echmich - Assignment Essays

question

xA monopolized market is characterized by:
a. a sole supplier, no close substitutes, and barriers to entry.
b. a sole supplier, a few close substitutes, and free entry.
c. a sole supplier, no close substitutes, and free entry.
d. a sole supplier, many close substitutes, and barriers to entry.

answer

xA monopolized market is characterized by a sole supplier, no close substitutes, and barriers to entry.

question

xGovernments at the local, state, or federal level create monopolies by awarding a single firm the exclusive right to supply a good or service. Examples include food concessions at airports and sports events, cable-access television, and garbage collection.
a. True
b. False

answer

xThe statement is true.

question

x
The source of monopoly power for a firm with economies of scale occurs when:
a. government awards a firm exclusive right to supply a particular product.
b. a single firm can supply market demand at a lower average cost per unit than two or more firms each producing less.
c. an inventor gets the exclusive right to produce a product for 20 years.
d. a firm has exclusive control over a resource critical to production.

answer

x In this case the source of power is economies of scale.

question

x___ exist when the average cost of production by one firm becomes smaller as the rate of output increases.
a. Diseconomies of scale
b. Decreasing returns to scale
c. Diminishing marginal returns
d. Economies of scale

answer

xEconomies of scale exist when the average cost of production by one firm becomes smaller as the rate of output increases.

question

xWhich of the following is correct about natural monopoly?
a. A natural monopoly arises if a particular firm is able to sell each unit of its output at a different price.
b. A natural monopoly is created by government patents, licenses, and legal barriers to entry.
c. Natural monopoly exists when a firm has an upward-sloping long-run average cost curve.
d. A natural monopoly arises when a single firm has a cost advantage over smaller potential entrants.

answer

x A natural monopoly arises when a single firm has a cost advantage over smaller potential entrants.

question

xThe demand curve of a monopolist is:
a. downward sloping.
b. upward rising.
c. perfectly price inelastic.
d. perfectly price elastic.

answer

xThe demand curve of a monopolist is downward sloping.

question

xA monopolist faces a demand curve that is equal to:
a. the market demand curve.
b. the monopolist's own marginal revenue.
c. the demand curve faced by perfectly competitive producers.
d. the monopolist's own marginal cost curve

answer

xA monopolist faces a demand curve that is equal to the market demand curve.

question

xhen price is $100, a monopoly can sell 5 units, and to sell a 6th unit, price must fall to $95. Which of the following is the monopolist's marginal revenue from selling the 6th unit?
a. $10
b. $70
c. -$5
d. $50

answer

xhen price is $100, a monopoly can sell 5 units, and to sell a 6th unit, price must fall to $95. Which of the following is the monopolist's marginal revenue from selling the 6th unit?

b. $70

question

xWhen price is $10 the monopolist can sell 100 units. In order to sell 101 units, the price must fall to $9. Which of the following is the monopolist's marginal revenue from selling the 101st unit?
a. $10
b. $909
c. -$91
d. $99

answer

x When price is $10 the monopolist sells 100 units, and so total revenue is $1,000. When price is $9 the monopolist sells 101 units, and so total revenue is $909. Thus producing the 101st unit generates marginal revenue of -$91.

question

xor a monopolist, when marginal revenue is zero:
a. total revenue is falling.
b. total revenue is at a maximum.
c. total revenue is rising.
d. total revenue is at a minimum.

answer

xTotal revenue reaches a maximum where marginal revenue is zero.

question

xAt the rate of output where a monopolist's marginal revenue equals zero, what is the price elasticity of demand for the monopolist's product or service?
a. Unitary
b. Indefinite
c. Zero
d. Infinity

answer

xThe rate of output where a monopolist's marginal revenue equals zero, the price elasticity of demand for the monopolist's product or service is unitary.

question

xuppose a monopolist's marginal revenue equals marginal cost at an output of 100. If price is $250, and average cost is $50 at this output, compute the monopolist's profit?
a. Profit = $150
b. Profit = $20,000
c. Profit = $250
d. Profit = $15,000

answer

xIncorrect. Profit = (P-AC) x Q = $200 x 100 = $20,000.

question

x
A profit-maximizing monopolist will never produce on the elastic segment of its demand curve.

answer

x
he wil produce on elastic segment

question

xA monopolist's profit-maximizing level of output occurs where:
a. price equals marginal cost.
b. price equals average revenue.
c. marginal revenue equals marginal cost.
d. average total cost is at a minimum.

answer

x. A monopolist's profit-maximizing level of output occurs where marginal revenue equals marginal cost.

question

xThe rate of output that maximizes profit for a monopolist can be found where _____.
a. price equals marginal cost
b. total revenue is maximized
c. average revenue equals marginal cost
d. marginal revenue equals marginal cost

answer

xThe rate of output that maximizes profit for a monopolist can be found where marginal revenue equals marginal cost.

question

xFor a monopolist producing the output where profit is maximized:
a. price equals marginal revenue.
b. price exceeds marginal cost.
c. price equals marginal cost.
d. price is less than marginal cost.

answer

xt the profit maximizing output price exceeds marginal cost.

question

xA monopoly firm will shut down in the short run if:
a. economic profit is zero.
b. total revenue exceeds total variable cost.
c. accounting profit is zero.
d. price falls below the average variable cost.

answer

xIn the short run a monopoly will produce as long as price is not less than average variable cost, or equivalently, that total revenue is not less than total variable cost.

question

xWhich of the following is required for a monopolist to receive positive economic profits in the long run?
a. Exchange of technological know-how with rival firms
b. Allowing rival firms to produce close substitute products
c. Minimal entry barriers
d. High barriers that block new entry

answer

xThe monopolist will be able to maintain positive economic profits in the long run if there are high barriers that block new entry.

question

xWhen a monopolist is producing the profit-maximizing rate of output, price is greater than the marginal cost of producing the last unit of output.
a. True
b. False

answer

xWhen a monopolist is producing the profit-maximizing rate of Incorrect. The given statement is true.

question

xWhen a monopolist is producing the profit-maximizing rate of output, price is greater than the marginal cost of producing the last unit of output.
a. True
b. False

answer

x The output level produced by a profit-maximizing monopolist is less than the level that would maximize social welfare

question

xA monopolist produces _____ than a perfectly competitive firm, and charges a _____ price.
a. less; lower
b. more; lower
c. less; higher
d. more; higher

answer

x A monopolist produces less than a perfectly competitive firm, and charges a higher price.

question

xA monopoly is allocatively efficient compared to perfect competition

answer

x The allocative inefficiency under a monopoly arises from the higher price and reduced output compared to perfect competitio

question

xDeadweight loss is the net loss to society when a monopolist restricts output and increases the price.
a. True
b. False

answer

xDeadweight loss is the net loss to society when a monopolist restricts output and increases the price.

question

xA monopolist might keep the prices below the profit maximizing level:
a. to increase producer surplus.
b. due to economies of scale.
c. to attract new firms to the market.
d. due to government intervention and scrutiny.

answer

xA monopolist might keep the prices below the profit maximizing level due to government intervention and scrutiny.

question

xThe deadweight or social loss of monopoly:
a. reflects a transfer from consumer surplus to monopoly profit.
b. reflects that part of lost consumer surplus which is not transferred to monopoly profit.
c. is representative of production inefficiency.
d. is representative of the low sales resulting from the high price charged by the monopolist.

answer

xThe deadweight or social loss of monopoly reflects that part of lost consumer surplus which is not transferred to monopoly profit

question

xUnder the theory of rent-seeking, a monopoly will spend valuable resources to guarantee its monopoly position.
a. True
b. False

answer

xIf resources are devoted to securing and maintaining a monopoly position, monopolies might impose a greater welfare loss, as under rent seeking.

question

xAn example of rent-seeking behavior would be:
a. lobbying legislators in charge of drafting business legislation.
b. keeping prices below the profit maximizing level.
c. streamlining production processes.
d. engaging in price discrimination.

answer

xThis is not an example of rent-seeking behavior.

question

xIf rent-seeking behavior does occur, then the deadweight loss from monopoly practices is smaller than it otherwise would be.
a. True
b. False

answer

x Deadweight loss would be larger than it would otherwise be.

question

xRent-seeking increases monopoly profit but it also increases the deadweight loss from monopoly practices.
a. True
b. False

answer

x Rent seeking is a social waste because it uses up scarce resources but does not increase output.

question

xTo practice price discrimination a firm must:
a. charge the same price to all its existing customers.
b. sell a product which has close substitutes.
c. face an inelastic demand curve.
d. have different groups of customers with different price elasticity of demand.

answer

x To practice price discrimination a firm must have different groups of customers with different price elasticities of demand

question

xWhich of the following correctly describes price discrimination?
a. Buying goods at a lower cost in one market and selling it at a higher price at another market.
b. Charging higher prices for goods and services that are exported compared to those sold in the domestic market.
c. Selling the same good or service for different prices to different consumers for reasons unrelated to cost.
d. Selling the same good or service for the same price to different consumers.

answer

x. Price discrimination is the practice of charging different prices to different groups of consumers

question

xWhich of the following is an example of price discrimination?
a. Lower prices for DVD players with fewer features than higher-priced players
b. A hair salon charging different prices for haircuts
c. Lower admission prices to movies for senior citizens
d. Higher prices for houses in California than in Nebraska

answer

x Lower admission prices to movies for senior citizens is an example of price discrimination.

question

xSuppose there are two groups of consumers that a monopolist can identify, one with relatively price-inelastic demand (perhaps because they have higher income and thus are not price sensitive) and one with relatively price-elastic demand. Which of the following forms of price discrimination would increase profit relative to charging each group the same price?
a. Charging the group with the higher price elasticity a lower price, and charging the group with the lower price elasticity a higher price.
b. Charging a uniform price to both the groups of consumers.
c. Charging the group with the higher price elasticity a higher price, and charging the group with the lower price elasticity a lower price.
d. Charging the group with the higher price elasticity a price equal to marginal cost, and charging the group with the lower price elasticity a higher price.

answer

x To increase profits a monopolist would charge the group with the higher price elasticity a lower price, and the group with the lower price elasticity a higher price.

question

xUnder price discrimination, a monopolist increases the price for the _____ consumer group so that overall profit will _____.
a. elastic; fall
b. inelastic; fall
c. elastic; rise
d. inelastic; rise

answer

xUnder price discrimination, a monopolist increases the price for the inelastic consumer group so that overall profit will rise.

question

x
A monopolist practicing price discrimination will always charge a higher price to the group of consumers which have less elastic demand.
a. True
b. False

answer

xA monopolist practicing price discrimination will always charge a higher price to the group of consumers which have less elastic demand.

question

xA monopolist who charges a different price for each unit of the commodity sold is called:
a. a natural monopolist.
b. an elastic monopolist.
c. a perfectly competitive monopolist.
d. a perfectly discriminating monopolist

answer

x A monopolist who charges a different price for each unit of the commodity sold is called a perfectly discriminating monopolist.

1 of 36

question

answer

xA monopolized market is characterized by a sole supplier, no close substitutes, and barriers to entry.

question

answer

xThe statement is true.

question

answer

x In this case the source of power is economies of scale.

question

answer

xEconomies of scale exist when the average cost of production by one firm becomes smaller as the rate of output increases.

question

answer

x A natural monopoly arises when a single firm has a cost advantage over smaller potential entrants.

question

xThe demand curve of a monopolist is:
a. downward sloping.
b. upward rising.
c. perfectly price inelastic.
d. perfectly price elastic.

answer

xThe demand curve of a monopolist is downward sloping.

question

answer

xA monopolist faces a demand curve that is equal to the market demand curve.

question

answer

xhen price is $100, a monopoly can sell 5 units, and to sell a 6th unit, price must fall to $95. Which of the following is the monopolist's marginal revenue from selling the 6th unit?

b. $70

question

answer

question

xor a monopolist, when marginal revenue is zero:
a. total revenue is falling.
b. total revenue is at a maximum.
c. total revenue is rising.
d. total revenue is at a minimum.

answer

xTotal revenue reaches a maximum where marginal revenue is zero.

question

xAt the rate of output where a monopolist's marginal revenue equals zero, what is the price elasticity of demand for the monopolist's product or service?
a. Unitary
b. Indefinite
c. Zero
d. Infinity

answer

xThe rate of output where a monopolist's marginal revenue equals zero, the price elasticity of demand for the monopolist's product or service is unitary.

question

answer

xIncorrect. Profit = (P-AC) x Q = $200 x 100 = $20,000.

question

x
A profit-maximizing monopolist will never produce on the elastic segment of its demand curve.

answer

x
he wil produce on elastic segment

question

answer

x. A monopolist's profit-maximizing level of output occurs where marginal revenue equals marginal cost.

question

answer

xThe rate of output that maximizes profit for a monopolist can be found where marginal revenue equals marginal cost.

question

xFor a monopolist producing the output where profit is maximized:
a. price equals marginal revenue.
b. price exceeds marginal cost.
c. price equals marginal cost.
d. price is less than marginal cost.

answer

xt the profit maximizing output price exceeds marginal cost.

question

answer

xIn the short run a monopoly will produce as long as price is not less than average variable cost, or equivalently, that total revenue is not less than total variable cost.

question

answer

xThe monopolist will be able to maintain positive economic profits in the long run if there are high barriers that block new entry.

question

xWhen a monopolist is producing the profit-maximizing rate of output, price is greater than the marginal cost of producing the last unit of output.
a. True
b. False

answer

xWhen a monopolist is producing the profit-maximizing rate of Incorrect. The given statement is true.

question

xWhen a monopolist is producing the profit-maximizing rate of output, price is greater than the marginal cost of producing the last unit of output.
a. True
b. False

answer

x The output level produced by a profit-maximizing monopolist is less than the level that would maximize social welfare

question

xA monopolist produces _____ than a perfectly competitive firm, and charges a _____ price.
a. less; lower
b. more; lower
c. less; higher
d. more; higher

answer

x A monopolist produces less than a perfectly competitive firm, and charges a higher price.

question

xA monopoly is allocatively efficient compared to perfect competition

answer

x The allocative inefficiency under a monopoly arises from the higher price and reduced output compared to perfect competitio

question

xDeadweight loss is the net loss to society when a monopolist restricts output and increases the price.
a. True
b. False

answer

xDeadweight loss is the net loss to society when a monopolist restricts output and increases the price.

question

answer

xA monopolist might keep the prices below the profit maximizing level due to government intervention and scrutiny.

question

answer

xThe deadweight or social loss of monopoly reflects that part of lost consumer surplus which is not transferred to monopoly profit

question

xUnder the theory of rent-seeking, a monopoly will spend valuable resources to guarantee its monopoly position.
a. True
b. False

answer

xIf resources are devoted to securing and maintaining a monopoly position, monopolies might impose a greater welfare loss, as under rent seeking.

question

answer

xThis is not an example of rent-seeking behavior.

question

xIf rent-seeking behavior does occur, then the deadweight loss from monopoly practices is smaller than it otherwise would be.
a. True
b. False

answer

x Deadweight loss would be larger than it would otherwise be.

question

xRent-seeking increases monopoly profit but it also increases the deadweight loss from monopoly practices.
a. True
b. False

answer

x Rent seeking is a social waste because it uses up scarce resources but does not increase output.

question

answer

x To practice price discrimination a firm must have different groups of customers with different price elasticities of demand

question

answer

x. Price discrimination is the practice of charging different prices to different groups of consumers

question

answer

x Lower admission prices to movies for senior citizens is an example of price discrimination.

question

answer

x To increase profits a monopolist would charge the group with the higher price elasticity a lower price, and the group with the lower price elasticity a higher price.

question

xUnder price discrimination, a monopolist increases the price for the _____ consumer group so that overall profit will _____.
a. elastic; fall
b. inelastic; fall
c. elastic; rise
d. inelastic; rise

answer

xUnder price discrimination, a monopolist increases the price for the inelastic consumer group so that overall profit will rise.

question

x
A monopolist practicing price discrimination will always charge a higher price to the group of consumers which have less elastic demand.
a. True
b. False

answer

xA monopolist practicing price discrimination will always charge a higher price to the group of consumers which have less elastic demand.

question

answer

x A monopolist who charges a different price for each unit of the commodity sold is called a perfectly discriminating monopolist.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order