Question 1

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Accepted Answer

A)   arbitrage
B)   price discrimination
C)   cost-plus pricing
D)   regulationE) A) and D)
F) A) and C)

Question 2

In a monopoly, consumers will purchase if their willingness-to-pay is above:

Accepted Answer

A)   price
B)   firm profit
C)   marginal cost
D)   marginal revenueE) A) and D)
F) C) and D)

Question 3

When a monopolist reduces the amount of output that it sells, the price of its output:

Accepted Answer

A)   increases
B)   decreases
C)   stays the same
D)   may increase or decrease, depending on the elasticity of demandE) All of the above
F) B) and C)

Question 4

Price discrimination explains why high-ranking universities often set rules that determine prices of admission based on the students:

Accepted Answer

A)   final high-school exam results
B)   sex
C)   age
D)   financial resourcesE) A) and B)
F) All of the above

Question 5

Graph 15-6
  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) .
-Refer to Graph 15-6. What is the deadweight loss equal to when the monopolist engages in perfect price discrimination?

Accepted Answer

A)   ABC
B)   ADF
C)   CEF
D)   deadweight loss will equal zeroE) None of the above
F) All of the above

Question 6

Suppose there is one firm in a market. If this firm sells the same good at different prices to different customers, then this practice is called:

Accepted Answer

A)   price determination
B)   predatory pricing
C)   variable pricing
D)   price discriminationE) B) and D)
F) B) and C)

Question 7

In many cases additional firms do not try to compete with a natural monopoly because:

Accepted Answer

A)   the natural monopoly doesn't make a huge profit
B)   they are unsure of the size of the market in general
C)   they know they cannot achieve the same low costs that the monopolist enjoys
D)   they fear retaliation in the form of pricing wars from the natural monopolistE) A) and B)
F) A) and C)

Question 8

Graph 15-3
 0 *Q1 B)  P0 * Q2 C)  P0 * Q3 D)  (P1 - P0)  *Q2" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) .
-Refer to Graph 15-3. A profit-maximising monopoly would have a total cost equal to:

Accepted Answer

A)   P0 *Q1
B)   P0 * Q2
C)   P0 * Q3
D)   (P1 - P0)  *Q2E) C) and D)
F) A) and D)

Question 9

Graph 15-2
 3, reducing output will always cause profit to: A)  increase as long as output is at least Q2 B)  increase as long as output is at least Q1 C)  remain unchanged D)  decrease" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) .
-Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q3, reducing output will always cause profit to:

Accepted Answer

A)   increase as long as output is at least Q2
B)   increase as long as output is at least Q1
C)   remain unchanged
D)   decreaseE) A) and B)
F) B) and C)

Question 10

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Accepted Answer

A)   not in the best interest of society
B)   in the best interest of society
C)   efficient, but not equitable
D)   equitable, but not efficientE) B) and D)
F) A) and B)

Question 11

Graph 15-5
  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) .
-Refer to Graph 15-5. Compared to the monopoly outcome, an economy designed by a social planner would have a total surplus greater by an amount equal to:

Accepted Answer

A)   rectangle ACDB
B)   rectangle CFGD
C)   triangle BDE
D)   triangle BGEE) B) and D)
F) B) and C)

Question 12

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Accepted Answer

A) True 
 B)False

Question 13

Price discrimination is a rational strategy for a profit-maximising monopolist when:

Accepted Answer

A)   there is no opportunity for arbitrage across market segmentations
B)   there is an opportunity for arbitrage across market segmentations
C)   consumers are unable to be segmented into identifiable markets
D)   they want to increase the deadweight loss that results from profit-maximising behaviourE) A) and B)
F) B) and C)

Question 14

Generic drugs enter the pharmaceutical drug market once:

Accepted Answer

A)   the ingredients to the name brand drug have been discovered
B)   the patent on the name brand drug expires
C)   10 years have passed
D)   they are patentedE) B) and D)
F) B) and C)

Question 15

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Accepted Answer

A profit-maximising monopolist will choo...

Question 16

Perfect price discrimination describes a situation in which the monopolist:

Accepted Answer

A)   knows the exact willingness to pay of each of its customers
B)   cannot charge each customer a different price
C)   collects a part but not all of the consumer surplus in the form of higher profit
D)   all of the above are correctE) C) and D)
F) A) and B)

Question 17

Which of the following statements concerning profit maximisation for a monopoly firm is correct?

Accepted Answer

A)   P > MR = MC
B)   P 
C)   P = MR > MC
D)   P = MR = MCE) All of the above
F) B) and C)

Question 18

The profit-maximising level of output of a monopoly is determined where the marginal-cost curve crosses the:

Accepted Answer

A)   average-revenue curve
B)   demand curve
C)   marginal-revenue curve
D)   average-variable-cost curveE) None of the above
F) C) and D)

Question 19

If a firm's average total cost is everywhere decreasing, then this is likely to lead to a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 20

An unregulated monopoly is likely to have its marginal cost set:

Accepted Answer

A)   above its marginal revenue
B)   equal to its average total cost
C)   below its average fixed cost
D)   below the market price of its goodsE) B) and C)
F) B) and D)

Exam 15: Monopoly

Correct Answer
verified

Price discrimination explains why high-ranking universities often set rules that determine prices of admission based on the students:

Correct Answer
verified

If a firm's average total cost is everywhere decreasing, then this is likely to lead to a natural monopoly.

Correct Answer
verified

When a monopolist reduces the amount of output that it sells, the price of its output:

Correct Answer
verified

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Correct Answer
verified
A profit-maximising monopolist will choo...
View Answer

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct Answer
verified

In many cases additional firms do not try to compete with a natural monopoly because:

Correct Answer
verified

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Correct Answer
verified

Perfect price discrimination describes a situation in which the monopolist:

Correct Answer
verified

Which of the following statements concerning profit maximisation for a monopoly firm is correct?

Correct Answer
verified

In a monopoly, consumers will purchase if their willingness-to-pay is above:

Correct Answer
verified

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Correct Answer
verified

Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q₃, reducing output will always cause profit to:

Correct Answer
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Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-3. A profit-maximising monopoly would have a total cost equal to:

Correct Answer
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Generic drugs enter the pharmaceutical drug market once:

Correct Answer
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Suppose there is one firm in a market. If this firm sells the same good at different prices to different customers, then this practice is called:

Correct Answer
verified

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. What is the deadweight loss equal to when the monopolist engages in perfect price discrimination?

Correct Answer
verified

The profit-maximising level of output of a monopoly is determined where the marginal-cost curve crosses the:

Correct Answer
verified

An unregulated monopoly is likely to have its marginal cost set:

Correct Answer
verified

Price discrimination is a rational strategy for a profit-maximising monopolist when:

Correct Answer
verified

Exam 15: Monopoly

Correct AnswerverifiedShow Answer

Price discrimination explains why high-ranking universities often set rules that determine prices of admission based on the students:

Correct AnswerverifiedShow Answer

If a firm's average total cost is everywhere decreasing, then this is likely to lead to a natural monopoly.

Correct AnswerverifiedShow Answer

When a monopolist reduces the amount of output that it sells, the price of its output:

Correct AnswerverifiedShow Answer

Graphically depict the deadweight loss caused by a monopoly. How is this similar to the deadweight loss from taxation?

Correct AnswerverifiedA profit-maximising monopolist will choo...View AnswerShow Answer

Which of the following can eliminate the inefficiency inherent in monopoly pricing?

Correct AnswerverifiedShow Answer

In many cases additional firms do not try to compete with a natural monopoly because:

Correct AnswerverifiedShow Answer

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Correct AnswerverifiedShow Answer

Perfect price discrimination describes a situation in which the monopolist:

Correct AnswerverifiedShow Answer

Which of the following statements concerning profit maximisation for a monopoly firm is correct?

Correct AnswerverifiedShow Answer

In a monopoly, consumers will purchase if their willingness-to-pay is above:

Correct AnswerverifiedShow Answer

Given that monopoly firms do not have to compete with other firms, the outcome in a monopoly market is best described as:

Correct AnswerverifiedShow Answer

Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q3, reducing output will always cause profit to:

Correct AnswerverifiedShow Answer

Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-3. A profit-maximising monopoly would have a total cost equal to:

Correct AnswerverifiedShow Answer

Generic drugs enter the pharmaceutical drug market once:

Correct AnswerverifiedShow Answer

Suppose there is one firm in a market. If this firm sells the same good at different prices to different customers, then this practice is called:

Correct AnswerverifiedShow Answer

Graph 15-6 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist. Use the graph to answer the following question(s) . -Refer to Graph 15-6. What is the deadweight loss equal to when the monopolist engages in perfect price discrimination?

Correct AnswerverifiedShow Answer

The profit-maximising level of output of a monopoly is determined where the marginal-cost curve crosses the:

Correct AnswerverifiedShow Answer

An unregulated monopoly is likely to have its marginal cost set:

Correct AnswerverifiedShow Answer

Price discrimination is a rational strategy for a profit-maximising monopolist when:

Correct AnswerverifiedShow Answer

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A profit-maximising monopolist will choo...
View Answer

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Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm. Use the graph to answer the following question(s) . -Refer to Graph 15-2. If the monopoly firm is currently producing output at a level of Q₃, reducing output will always cause profit to:

Correct Answer
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