Econ 101 - Microeconomics » Winter 2022 » iVAT Chapter 14

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Question #1
Marginal revenue for a monopolist is:
A.   Below price.
B.   Equal to price.
C.     
D.   Constant.
E.   Greater than price.
F.   Increasing.
Question #2
Marginal revenue for a monopolist is below price:
A.   Due to the fact that in order to sell an additional unit, a monopolist must reduce the price for all of the previous units.
B.   Due to the fact that in order to purchase additional unit, a monopolist must increase the price for all of the previous units.
C.   Due to the fact that in order to sell an additional unit, a monopolist must increase the price for all of the previous units.
D.   Due to the fact that a monopolist is a price taker.
Question #3
If the marginal revenue of the monopolist's sixth unit of production is $4 and its marginal cost is $9, the firm should
A.   Increase production.
B.   Decrease production.
C.   None of the available answers.
D.   Maintain the same level of production.
E.   Shut down.
Question #4
When compared to a perfectly competitive industry, a monopolist produces:
A.   Slightly lower output and a much lower price.
B.   Exactly the same manner as a perfect competitor.
C.   Lower output at a lower price.
D.   Larger output at a higher price.
E.   Lower output at a higher price.
Question #5
A pure monopoly without competitors:
A.   Can influence the price of its product by controlling output.
B.   Faces a perfectly elastic demand curve for its product.
C.   Faces a perfectly inelastic demand curve for its product.
D.   Will always earn economic profits.
E.   Cannot influence the price of its product.
Question #6
Welfare loss (deadweight loss) occurs when a market is monopolized:
A.   Due to the fact that lower output will be produced and higher prices will be charged relative to a competitive market.
B.   Due to the fact that monopolization is inherently unfair.
C.   Due to the fact that deadweight loss is inherent when a market is competitive.
D.   Due to the fact that higher output will be produced and lower prices will be charged relative to a competitive market.
Question #7
A price-discriminating monopolist:
A.   Charges the same price to everyone.
B.   Has the same level of output as a normal monopolist.
C.   Produces where P=MR=AVC.
D.   Produces where price equals total cost.
E.   Charges a different price to different customers.
Question #8
iTunes charges British customers 20 percent more than customers in France and Germany. Apple defended the price differential, saying that the “underlying economic model in each country has an impact on how we price our track downloads.” An economist would say that Apple is engaged in:
A.   Price discrimination.
B.   Price gouging.
C.   Producer sovereignty.
D.   Consumer sovereignty.
Question #9
Welfare losses under perfect price discrimination are greater than instances where a market is monopolized without price discrimination.
A.   True
B.   False
Question #10
A price discriminating monopolist is able to extract all of the consumer surplus in a market.
A.   False
B.   True
Question #11
The level of output from a perfect price discriminating monopolist is less than under perfectly competitive conditions.
A.   False
B.   True
Question #12
A natural monopoly occurs when:
A.   Multiple firms can compete and lower costs.
B.   There are exceptionally low indivisible setup costs in that industry.
C.   One firm can produce a given quantity at a lower price than having multiple firms producing the same given quantity.
D.   None of the available answers.
E.   Naturally occurring competitive strengths of the firm lower costs.
Question #13
Which of the following markets could be considered monopolistically competitive?
A.   Fast-food industry.
B.   Corn Market.
C.   Electric utility market.
D.   Soy bean market.
Question #14
Because monopolistic competition is similar to ________ in that products are differentiated and competition occurs on dimensions other than price, firms in monopolistic competition will tend to ____
A.   Perfect competition; charge a price that is greater than.
B.   Perfect competition; earn zero economic profit in the long run.
C.   Monopoly; go out of business.
D.   Monopoly; charge a price that is greater than marginal cost.
E.   Monopoly; earn zero economic profit in the long run.
Question #15
If a monopolistically competitive firm is earning economic profits in the short run:
A.   These profits will persist in the long run because of the firm's limited monopoly power.
B.   These profits will be eliminated in the long run as new firms enter the industry.
C.   Price will be driven down to minimum average total cost in the long run.
D.   Its output will increase in the long run.

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