Econ 101 - Microeconomics » Winter 2022 » iVAT Chapter 14

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Question #1
Marginal revenue for a monopolist is:
A.     
B.   Equal to price.
C.   Greater than price.
D.   Increasing.
E.   Below price.
F.   Constant.
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 purchase additional unit, a monopolist must increase the price for all of the previous units.
D.   Due to the fact that in order to sell an 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.   Maintain the same level of production.
B.   Increase production.
C.   Shut down.
D.   Decrease production.
E.   None of the available answers.
Question #4
When compared to a perfectly competitive industry, a monopolist produces:
A.   Exactly the same manner as a perfect competitor.
B.   Slightly lower output and a much lower price.
C.   Lower output at a lower price.
D.   Lower output at a higher price.
E.   Larger output at a higher price.
Question #5
A pure monopoly without competitors:
A.   Will always earn economic profits.
B.   Faces a perfectly elastic demand curve for its product.
C.   Can influence the price of its product by controlling output.
D.   Faces a perfectly inelastic demand curve for its product.
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 higher output will be produced and lower prices will be charged relative to a competitive market.
B.   Due to the fact that deadweight loss is inherent when a market is competitive.
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 monopolization is inherently unfair.
Question #7
A price-discriminating monopolist:
A.   Charges the same price to everyone.
B.   Produces where P=MR=AVC.
C.   Charges a different price to different customers.
D.   Produces where price equals total cost.
E.   Has the same level of output as a normal monopolist.
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.   Price gouging.
C.   Price discrimination.
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.   True
B.   False
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.   There are exceptionally low indivisible setup costs in that industry.
B.   Naturally occurring competitive strengths of the firm lower costs.
C.   Multiple firms can compete and lower costs.
D.   One firm can produce a given quantity at a lower price than having multiple firms producing the same given quantity.
E.   None of the available answers.
Question #13
Which of the following markets could be considered monopolistically competitive?
A.   Fast-food industry.
B.   Soy bean market.
C.   Corn Market.
D.   Electric utility 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; earn zero economic profit in the long run.
B.   Perfect competition; charge a price that is greater than.
C.   Monopoly; charge a price that is greater than marginal cost.
D.   Monopoly; earn zero economic profit in the long run.
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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