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-Refer to Figure 9-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit/loss per unit? A) loss of $7 per unit B) profit of $30 per unit C) loss of $21 per unit D) profit of $14 per unit -Refer to Figure 9-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit/loss per unit?


A) loss of $7 per unit
B) profit of $30 per unit
C) loss of $21 per unit
D) profit of $14 per unit

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A public franchise


A) is a corporation that is owned by stockholders.
B) results from ownership of a key raw material.
C) is a government designation that a private firm is the only legal producer of a good or service.
D) is an unregulated monopoly necessary for the public good.

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Firms do not have market power in which of the following market structures?


A) perfect competition only
B) perfect competition and monopolistic competition
C) oligopoly
D) monopoly

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-Refer to Figure 9-15. What is the price charged under perfect price discrimination? A) P<sub>3</sub> B) P<sub>4</sub> C) a range of prices corresponding to the demand curve from P<sub>3</sub> and above D) a range of prices corresponding to the demand curve from P<sub>4</sub> and above -Refer to Figure 9-15. What is the price charged under perfect price discrimination?


A) P3
B) P4
C) a range of prices corresponding to the demand curve from P3 and above
D) a range of prices corresponding to the demand curve from P4 and above

Correct Answer

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-Refer to Figure 9-2. If the firm's average total cost curve is ATC<sub>1</sub>, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition. -Refer to Figure 9-2. If the firm's average total cost curve is ATC1, the firm will


A) suffer a loss.
B) break even.
C) make a profit.
D) face competition.

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When the government wants to give an exclusive right to one firm to produce a product, it


A) imposes a tariff on imports of the product.
B) imposes a quota on imports of the product.
C) grants a patent or copyright to an individual or firm.
D) uses antitrust laws to keep other firms from entering the market.

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-Refer to Figure 9-4. What is the price charged for the profit-maximising output level? A) $13 B) $21 C) $27 D) $34 -Refer to Figure 9-4. What is the price charged for the profit-maximising output level?


A) $13
B) $21
C) $27
D) $34

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Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1200. Assume that Iris and Daphne do not know each other. If Joss charges the same price per copy to both Iris and Daphne,


A) the report will not get written.
B) only Daphne will commission the job and the report will be written.
C) both Iris and Daphne will commission the job and the report will be written.
D) No conclusion can be drawn without information on the price.

Correct Answer

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Using a broad definition, a firm would have a monopoly if


A) it produced a product that has substitutes.
B) it does not have to collude with any other producer to earn an economic profit.
C) there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run.
D) it can make decisions regarding price and output without violating antitrust laws.

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C

A monopoly differs from monopolistic competition in that


A) a monopoly has market power while a firm in monopolistic competition does not have any market power.
B) a monopoly can never incur a loss, but a firm in monopolistic competition can.
C) in a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure.
D) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

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Suppose that a perfectly competitive industry becomes a monopoly. What effect will this have on consumer surplus, producer surplus, and deadweight loss?

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If a perfectly competitive industry is monopolised, consumer surplus will decrease, producer surplus will increase, and there will be a deadweight loss.

Book publishers use price discrimination routinely, but the form of price discrimination they use is different from the form used by airlines and other industries. Explain.

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and a lower price to...

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Unlike a perfect competitor, a monopolist faces the market demand curve.

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To successfully price discriminate, a firm must ensure that there are no opportunities for arbitrage.

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How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.

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A network externality exists where the u...

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If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in


A) odd pricing.
B) cost-plus pricing.
C) price discrimination.
D) markup pricing.

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If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand,


A) the firm would earn monopoly profits.
B) economic efficiency would not be achieved.
C) the firm would incur a loss.
D) the firm would break even.

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One reason patent protection is vitally important to pharmaceutical firms is


A) successful new drugs are not profitable. If firms are not granted patents, many would go out of business and health care would be severely diminished.
B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process.
C) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes.
D) the high salaries pharmaceutical firms pay to scientists and doctors make their labour costs higher than for any other business. Profits from patents are needed to pay these labour costs.

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-Refer to Figure 9-9. What is the difference between the monopoly's price and perfectly competitive industry's price? A) The monopoly's price is higher by $9.50. B) The monopoly's price is higher by $13. C) The monopoly's price is higher by $3.50. D) The monopoly's price is higher by $21. -Refer to Figure 9-9. What is the difference between the monopoly's price and perfectly competitive industry's price?


A) The monopoly's price is higher by $9.50.
B) The monopoly's price is higher by $13.
C) The monopoly's price is higher by $3.50.
D) The monopoly's price is higher by $21.

Correct Answer

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Holding everything else constant, government approval of horizontal mergers is more likely to be granted if the 'market' that firms are in are broadly defined rather than narrowly defined.

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True

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