Econ 1B - Principles of Microeconomics » Spring 2023 » Chapter 13 Problem Set

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Question #1
Price discrimination leads to a _____ price for consumers with a _____ demand.
A.   higher; perfectly elastic
B.   higher; more elastic
C.   lower; less elastic
D.   lower; more elastic
Question #2
Diamond rings are relatively scarce because:
A.   diamond producers limit the quantity supplied to the market.
B.   of monopolistic competition.
C.   the demand for diamonds is so high.
D.   according to geologists, diamonds are less common than any other gem-quality stone.
Question #3
The demand curve for a monopoly is:
A.   also the industry demand curve.
B.   the MR curve above the horizontal axis.
C.   identical to the MR curve.
D.   the MC curve above the AVC curve.
Question #4
The large barriers to entry are a reason a monopoly:
A.   produces at the minimum average total cost in the long run.
B.   produces with no fixed costs in the long run.
C.   earns an economic profit in the long run.
D.   maximizes its profits by producing where P = MC.
Question #5
The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:
A.   average total cost is greater than $10.
B.   average total cost equals $10.
C.   marginal revenue equals $10.
D.   marginal cost equals marginal revenue.
Question #6
The demand curve for a monopoly is:
A.   the MR curve above the horizontal axis.
B.   the entire MR curve.
C.   above the MR curve.
D.   the MR curve above the AVC curve.
Question #7
Price discrimination can occur if:
A.   producers are price takers.
B.   the market structure is a monopolistic competition.
C.   there are many firms in the industry, all producing the same identical good.
D.   all consumers have the same willingness to pay for the good.
Question #8
A monopolist sells cable subscriptions in a small town and finds that it can sell 100 subscriptions when the price is $15 a week and an additional 75 subscriptions when the price is $10 a week. The MC for the provision of the cable is $5 a week. There are no fixed costs. If the company is allowed to offer different prices for its good, what is the maximum amount of profit this company can earn?
A.   $1,000
B.   $1,375
C.   $1,520
D.   $750
Question #9
Suppose a monopoly can separate its customers into two groups. If the monopoly practices price discrimination, it will charge the lower price to the group with:
A.   The answer cannot be determined with the information given.
B.   the lower price elasticity of demand.
C.   the fewer close substitutes.
D.   the higher price elasticity of demand.
Question #10
You own a lemonade stand in a competitive market, and as such, you are a price-taking firm. Which of the following events would most likely increase your market power?
A.   A booming economy increases the demand for lemonade and attracts entry into the market.
B.   The government abolishes the system of patents and copyrights.
C.   You own exclusive rights to harvest lemons from all domestic citrus orchards.
D.   The average total cost curve for firms in the industry is horizontal.

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