Question 1

What is the difference between price discrimination and other forms of discrimination?
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Accepted Answer

Discrimination based on race or gender a...

Question 2

Some consumer electronic products such as plasma TVs, DVD players and digital cameras are introduced at very high prices, but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies) .Which of the following is the best explanation for this observation?

Accepted Answer

A)  More firms are likely to enter the consumer electronic market over time, forcing market prices down.
B)  Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait.
C)  Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods.
D)  After satisfying the demand for early adopters, firms lower price to attract the more price sensitive consumers.E) A) and D)
F) B) and C)

Question 3

If a monopolist practices perfect price discrimination,

Accepted Answer

A)  the firm will break even in the long run.
B)  consumer surplus will be equal to the deadweight loss.
C)  producer surplus will equal consumer surplus.
D)  consumer surplus will be zero.E) A) and D)
F) B) and D)

Question 4

If we use a narrow definition of monopoly, then a monopoly is defined as a firm

Accepted Answer

A)  that has been granted special production rights by the government.
B)  that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products.
C)  that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.
D)  that has the largest market share in an industry.E) B) and D)
F) All of the above

Question 5

Which of the following is not a way by which price-discriminating firms can segment a market?

Accepted Answer

A)  On the basis of time of purchase, for example long-distance calling
B)  By requiring an advance purchase, for example air tickets
C)  On basis of the buyer's location, for example requiring out-of-state students to pay higher tuition
D)  On the basis of the supplier's marginal cost of production, for example requiring customers to pay a premium for customising optionsE) B) and C)
F) C) and D)

Question 6

Table 9.1 th unit is A) $75 B) $50 C) $20 D) -$5" class="answers-bank-image d-inline" rel="preload" > A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1.
-Refer to Table 9.1.The marginal revenue from the sale of the 12th unit is

Accepted Answer

A)  $75
B)  $50
C)  $20
D)  -$5E) None of the above
F) All of the above

Question 7

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Accepted Answer

A) True 
 B)False

Question 8

Consider the following actions undertaken by a firm:
a.charging the same price for products of different quality
b.charging different prices to different consumers for the same product when the variation cannot be explained by cost differences
c.charging different prices for products of different qualities
d.charging a lower price to match a competitor's price
The actions that will be considered price discrimination are

Accepted Answer

A)  a, b, c, and d
B)  a, b, and d only
C)  b and d only
D)  a and b onlyE) B) and C)
F) None of the above

Question 9

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

A)  after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat.
B)  firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses.
C)  the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls.
D)  after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.E) C) and D)
F) A) and B)

Question 10

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week he will sell six motor homes.The marginal revenue of the sixth motor home is

Accepted Answer

A)  $10 000
B)  $12 000
C)  $20 000
D)  $22 000E) A) and D)
F) A) and C)

Question 11

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

Accepted Answer

A) True 
 B)False

Question 12

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Accepted Answer

A) True 
 B)False

Question 13

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

Accepted Answer

A)  marginal revenue of the sixth performance is $48 000.
B)  marginal revenue of the sixth performance is $38 000.
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five.
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five.E) A) and B)
F) B) and C)

Question 14

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then what is the firm's total profit?

Accepted Answer

A)  $3150.
B)  $2709.
C)  $441.
D)  $7.E) A) and B)
F) A) and C)

Question 15

Figure 9.1 
-Refer to Figure 9.1.Which of the following statements about the firm depicted in the diagram is true?

Accepted Answer

A)  The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises.
B)  The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.
C)  The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises.
D)  The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximises its profits.E) None of the above
F) All of the above

Question 16

Long-run economic profits would most likely exist in which market structure?

Accepted Answer

A)  Monopoly, monopolistic competition and oligopoly
B)  Monopoly and oligopoly
C)  Monopoly and monopolistic competition
D)  Monopoly onlyE) A) and C)
F) All of the above

Question 17

A necessary condition for successful price discrimination is

Accepted Answer

A)  The seller must possess market power.
B)  The buyer must possess market power.
C)  Transactions costs must be zero.
D)  Buyers must have identical inelastic demands.E) C) and D)
F) B) and D)

Question 18

a.What is the defining characteristic of a natural monopoly?
b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive?
c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal, it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain.
d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?
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Accepted Answer

a.The defining characteristic is the pre...

Question 19

A merger between the Ford Motor Company and General Motors would be an example of a

Accepted Answer

A)  vertical merger.
B)  horizontal merger.
C)  conglomerate merger.
D)  trust.E) All of the above
F) C) and D)

Question 20

Figure 9.12  Figure 9.12 shows the cost and demand curves for the ETSA.
-Refer to Figure 9.12.Why won't regulators require that ETSA Power produce the economically efficient output level?

Accepted Answer

A)  Because there is insufficient demand at that output level
B)  Because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit
C)  Because Erickson Power will earn zero profit
D)  Because Erickson Power will sustain persistent losses and will not continue in business in the long runE) None of the above
F) C) and D)

Exam 9: Monopoly Markets

A necessary condition for successful price discrimination is

Correct Answer
verified

Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1. -Refer to Table 9.1.The marginal revenue from the sale of the 12^th unit is

Correct Answer
verified

Figure 9.12 Figure 9.12 shows the cost and demand curves for the ETSA. -Refer to Figure 9.12.Why won't regulators require that ETSA Power produce the economically efficient output level?

Correct Answer
verified

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Correct Answer
verified

Correct Answer
verified

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

Correct Answer
verified

If a monopolist practices perfect price discrimination,

Correct Answer
verified

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Correct Answer
verified

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week he will sell six motor homes.The marginal revenue of the sixth motor home is

Correct Answer
verified

Correct Answer
verified

Figure 9.1 -Refer to Figure 9.1.Which of the following statements about the firm depicted in the diagram is true?

Correct Answer
verified

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

Correct Answer
verified

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Correct Answer
verified

If we use a narrow definition of monopoly, then a monopoly is defined as a firm

Correct Answer
verified

Long-run economic profits would most likely exist in which market structure?

Correct Answer
verified

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then what is the firm's total profit?

Correct Answer
verified

Which of the following is not a way by which price-discriminating firms can segment a market?

Correct Answer
verified

What is the difference between price discrimination and other forms of discrimination? __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
verified
Discrimination based on race or gender a...
View Answer

Correct Answer
verified
a.The defining characteristic is the pre...
View Answer

A merger between the Ford Motor Company and General Motors would be an example of a

Correct Answer
verified

Exam 9: Monopoly Markets

A necessary condition for successful price discrimination is

Correct AnswerverifiedShow Answer

Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1. -Refer to Table 9.1.The marginal revenue from the sale of the 12th unit is

Correct AnswerverifiedShow Answer

Figure 9.12 Figure 9.12 shows the cost and demand curves for the ETSA. -Refer to Figure 9.12.Why won't regulators require that ETSA Power produce the economically efficient output level?

Correct AnswerverifiedShow Answer

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost, the efficient level of output.

Correct AnswerverifiedShow Answer

If a monopolist practices perfect price discrimination,

Correct AnswerverifiedShow Answer

A firm that engages in price discrimination must be able to identify the preferences of every customer it serves.

Correct AnswerverifiedShow Answer

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week he will sell six motor homes.The marginal revenue of the sixth motor home is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 9.1 -Refer to Figure 9.1.Which of the following statements about the firm depicted in the diagram is true?

Correct AnswerverifiedShow Answer

If a theatre company expects $250 000 in ticket revenue from five performances and $288 000 in ticket revenue if it adds a sixth performance, the

Correct AnswerverifiedShow Answer

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Correct AnswerverifiedShow Answer

If we use a narrow definition of monopoly, then a monopoly is defined as a firm

Correct AnswerverifiedShow Answer

Long-run economic profits would most likely exist in which market structure?

Correct AnswerverifiedShow Answer

If a monopolist's price is $50 at 63 units of output, and marginal revenue equals marginal cost, and average total cost equals $43, then what is the firm's total profit?

Correct AnswerverifiedShow Answer

Which of the following is not a way by which price-discriminating firms can segment a market?

Correct AnswerverifiedShow Answer

What is the difference between price discrimination and other forms of discrimination? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedDiscrimination based on race or gender a...View AnswerShow Answer

Correct Answerverifieda.The defining characteristic is the pre...View AnswerShow Answer

A merger between the Ford Motor Company and General Motors would be an example of a

Correct AnswerverifiedShow Answer

Correct Answer
verified

Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1. -Refer to Table 9.1.The marginal revenue from the sale of the 12^th unit is

Correct Answer
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Discrimination based on race or gender a...
View Answer

Correct Answer
verified
a.The defining characteristic is the pre...
View Answer

Correct Answer
verified