question
Which of the following firms is most likely to be a pure monopolist?
a. The most popular hot dog vendor on a city street corner
b. A clothing retailer with the best location in a mall
c. The only gas station in a small, isolated town
d. A grocery store in a large city
a. The most popular hot dog vendor on a city street corner
b. A clothing retailer with the best location in a mall
c. The only gas station in a small, isolated town
d. A grocery store in a large city
answer
C
question
Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must:
answer
lower its price
question
Suppose the accompanying table describes the demand for a good produced by monopolist.
Price 10 Quantity 1
Price 9 Quantity 2
Price 8 Quantity 3
Price 7 Quantity 4
Price 6 Quantity 5
Price 5 Quantity 6
Price 4 Quantity 7
The monopolist's total revenue from selling 3 units is ______, and the monopolist's marginal revenue from selling the 3rd unit is ______.
Price 10 Quantity 1
Price 9 Quantity 2
Price 8 Quantity 3
Price 7 Quantity 4
Price 6 Quantity 5
Price 5 Quantity 6
Price 4 Quantity 7
The monopolist's total revenue from selling 3 units is ______, and the monopolist's marginal revenue from selling the 3rd unit is ______.
answer
$24; 6
question
Which of the following is NOT an example of a good with network economies?
a. A computer printer
b. Internet service
c. Facebook
d. A cell phone
a. A computer printer
b. Internet service
c. Facebook
d. A cell phone
answer
A
question
Price discrimination means charging:
answer
different prices to different buyers for essentially the same good or service.
question
Under cost-plus regulation, a regulated firm is permitted to charge prices that cover the explicit cost of production plus a markup to cover the:
answer
opportunity cost of the resources supplied by the firm's owners.
question
For perfectly competitive firms, marginal revenue ______ price; for monopolists marginal revenue ______ price.
answer
equals; is less than
question
If a firm faces a downward-sloping demand curve, then:
answer
the firm's marginal revenue from selling an additional unit of output is less than price.
question
Suppose the accompanying table describes the demand for a good produced by monopolist.
Price 10 Quantity 1
Price 9 Quantity 2
Price 8 Quantity 3
Price 7 Quantity 4
Price 6 Quantity 5
Price 5 Quantity 6
Price 4 Quantity 7
The monopolist's marginal revenue from selling the 4th unit of output is less than $7 because:
Price 10 Quantity 1
Price 9 Quantity 2
Price 8 Quantity 3
Price 7 Quantity 4
Price 6 Quantity 5
Price 5 Quantity 6
Price 4 Quantity 7
The monopolist's marginal revenue from selling the 4th unit of output is less than $7 because:
answer
it has to charge $1 less for each of the first 3 units of output.
question
The reason economists consider monopoly to be socially undesirable is that monopolists:
answer
produce less than the socially optimal level of output.
question
A single-priced, profit-maximizing monopolist:
answer
Always charges a price above the marginal cost of production.
question
A price setter is a firm that:
answer
has some degree of control over its price.
question
Suppose the accompanying table describes the relationship between price and quantity demanded for a monopolist.
Quantity 1 Price 10
Quantity 2 Price 9
Quantity 3 Price 8
Quantity 4 Price 7
Quantity 5 Price 6
Quantity 6 Price 5
Quantity 7 Price 4
Quantity 8 Price 3
If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ______.
Quantity 1 Price 10
Quantity 2 Price 9
Quantity 3 Price 8
Quantity 4 Price 7
Quantity 5 Price 6
Quantity 6 Price 5
Quantity 7 Price 4
Quantity 8 Price 3
If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ______.
answer
6 units
question
Both a perfectly competitive firm and a monopolist find that:
answer
it is best to expand production until the benefit and the cost of the last unit produced are equal.
question
`Why do price discrimination and the existence of slightly different variants of the same product tend to go hand in hand?
By introducing slightly different variants of the product, firms that price discriminate are able to
By introducing slightly different variants of the product, firms that price discriminate are able to
answer
separate buyers based on their willingness to pay
question
If a firm collects $80 in revenue when it sells 4 units, $100 in revenue when it sells 5 units, and $120 in revenue when it sells 6 units, then one can infer the firm is a(n):
answer
perfect competitor.
question
If a firm functions in an oligopoly, it is:
answer
one of a small number of firms that produce goods that are either close or perfect substitutes.
question
If a monopolist's marginal revenue exceeds its marginal cost at its current level of output, then to maximize its profit the monopolist should:
answer
increase output until marginal revenue equals marginal cost.
question
Patents, which confer market power, are intended to:
answer
encourage innovation by helping firms recoup the costs of research and development.
question
Because monopolists charge a price in excess of marginal cost, it must be the case that monopolists:
answer
produce less than the socially optimal level of output.
question
For all firms, the additional revenue collected from the sale of one additional unit of output is termed:
answer
marginal revenue.
question
The essential feature that differentiates imperfectly competitive firms from perfectly competitive firms is that an imperfectly competitive firm:
answer
faces a downward-sloping demand curve.
question
A pure monopoly exists when:
answer
a single firm produces a good with no close substitutes.
question
The primary objective of an imperfectly competitive firm is to:
answer
maximize profit.
question
A perfectly price discriminating monopolist charges each buyer:
answer
exactly his or her reservation price.
question
The profit maximizing rule P = MC applies to:
answer
perfectly competitive firms only.
question
If the demand curve facing a monopolist shifts, then the monopolist's:
answer
marginal revenue curve and profit-maximizing level of output will change.
question
A monopolistically competitive firm is one:
answer
of many firms that sell products that are close but not perfect substitutes.
question
o Monopoly:
o Oligopoly:
o Monopolistic Competition:
o Oligopoly:
o Monopolistic Competition:
answer
- One seller
- Small number of large firms
- Many firms where goods are differentiated
- Small number of large firms
- Many firms where goods are differentiated
question
Ability for the firm to raise its price without reduction in all of its sales unlike under perfectly competitive markets
answer
Market Power
question
5 sources of market power
answer
- Exclusive control over inputs
- Patents and copyrights
- Government franchises
- Natural Monopolies
- Network Economies
- Patents and copyrights
- Government franchises
- Natural Monopolies
- Network Economies
question
In profit maximization, marginal revenue ____ marginal cost
answer
=
question
Marginal revenue is always (higher/lower) than the demand price for the monopolist
answer
lower
question
Loss of socially efficiency due to the monopolist charging a high price but producing at a lower quantity than is socially optimum
answer
Deadweight Loss
question
Charging buyers different prices for essentially the same good or service
answer
Price Discrimination
question
Price discrimination against groups
answer
hurdle method
question
negotiate separate prices and deals with each customer
answer
Perfect Discrimination
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