Econ 101 - Microeconomics » Winter 2022 » iVAT Chapter 14

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Question #1
Marginal revenue for a monopolist is:
A.   Equal to price.
B.     
C.   Increasing.
D.   Constant.
E.   Below price.
F.   Greater than price.
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 a monopolist is a price taker.
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 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.   Increase production.
B.   Shut down.
C.   Decrease production.
D.   Maintain the same level of production.
E.   None of the available answers.
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 lower price.
D.   Exactly the same manner as a perfect competitor.
E.   Lower output at a higher price.
Question #5
A pure monopoly without competitors:
A.   Faces a perfectly inelastic demand curve for its product.
B.   Faces a perfectly elastic demand curve for its product.
C.   Can influence the price of its product by controlling output.
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 monopolization is inherently unfair.
B.   Due to the fact that deadweight loss is inherent when a market is competitive.
C.   Due to the fact that higher output will be produced and lower prices will be charged relative to a competitive market.
D.   Due to the fact that lower output will be produced and higher prices will be charged relative to a competitive market.
Question #7
A price-discriminating monopolist:
A.   Produces where P=MR=AVC.
B.   Charges the same price to everyone.
C.   Has the same level of output as a normal monopolist.
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.   Producer sovereignty.
B.   Consumer sovereignty.
C.   Price gouging.
D.   Price discrimination.
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.   True
B.   False
Question #12
A natural monopoly occurs when:
A.   There are exceptionally low indivisible setup costs in that industry.
B.   Naturally occurring competitive strengths of the firm lower costs.
C.   One firm can produce a given quantity at a lower price than having multiple firms producing the same given quantity.
D.   Multiple firms can compete and lower costs.
E.   None of the available answers.
Question #13
Which of the following markets could be considered monopolistically competitive?
A.   Electric utility market.
B.   Corn Market.
C.   Soy bean market.
D.   Fast-food industry.
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; earn zero economic profit in the long run.
B.   Monopoly; earn zero economic profit in the long run.
C.   Monopoly; charge a price that is greater than marginal cost.
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.   These profits will be eliminated in the long run as new firms enter the industry.
B.   Its output will increase in the long run.
C.   Price will be driven down to minimum average total cost in the long run.
D.   These profits will persist in the long run because of the firm's limited monopoly power.

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