verified

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

Correct Answer
verified

A natural monopoly is characterised by large fixed costs relative to variable costs.

Correct Answer
verified

Why do governments grant patents?

Correct Answer
verified

Correct Answer
verified
The perfect price discriminator sells Q₃ ...
View Answer

Are restaurant coupons a form of price discrimination? Why or why not? __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
verified
Yes, coupons are a form of price discrim...
View Answer

The demand curve for the monopoly's product is

Correct Answer
verified

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC₂, the firm will

Correct Answer
verified

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Correct Answer
verified

Exam 9: Monopoly Markets

Using a broad definition, a firm would have a monopoly if

Correct AnswerverifiedShow Answer

In a natural monopoly, throughout the range of market demand

Correct AnswerverifiedShow Answer

A monopolist's profit-maximising price and output correspond to the point on a graph

Correct AnswerverifiedShow Answer

Which of the following is true for a monopolist?

Correct AnswerverifiedShow Answer

Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist. -Refer to Figure 9.9.The difference between the monopoly's price and the perfectly competitive industry's price is

Correct AnswerverifiedShow Answer

What is yield management? How is yield management being used in the airline industry? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedYield management is the use of sophistic...View AnswerShow Answer

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC3, the firm will

Correct AnswerverifiedShow Answer

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Correct AnswerverifiedShow Answer

Assume that a monopolist practices perfect price discrimination.The firm's marginal revenue curve will

Correct AnswerverifiedShow Answer

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

Correct AnswerverifiedShow Answer

Economic efficiency in a free market occurs when

Correct AnswerverifiedShow Answer

To maximise profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and will charge a price given by the demand curve at that output level.

Correct AnswerverifiedShow Answer

When a proposed merger between two companies is reviewed by the government, the relevant market is defined by

Correct AnswerverifiedShow Answer

A natural monopoly is characterised by large fixed costs relative to variable costs.

Correct AnswerverifiedShow Answer

Why do governments grant patents?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe perfect price discriminator sells Q3 ...View AnswerShow Answer

Are restaurant coupons a form of price discrimination? Why or why not? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedYes, coupons are a form of price discrim...View AnswerShow Answer

The demand curve for the monopoly's product is

Correct AnswerverifiedShow Answer

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC2, the firm will

Correct AnswerverifiedShow Answer

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Yield management is the use of sophistic...
View Answer

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC₃, the firm will

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The perfect price discriminator sells Q₃ ...
View Answer

Correct Answer
verified
Yes, coupons are a form of price discrim...
View Answer

Correct Answer
verified

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC₂, the firm will

Correct Answer
verified

Correct Answer
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