Econ 101 - Microeconomics » Winter 2022 » iVAT Chapter 14

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Question #1
Marginal revenue for a monopolist is:
A.   Greater than price.
B.   Below price.
C.   Equal to price.
D.     
E.   Constant.
F.   Increasing.
Question #2
Marginal revenue for a monopolist is below price:
A.   Due to the fact that a monopolist is a price taker.
B.   Due to the fact that in order to sell an 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 reduce the price for all of the previous units.
D.   Due to the fact that in order to purchase additional unit, a monopolist must increase the price for all of the previous units.
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.   None of the available answers.
B.   Increase production.
C.   Decrease production.
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.   Larger output at a higher price.
C.   Lower output at a higher price.
D.   Exactly the same manner as a perfect competitor.
E.   Lower output at a lower price.
Question #5
A pure monopoly without competitors:
A.   Faces a perfectly inelastic demand curve for its product.
B.   Cannot influence the price of its product.
C.   Faces a perfectly elastic demand curve for its product.
D.   Will always earn economic profits.
E.   Can influence the price of its product by controlling output.
Question #6
Welfare loss (deadweight loss) occurs when a market is monopolized:
A.   Due to the fact that higher output will be produced and lower 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 lower output will be produced and higher prices will be charged relative to a competitive market.
D.   Due to the fact that deadweight loss is inherent when a market is competitive.
Question #7
A price-discriminating monopolist:
A.   Charges a different price to different customers.
B.   Produces where price equals total cost.
C.   Produces where P=MR=AVC.
D.   Has the same level of output as a normal monopolist.
E.   Charges the same price to everyone.
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.   Consumer sovereignty.
B.   Price discrimination.
C.   Producer sovereignty.
D.   Price gouging.
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.   True
B.   False
Question #11
The level of output from a perfect price discriminating monopolist is less than under perfectly competitive conditions.
A.   True
B.   False
Question #12
A natural monopoly occurs when:
A.   Naturally occurring competitive strengths of the firm lower costs.
B.   There are exceptionally low indivisible setup costs in that industry.
C.   None of the available answers.
D.   One firm can produce a given quantity at a lower price than having multiple firms producing the same given quantity.
E.   Multiple firms can compete and lower costs.
Question #13
Which of the following markets could be considered monopolistically competitive?
A.   Fast-food industry.
B.   Electric utility market.
C.   Soy bean market.
D.   Corn 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.   Monopoly; charge a price that is greater than marginal cost.
B.   Monopoly; earn zero economic profit in the long run.
C.   Perfect competition; earn zero economic profit in the long run.
D.   Perfect competition; charge a price that is greater than.
E.   Monopoly; go out of business.
Question #15
If a monopolistically competitive firm is earning economic profits in the short run:
A.   Price will be driven down to minimum average total cost in the long run.
B.   Its output will increase in the long run.
C.   These profits will persist in the long run because of the firm's limited monopoly power.
D.   These profits will be eliminated in the long run as new firms enter the industry.

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