Econ 102 Quiz Week 11 - Monopoly

question

In the short run, a monopoly will stop producing if:

answer

P < AVC.

question

In perfect competition, the firm produces the output such that ________, and in monopoly, the firm produces the output such that ________.

answer

P = MR = MC; P > MR = MC

question

The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a ________ for bus service than other passengers.

answer

more elastic demand

question

When a firm finds that its ATC of production decreases as it increases production, this firm is said to be experiencing:

answer

economies of scale.

question

A monopoly can be temporary because of:

answer

technological change.

question

Suppose the price elasticity of demand for coffee at the CoffeeBarn equals 1.71 for women and 0.55 for men. A successful price discrimination strategy would lead to:

answer

higher prices for men and lower prices for women as long as the CoffeeBarn could prevent women from reselling drinks to men.

question

Which of the following is true?

answer

A monopoly firm is a price-maker.

The profit-maximizing solution occurs where MR = MC.

If demand is downward sloping, P > MR.

question

All of the following are examples of price discrimination except:

answer

generally lower prices at Walmart than at Target.

question

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:

answer

a monopoly.

question

The motivation for a firm with market power to engage in price discrimination is to:

answer

enhance its profitability.

question

A natural monopoly exists whenever a single firm:

answer

has economies of scale over the entire range of production that is relevant to its market.

question

Which of the following statements is correct for a firm that can price-discriminate?

answer

It should adjust prices so that customers with price-elastic demand pay lower prices than those with inelastic demand.

question

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way, then we can predict that its total output will:

answer

rise.

question

Firms in which of the following market structures have the most market power?

answer

monopoly

question

If a monopolist can engage in perfect price discrimination, then:

answer

it produces at the socially efficient level.

question

The demand curve facing a monopolist is:

answer

downward sloping, like the industry demand curve in perfect competition.

downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

question

To practice effective price discrimination, a monopolist must be able to:

answer

prevent the resale of goods among groups of buyers.

question

Public policies toward monopoly in the United States often consist of:

answer

the regulation of natural monopolies.

question

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry. We can assume that monopoly output will be ________ than the competitive output and that ________.

answer

lower; deadweight loss will emerge

question

In order to engage in price discrimination a firm must be:

answer

a price-setter, and it must be able to identify consumers whose elasticities differ. Correct

question

Which of the following is not a barrier to entry?

answer

a ban on certain kinds of advertising

question

Natural monopolies include all of the following except:

answer

a diamond mining company.

question

The demand curve for a monopoly is:

answer

above the marginal revenue curve.

above the MR curve.

the industry demand curve.

also the industry demand curve.

question

Price-discriminating firms will impose a price structure that offers customers with a ________ demand a ________ price and offers customers with a(n) ________ demand a ________ price.

answer

less elastic; higher; more elastic; lower

question

Amtrak charges lower fares to students than to its other passengers. This pricing strategy increases Amtrak's profits. From this information, we can conclude that students must have a ________ for Amtrak train service than other passengers.

answer

more price-elastic demand

question

The ability of a monopolist to raise the price of a product above the competitive level by reducing the output is known as:

answer

market power.

question

An industry with a single producer that sells a single product with no substitutes is a:

answer

monopoly.

question

The demand curve facing a monopolist is always:

answer

the same as the industry's demand curve.

question

If a monopolist is producing a quantity that generates MC < MR, then profit:

answer

can be increased by increasing production.

question

A monopoly is producing at the output level where average total cost equals $30, marginal revenue is $40, and the price is $50. If ATC is at its minimum level and the ATC curve is U-shaped, in order to maximize profits this firm should:

answer

increase output.

question

An increase in the fixed costs of a monopoly firm would ________ price and ________ quantity in the short run.

answer

not change; not change

question

The main reason a monopoly engages in price discrimination is that:

answer

doing so increases its profits.

question

Which of the following statements about the differences between monopoly and perfect competition is incorrect?

answer

Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

question

Network externalities exist when a good's value to the consumer rises as:

answer

the number of people who use the good increases.

question

Which of the following is not an example of price discrimination?

answer

Street vendors increase the price of umbrellas when it is raining.

a special Fourth of July sale

question

The monopoly firm's profit-maximizing price is:

answer

given by the point on the demand curve for the profit-maximizing quantity.

question

Which of the following statements best characterizes a monopoly? A monopoly:

answer

produces a product with no close substitutes.

question

If your local government gave you the exclusive right to sell breakfast bagels in your community, your monopoly would result from:

answer

government-created barriers.

question

If a monopolist is producing a quantity that generates MC = P, then profit:

answer

can be increased by decreasing production.

question

Because tourist demand for airline flights is relatively ________, small ________ in ticket price will result in relatively ________ in additional tourists.

answer

elastic; reductions; large increases

question

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

answer

price discrimination.

question

If a monopoly market structure was transformed into a perfectly competitive one, one would find that price would ________ and output would ________.

answer

fall; increase

question

A local community college charges lower tuition fees to local town residents than to nonresidents. This pricing strategy increases the profits of the community college. Using this information, we can conclude that nonresidents must have a ________ for attending the community college than residents.

answer

less price-elastic demand

question

A downward-sloping demand curve will ensure that:

answer

P > MR.

question

Marginal revenue for a monopolist is:

answer

not equal to price.

less than price.

question

Market structures are categorized by the following two criteria:

answer

the number of firms and whether or not products are differentiated

question

Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each. If she wants to sell six, she can charge only $20,000 each. The quantity effect of selling the sixth motor home is:

answer

$20,000.

question

Suppose GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the ________ to increase from the breakup and ________ to decrease from the breakup.

answer

consumer surplus and total surplus; producer surplus

question

If a monopolist is producing a quantity that generates MC > MR, then profit:

answer

can be increased by increasing price.

question

In an industry characterized by extensive economies of scale:

answer

large companies are more profitable than small companies.

question

One of the major differences between a monopolist and a purely competitive
firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a ________ demand curve.

answer

downward-sloping; perfectly elastic

question

Because business travelers' demand for airline flights is relatively ________, small increases in price will result in relatively ________ in additional business travelers.

answer

price-inelastic; small decreases

question

A natural monopolist that is price regulated at the marginal cost output level will:

answer

eventually incur losses if MC is less than ATC.

question

The profit-maximizing rule MR = MC is:

answer

followed by all types of firms.

question

A monopolist is likely to ________ and ________ than a comparable perfectly competitive firm.

answer

produce less; charge more

question

In monopoly:

answer

a basic condition for efficiency is violated because P > MC.

question

A firm that is a natural monopoly will:

answer

maximize profit by producing where MR = MC.

question

For a monopolist, the market demand curve:

answer

is also the demand for the monopolist's product.

question

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is incorrect?

answer

In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market.

question

Because of monopoly, consumers experience ________ than with perfect competition.

answer

higher prices

question

Situations in which the more users of a product there are, the more useful the product becomes are:

answer

network effects.

question

A Japanese steel firm sells steel in the United States and in Japan. Since the United States buys steel from a number of sources, the U.S. demand for Japanese steel is more price-elastic than the Japanese demand for Japanese steel. If the Japanese steel firm wishes to maximize its profits, it should:

answer

charge a lower price in the United States and a higher price in Japan.

question

Compared to a perfectly competitive market, a monopolist will produce ________ and charge a ________ price.

answer

less; higher

question

The practice of selling the same product at different prices in different markets, without corresponding differences in costs, is:

answer

price discrimination.

question

If a firm wants to charge different customers different prices, it must be:

answer

a price-setter.

question

A firm that has economies of scale:

answer

over the entire range of output demanded is called a natural monopoly.

question

Goods that are subject to network externalities tend to be ones:

answer

for which the value of the good to an individual is higher when more people use it.

question

Suppose that you build a new jumbo jet that can carry five times more passengers than any other competitor. You have high fixed costs due to the quantity of capital used to build the jets. There's decreasing average cost for all levels of demand. In this case, your monopoly would result from which of the following?

answer

economies of scale

question

De Beers became a monopoly by:

answer

establishing control over diamond mines.

question

Bob owns a trout farm with monopoly power in North Carolina. Bob's optimal output occurs where marginal revenue ________. Because of monopoly power, Bob's supply curve ________.

answer

equals marginal cost; does not exist

question

A monopolist responds to a decrease in demand by ________ price and ________ output.

answer

decreasing; decreasing

question

A monopolistically competitive industry is made up of:

answer

many firms producing a differentiated product.

question

Suppose that a monopoly computer chip maker increases production from 10 microchips to 11 microchips. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

answer

$19.

question

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:

answer

patents and copyrights.

question

The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from which of the following?

answer

ownership of scarce inputs

question

The De Beers company is described as a monopolist in the production of:

answer

diamonds.

question

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a ________ demand curve.

answer

downward-sloping; perfectly elastic

question

In a monopoly in the long run:

answer

entry by other firms will not occur.

question

Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each. If she wants to sell six, she can only charge $20,000 each. The price effect of selling the sixth motor home is:

answer

-$5,000.

question

Which of the following is true regarding monopolies?

answer

Monopolies produce too little and charge too much from the standpoint of efficiency.

question

When firms price-discriminate, people with ________ price elasticity of demand will pay ________ prices relative to those purchasing the same product who have a ________ price elasticity of demand.

answer

lower; higher; higher

question

If a monopoly is producing at the profit-maximizing level of output, then we can assume that at that level of output, demand is:

answer

price-elastic.

question

Control of a scarce resource or input, economies of scale, technological superiority, and government-created barriers are forms of:

answer

barriers to entry.

question

A monopolist or an imperfectly competitive firm practices price discrimination primarily to:

answer

increase profits.

question

Compared to a perfectly competitive industry, a monopolist:

answer

charges a higher price. Correct

question

In contrast with perfect competition, a monopolist:

answer

may have economic profits in the long run.

question

Which of the following statements concerning monopoly is true?

answer

A monopoly has no rivals.

question

The large barriers to entry are a reason a monopoly:

answer

earns an economic profit in the long run.

question

Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect:

answer

price to rise, output to fall, consumer surplus to fall, producer surplus to rise, and deadweight loss to rise.

question

You own a lemonade stand in a competitive lemonade market, and as such, you are a price-taking firm. Which of the following events would most likely increase your market power?

answer

You own exclusive rights to harvest lemons from all domestic citrus orchards.

question

Which of the following is a barrier to entry?

answer

control of scarce resources, economies of scale, and government-created barriers (i.e., patents and copyrights)

question

Conditions that prevent the entry of new firms in a monopoly market are:

answer

barriers to entry.

question

Which of the following statements regarding entry barriers is correct?

answer

Entry barriers exist in monopoly and oligopoly markets.

question

In general, economists are critical of monopoly where ________ exist(s).

answer

no natural monopoly

question

A monopolist responds to an increase in marginal cost by ________ price and ________ output.

answer

increasing; decreasing

question

Most electric, gas, and water companies are examples of:

answer

natural monopolies.

question

Suppose that a monopoly firm is required to pay a new annual license fee just for the privilege of doing business in its city and that the fee is somewhat less than the economic profit the firm is now earning. In response to the increase in fees, the firm will:

answer

not change its price.

question

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a ________ for swimming at the pool than residents.

answer

less elastic demand

question

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:

answer

increasing returns to scale.

question

Critics of the National Collegiate Athletic Association (NCAA) argue that the NCAA monopolizes college athletics and prevents student-athletes from earning money while in college. If this is true, what type of entry barrier does the NCAA have?

answer

control of a scarce resource or input

question

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:

answer

lower levels of production.

question

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

answer

government restrictions.

question

Price discrimination leads to a ________ price for consumers with a ________ demand.

answer

higher; less elastic

question

A natural monopoly exists when:

answer

economies of scale provide large cost advantages to having one firm produce the industry's output.

question

If a change in fixed cost raises average total cost above the demand curve:

answer

the monopoly will go out of business.

question

Diamond rings are relatively scarce because:

answer

De Beers limits the quantity of diamonds supplied to the market.

question

A price-discriminating firm will adjust prices so that customers with more ________ demand pay ________ prices than (as) those customers with ________ elastic demand.

answer

elastic; lower; less

question

Because monopoly firms are price-setters:

answer

they can sell more only by lowering price.

question

A monopolist with a linear demand curve will:

answer

not produce in the inelastic portion of its demand curve.

question

If the government allowed only one airline to serve the entire U.S. market, there would be a ________ loss associated with ________ efficiency in the airline industry.

answer

deadweight; reduced

1 of 110

question

In the short run, a monopoly will stop producing if:

answer

P < AVC.

question

In perfect competition, the firm produces the output such that ________, and in monopoly, the firm produces the output such that ________.

answer

P = MR = MC; P > MR = MC

question

answer

more elastic demand

question

When a firm finds that its ATC of production decreases as it increases production, this firm is said to be experiencing:

answer

economies of scale.

question

A monopoly can be temporary because of:

answer

technological change.

question

Suppose the price elasticity of demand for coffee at the CoffeeBarn equals 1.71 for women and 0.55 for men. A successful price discrimination strategy would lead to:

answer

higher prices for men and lower prices for women as long as the CoffeeBarn could prevent women from reselling drinks to men.

question

Which of the following is true?

answer

A monopoly firm is a price-maker.

The profit-maximizing solution occurs where MR = MC.

If demand is downward sloping, P > MR.

question

All of the following are examples of price discrimination except:

answer

generally lower prices at Walmart than at Target.

question

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:

answer

a monopoly.

question

The motivation for a firm with market power to engage in price discrimination is to:

answer

enhance its profitability.

question

A natural monopoly exists whenever a single firm:

answer

has economies of scale over the entire range of production that is relevant to its market.

question

Which of the following statements is correct for a firm that can price-discriminate?

answer

It should adjust prices so that customers with price-elastic demand pay lower prices than those with inelastic demand.

question

answer

rise.

question

Firms in which of the following market structures have the most market power?

answer

monopoly

question

If a monopolist can engage in perfect price discrimination, then:

answer

it produces at the socially efficient level.

question

The demand curve facing a monopolist is:

answer

downward sloping, like the industry demand curve in perfect competition.

downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

question

To practice effective price discrimination, a monopolist must be able to:

answer

prevent the resale of goods among groups of buyers.

question

Public policies toward monopoly in the United States often consist of:

answer

the regulation of natural monopolies.

question

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry. We can assume that monopoly output will be ________ than the competitive output and that ________.

answer

lower; deadweight loss will emerge

question

In order to engage in price discrimination a firm must be:

answer

a price-setter, and it must be able to identify consumers whose elasticities differ. Correct

question

Which of the following is not a barrier to entry?

answer

a ban on certain kinds of advertising

question

Natural monopolies include all of the following except:

answer

a diamond mining company.

question

The demand curve for a monopoly is:

answer

above the marginal revenue curve.

above the MR curve.

the industry demand curve.

also the industry demand curve.

question

Price-discriminating firms will impose a price structure that offers customers with a ________ demand a ________ price and offers customers with a(n) ________ demand a ________ price.

answer

less elastic; higher; more elastic; lower

question

answer

more price-elastic demand

question

The ability of a monopolist to raise the price of a product above the competitive level by reducing the output is known as:

answer

market power.

question

An industry with a single producer that sells a single product with no substitutes is a:

answer

monopoly.

question

The demand curve facing a monopolist is always:

answer

the same as the industry's demand curve.

question

If a monopolist is producing a quantity that generates MC < MR, then profit:

answer

can be increased by increasing production.

question

answer

increase output.

question

An increase in the fixed costs of a monopoly firm would ________ price and ________ quantity in the short run.

answer

not change; not change

question

The main reason a monopoly engages in price discrimination is that:

answer

doing so increases its profits.

question

Which of the following statements about the differences between monopoly and perfect competition is incorrect?

answer

Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

question

Network externalities exist when a good's value to the consumer rises as:

answer

the number of people who use the good increases.

question

Which of the following is not an example of price discrimination?

answer

Street vendors increase the price of umbrellas when it is raining.

a special Fourth of July sale

question

The monopoly firm's profit-maximizing price is:

answer

given by the point on the demand curve for the profit-maximizing quantity.

question

Which of the following statements best characterizes a monopoly? A monopoly:

answer

produces a product with no close substitutes.

question

If your local government gave you the exclusive right to sell breakfast bagels in your community, your monopoly would result from:

answer

government-created barriers.

question

If a monopolist is producing a quantity that generates MC = P, then profit:

answer

can be increased by decreasing production.

question

Because tourist demand for airline flights is relatively ________, small ________ in ticket price will result in relatively ________ in additional tourists.

answer

elastic; reductions; large increases

question

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

answer

price discrimination.

question

If a monopoly market structure was transformed into a perfectly competitive one, one would find that price would ________ and output would ________.

answer

fall; increase

question

answer

less price-elastic demand

question

A downward-sloping demand curve will ensure that:

answer

P > MR.

question

Marginal revenue for a monopolist is:

answer

not equal to price.

less than price.

question

Market structures are categorized by the following two criteria:

answer

the number of firms and whether or not products are differentiated

question

answer

$20,000.

question

answer

consumer surplus and total surplus; producer surplus

question

If a monopolist is producing a quantity that generates MC > MR, then profit:

answer

can be increased by increasing price.

question

In an industry characterized by extensive economies of scale:

answer

large companies are more profitable than small companies.

question

One of the major differences between a monopolist and a purely competitive
firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a ________ demand curve.

answer

downward-sloping; perfectly elastic

question

Because business travelers' demand for airline flights is relatively ________, small increases in price will result in relatively ________ in additional business travelers.

answer

price-inelastic; small decreases

question

A natural monopolist that is price regulated at the marginal cost output level will:

answer

eventually incur losses if MC is less than ATC.

question

The profit-maximizing rule MR = MC is:

answer

followed by all types of firms.

question

A monopolist is likely to ________ and ________ than a comparable perfectly competitive firm.

answer

produce less; charge more

question

In monopoly:

answer

a basic condition for efficiency is violated because P > MC.

question

A firm that is a natural monopoly will:

answer

maximize profit by producing where MR = MC.

question

For a monopolist, the market demand curve:

answer

is also the demand for the monopolist's product.

question

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is incorrect?

answer

In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market.

question

Because of monopoly, consumers experience ________ than with perfect competition.

answer

higher prices

question

Situations in which the more users of a product there are, the more useful the product becomes are:

answer

network effects.

question

answer

charge a lower price in the United States and a higher price in Japan.

question

Compared to a perfectly competitive market, a monopolist will produce ________ and charge a ________ price.

answer

less; higher

question

The practice of selling the same product at different prices in different markets, without corresponding differences in costs, is:

answer

price discrimination.

question

If a firm wants to charge different customers different prices, it must be:

answer

a price-setter.

question

A firm that has economies of scale:

answer

over the entire range of output demanded is called a natural monopoly.

question

Goods that are subject to network externalities tend to be ones:

answer

for which the value of the good to an individual is higher when more people use it.

question

answer

economies of scale

question

De Beers became a monopoly by:

answer

establishing control over diamond mines.

question

Bob owns a trout farm with monopoly power in North Carolina. Bob's optimal output occurs where marginal revenue ________. Because of monopoly power, Bob's supply curve ________.

answer

equals marginal cost; does not exist

question

A monopolist responds to a decrease in demand by ________ price and ________ output.

answer

decreasing; decreasing

question

A monopolistically competitive industry is made up of:

answer

many firms producing a differentiated product.

question

answer

$19.

question

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:

answer

patents and copyrights.

question

The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from which of the following?

answer

ownership of scarce inputs

question

The De Beers company is described as a monopolist in the production of:

answer

diamonds.

question

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a ________ demand curve.

answer

downward-sloping; perfectly elastic

question

In a monopoly in the long run:

answer

entry by other firms will not occur.

question

answer

-$5,000.

question

Which of the following is true regarding monopolies?

answer

Monopolies produce too little and charge too much from the standpoint of efficiency.

question

When firms price-discriminate, people with ________ price elasticity of demand will pay ________ prices relative to those purchasing the same product who have a ________ price elasticity of demand.

answer

lower; higher; higher

question

If a monopoly is producing at the profit-maximizing level of output, then we can assume that at that level of output, demand is:

answer

price-elastic.

question

Control of a scarce resource or input, economies of scale, technological superiority, and government-created barriers are forms of:

answer

barriers to entry.

question

A monopolist or an imperfectly competitive firm practices price discrimination primarily to:

answer

increase profits.

question

Compared to a perfectly competitive industry, a monopolist:

answer

charges a higher price. Correct

question

In contrast with perfect competition, a monopolist:

answer

may have economic profits in the long run.

question

Which of the following statements concerning monopoly is true?

answer

A monopoly has no rivals.

question

The large barriers to entry are a reason a monopoly:

answer

earns an economic profit in the long run.

question

Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect:

answer

price to rise, output to fall, consumer surplus to fall, producer surplus to rise, and deadweight loss to rise.

question

You own a lemonade stand in a competitive lemonade market, and as such, you are a price-taking firm. Which of the following events would most likely increase your market power?

answer

You own exclusive rights to harvest lemons from all domestic citrus orchards.

question

Which of the following is a barrier to entry?

answer

control of scarce resources, economies of scale, and government-created barriers (i.e., patents and copyrights)

question

Conditions that prevent the entry of new firms in a monopoly market are:

answer

barriers to entry.

question

Which of the following statements regarding entry barriers is correct?

answer

Entry barriers exist in monopoly and oligopoly markets.

question

In general, economists are critical of monopoly where ________ exist(s).

answer

no natural monopoly

question

A monopolist responds to an increase in marginal cost by ________ price and ________ output.

answer

increasing; decreasing

question

Most electric, gas, and water companies are examples of:

answer

natural monopolies.

question

answer

not change its price.

question

answer

less elastic demand

question

answer

increasing returns to scale.

question

answer

control of a scarce resource or input

question

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:

answer

lower levels of production.

question

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from:

answer

government restrictions.

question

Price discrimination leads to a ________ price for consumers with a ________ demand.

answer

higher; less elastic

question

A natural monopoly exists when:

answer

economies of scale provide large cost advantages to having one firm produce the industry's output.

question

If a change in fixed cost raises average total cost above the demand curve:

answer

the monopoly will go out of business.

question

Diamond rings are relatively scarce because:

answer

De Beers limits the quantity of diamonds supplied to the market.

question

A price-discriminating firm will adjust prices so that customers with more ________ demand pay ________ prices than (as) those customers with ________ elastic demand.

answer

elastic; lower; less

question

Because monopoly firms are price-setters:

answer

they can sell more only by lowering price.

question

A monopolist with a linear demand curve will:

answer

not produce in the inelastic portion of its demand curve.

question

If the government allowed only one airline to serve the entire U.S. market, there would be a ________ loss associated with ________ efficiency in the airline industry.

answer

deadweight; reduced

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Econ 102 Quiz Week 11 – Monopoly

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