question
second-degree price discrimination.
answer
Suppose a water utility compnay charges a residential customer $1.50 per 1,000 gallons for the first 30,000 gallons of water used, and $1.00 per 1,000 gallons for any amounts used in excess of 30,000 gallons of water. The water utility is practicing:
-second-degree price discrimination.
-first-degree price discrimination.
-third-degree price discrimination.
-perfect price discrimination.
-second-degree price discrimination.
-first-degree price discrimination.
-third-degree price discrimination.
-perfect price discrimination.
question
A.
answer
A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be:
-A.
-B.
-C.
-D.
-A.
-B.
-C.
-D.
question
The product must be a durable good.
answer
Which of the following is NOT a condition necessary for price discrimination?
-The product cannot be resold to another customer.
-The product must be a durable good.
-The seller must have some market power.
-The price elasticities of demand are different for each group of consumers.
-The product cannot be resold to another customer.
-The product must be a durable good.
-The seller must have some market power.
-The price elasticities of demand are different for each group of consumers.
question
higher elasticities of demand than customers attending the evening showings.
answer
At movie theaters, lower prices are charged for matinees than for evening showings of the same film. The customers attending the matinees have:
-lower elasticities of demand than customers attending the evening showings.
-higher elasticities of demand than customers attending the evening showings.
-perfectly inelastic demand curves.
-highly inelastic demand curves.
-lower elasticities of demand than customers attending the evening showings.
-higher elasticities of demand than customers attending the evening showings.
-perfectly inelastic demand curves.
-highly inelastic demand curves.
question
profit will increase.
answer
Assume that at a given level of output a monopoly firm has marginal revenue of $9, its ATC is $9, and marginal cost is $7. If this firm were to incrementally increase its output, then:
-profit will increase.
-price will increase.
-profit will decrease.
-price will equal marginal revenue.
-profit will increase.
-price will increase.
-profit will decrease.
-price will equal marginal revenue.
question
2,050.
answer
If an industry is made up of five firms with market shares of 25%, 20%, 20%, 20%, and 15%, respectively, its Herfindahl-Hirschman Index is:
-2,500.
-2,050.
-100.
-7,950.
-2,500.
-2,050.
-100.
-7,950.
question
12
answer
Using the graph, what is the equilibrium output for this monopolist?
-5
-12
-16
-20
-5
-12
-16
-20
question
the industry demand curve.
answer
The demand curve for a monopolist is:
-the industry demand curve.
-a perfectly inelastic demand curve.
-the same as the demand curve for a perfectly competitive firm.
-always a unit-elastic demand curve.
-the industry demand curve.
-a perfectly inelastic demand curve.
-the same as the demand curve for a perfectly competitive firm.
-always a unit-elastic demand curve.
question
MR = MC.
answer
An unregulated natural monopolist would produce to the point at which:
-MR = MC.
-P = MR.
-P = AC.
-MR = AC.
-MR = MC.
-P = MR.
-P = AC.
-MR = AC.
question
an executive, at corporate expense, hiring a limousine to travel one block. whenever it is raining.
answer
An example of x-inefficiency is:
-an executive cutting wages of workers in an economic downtown.
-an executive paying a manager a bonus for increasing profits 20%.
-money spent on advertising.
-an executive, at corporate expense, hiring a limousine to travel one block. whenever it is raining.
-an executive cutting wages of workers in an economic downtown.
-an executive paying a manager a bonus for increasing profits 20%.
-money spent on advertising.
-an executive, at corporate expense, hiring a limousine to travel one block. whenever it is raining.
question
Yes. The industry is concentrated.
answer
Assume that Coca-Cola has a market share of 40% and Pepsi has a market share of 30%. If Pepsi and Coca-Cola attempt to merge, will the Federal Trade Commission challenge the attempt in court?
-No. The industry is not concentrated.
-The decision is unknown until they closely evaluate the effects.
-Yes. The industry is concentrated.
-The Federal Trade Commission has no legal authority over mergers.
-No. The industry is not concentrated.
-The decision is unknown until they closely evaluate the effects.
-Yes. The industry is concentrated.
-The Federal Trade Commission has no legal authority over mergers.
question
unfair competitive practices and deceptive acts.
answer
The Federal Trade Commission Act, as amended, prohibits:
-price-fixing agreements.
-unfair competitive practices and deceptive acts.
-price discrimination based on elasticity of demand.
-vertical and horizontal mergers.
-price-fixing agreements.
-unfair competitive practices and deceptive acts.
-price discrimination based on elasticity of demand.
-vertical and horizontal mergers.
question
average cost pricing rule.
answer
If the public utility commission allows the water company to earn a normal profit, then it is enforcing a(n):
-marginal cost pricing rule.
-market pricing rule.
-average cost pricing rule.
-customer service rule.
-marginal cost pricing rule.
-market pricing rule.
-average cost pricing rule.
-customer service rule.
question
second-degree price discrimination.
answer
When a business offers its customers bulk discounts, they are practicing:
-first-degree price discrimination.
-second-degree price discrimination.
-third-degree price discrimination.
-perfect price discrimination.
-first-degree price discrimination.
-second-degree price discrimination.
-third-degree price discrimination.
-perfect price discrimination.
question
is the same as welfare loss.
answer
A deadweight loss:
-results from a monopoly failing to protect its patent or government franchise.
-occurs when the monopoly charges a price that is below the market price.
-occurs when the monopoly charges a price that is below the marginal revenue.
-is the same as welfare loss.
-results from a monopoly failing to protect its patent or government franchise.
-occurs when the monopoly charges a price that is below the market price.
-occurs when the monopoly charges a price that is below the marginal revenue.
-is the same as welfare loss.
question
Economies of scale
answer
_____ in an industry can be so large that demand will support only one firm.
-Economies of scope
-Diseconomies of scale
-Economies of scale
-None of these can result in this outcome.
-Economies of scope
-Diseconomies of scale
-Economies of scale
-None of these can result in this outcome.
question
Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic, and inelastic portions.
answer
Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?
-Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions.
-We can define a demand curve under perfect competition but not under monopoly.
-The demand curves for a monopoly and perfect competition are always inelastic.
-Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic, and inelastic portions.
-Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions.
-We can define a demand curve under perfect competition but not under monopoly.
-The demand curves for a monopoly and perfect competition are always inelastic.
-Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic, and inelastic portions.
question
relatively low marginal tax rates.
answer
All of the following are barriers to entry in an industry, EXCEPT:
-relatively low marginal tax rates.
-a patent.
-governmental restrictions.
-economies of scale.
-relatively low marginal tax rates.
-a patent.
-governmental restrictions.
-economies of scale.
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