Question 1

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will

Accepted Answer

A)   improve efficiency.
B)   cause the monopolist to exit the market.
C)   raise the price of good.
D)   attract additional firms to enter the market.E) A) and D)
F) None of the above

Question 2

Consider the following demand and cost information
  Quantity  Price  Total Cost 0 R40  R10 1 R30  R15 2 R20  R25 3 R10  R40 4 R0  R60 \begin{array} { | c | c | c | } \hline 	ext { Quantity } & 	ext { Price } & 	ext { Total Cost } \\hline 0 & 	ext { R40 } & 	ext { R10 } \\hline 1 & 	ext { R30 } & 	ext { R15 } \\hline 2 & 	ext { R20 } & 	ext { R25 } \\hline 3 & 	ext { R10 } & 	ext { R40 } \\hline 4 & 	ext { R0 } & 	ext { R60 } \\hline\end{array} Quantity 01234​ Price  R40  R30  R20  R10  R0 ​ Total Cost  R10  R15  R25  R40  R60 ​​

-Refer to the table above. The marginal revenue of the second unit is

Accepted Answer

A)   R10
B)   R20
C)   R30
D)   R40 E) All of the above
F) A) and B)

Question 3

If a monopolist can sell 7 units when the price is R3 and 8 units when the price is R2, then marginal revenue of selling the eighth unit is equal to

Accepted Answer

A)   R2.
B)   R3.
C)   R16.
D)   -R5.E) A) and B)
F) A) and C)

Question 4

The inefficiency associated with monopoly is due to

Accepted Answer

A)   the monopoly's profits.
B)   underproduction of the good.
C)   the monopoly's losses.
D)   overproduction of the good.E) C) and D)
F) B) and D)

Question 5

What is the deadweight loss due to profit-maximising monopoly pricing under the following conditions: The price charged for goods produced is R10. The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is R5. The socially efficient level of production is 110 units. The demand curve is linear and downward sloping, and the marginal cost curve is constant.

Accepted Answer

½ x (110-1...

Question 6

The monopolist's supply curve

Accepted Answer

A)   is the upward sloping portion of the average variable cost.
B)   is the marginal cost curve above average variable cost.
C)   is the marginal cost curve above average total cost.
D)   is the upward sloping portion of the average total cost curve.
E)   does not exist.F) A) and B)
G) B) and E)

Question 7

Price discrimination can raise economic welfare because output increases beyond that which would result under monopoly pricing.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a barrier to entry in a monopolised market?

Accepted Answer

A)   A single firm is very large.
B)   The government gives a single firm the exclusive right to produce some good.
C)   The costs of production make a single producer more efficient than a large number of producers.
D)   A key resource is owned by a single firm.E) None of the above
F) A) and B)

Question 9

Which of the following statements is correct?

Accepted Answer

A)   Both a competitive firm and a monopolist are price takers.
B)   Both a competitive firm and a monopolist are price makers.
C)   A competitive firm is a price taker, whereas a monopolist is a price maker.
D)   A competitive firm is a price maker, whereas a monopolist is a price taker.E) None of the above
F) B) and C)

Question 10

A monopoly is able to continue to generate economic profits in the long run because

Accepted Answer

A)   it can control both price and output in the market.
B)   potential competitors sometimes don't notice the profits.
C)   the monopolist is financially powerful.
D)   competition laws eliminate competitors for a specified number of years.
E)   there is some barrier to entry to that market.F) A) and E)
G) B) and E)

Question 11

Compared to a perfectly competitive market, a monopoly market will usually generate

Accepted Answer

A)   lower prices and lower output.
B)   higher prices and higher output.
C)   higher prices and lower output.
D)   lower prices and higher output.E) B) and C)
F) A) and B)

Question 12

A monopolist that practises perfect price discrimination

Accepted Answer

A)   creates no deadweight loss.
B)   charges one group of buyers a higher price than another group, such as offering a student discount.
C)   produces the same monopoly level of output as when a single price is charged.
D)   charges some customers a price below marginal cost because costs are covered by the high-priced buyers.E) All of the above
F) C) and D)

Question 13

Most markets are not monopolies in the real world because

Accepted Answer

A)   firms usually face downward sloping demand curves.
B)   supply curves slope upward.
C)   price is usually set equal to marginal cost by firms.
D)   there are reasonable substitutes for most goods.E) None of the above
F) A) and B)

Question 14

-Refer to the above graph. The efficient price and quantity are represented by point

Accepted Answer

A)   Point A.
B)   Point D.
C)   Point B.
D)   Point C.
E)   none of these answers.F) All of the above
G) B) and E)

Question 15

Give some examples of the benefits and costs of competition laws.

Accepted Answer

Competition laws act against cartels and...

Question 16

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Accepted Answer

The government can create a monopoly by ...

Question 17

A monopolist's profits with price discrimination will be

Accepted Answer

A)   lower than if the firm charged a single, profit-maximising price.
B)   the same as if the firm charged a single, profit-maximising price.
C)   higher than if the firm charged just one price, because the firm will capture more consumer surplus.
D)   higher than if the firm charged a single price, because the costs of selling the good will be lower.E) A) and B)
F) A) and D)

Question 18

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Accepted Answer

A)   above the price because the output effect outweighs the price effect.
B)   below the price because the price effect outweighs the output effect.
C)   above the price because the price effect outweighs the output effect.
D)   below the price because the output effect outweighs the price effect.E) A) and B)
F) B) and C)

Question 19

Which of the following is a characteristic of a monopoly?

Accepted Answer

A)   Low fixed costs as a portion of total costs.
B)   Free entry and exit.
C)   Barriers to entry.
D)   Declining marginal cost.E) A) and B)
F) A) and C)

Question 20

Which of the follow statements about price discrimination is not true?

Accepted Answer

A)   Price discrimination increases a monopolist's profits.
B)   Price discrimination can raise economic welfare.
C)   Price discrimination requires that the seller be able to separate buyers according to their willingness to pay.
D)   Perfect price discrimination generates a deadweight loss.
E)   For a monopolist to engage in price discrimination, buyers must be unable to engage in arbitrage.F) B) and C)
G) A) and E)

Exam 14: Market Structures I: Monopoly

A monopolist's profits with price discrimination will be

Correct Answer
verified

A monopolist that practises perfect price discrimination

Correct Answer
verified

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct Answer
verified
The government can create a monopoly by ...
View Answer

Which of the following statements is correct?

Correct Answer
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Which of the following is not a barrier to entry in a monopolised market?

Correct Answer
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When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Correct Answer
verified

Which of the following is a characteristic of a monopoly?

Correct Answer
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The inefficiency associated with monopoly is due to

Correct Answer
verified

Correct Answer
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Most markets are not monopolies in the real world because

Correct Answer
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Price discrimination can raise economic welfare because output increases beyond that which would result under monopoly pricing.

Correct Answer
verified

Correct Answer
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½ x (110-1...
View Answer

-Refer to the above graph. The efficient price and quantity are represented by point

Correct Answer
verified

The monopolist's supply curve

Correct Answer
verified

Compared to a perfectly competitive market, a monopoly market will usually generate

Correct Answer
verified

A monopoly is able to continue to generate economic profits in the long run because

Correct Answer
verified

Give some examples of the benefits and costs of competition laws.

Correct Answer
verified
Competition laws act against cartels and...
View Answer

Which of the follow statements about price discrimination is not true?

Correct Answer
verified

If a monopolist can sell 7 units when the price is R3 and 8 units when the price is R2, then marginal revenue of selling the eighth unit is equal to

Correct Answer
verified

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will

Correct Answer
verified

Exam 14: Market Structures I: Monopoly

A monopolist's profits with price discrimination will be

Correct AnswerverifiedShow Answer

A monopolist that practises perfect price discrimination

Correct AnswerverifiedShow Answer

Describe how government is involved in creating a monopoly. Why might the government create one? Give an example.

Correct AnswerverifiedThe government can create a monopoly by ...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to entry in a monopolised market?

Correct AnswerverifiedShow Answer

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a monopoly?

Correct AnswerverifiedShow Answer

The inefficiency associated with monopoly is due to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most markets are not monopolies in the real world because

Correct AnswerverifiedShow Answer

Price discrimination can raise economic welfare because output increases beyond that which would result under monopoly pricing.

Correct AnswerverifiedShow Answer

Correct Answerverified½ x (110-1...View AnswerShow Answer

-Refer to the above graph. The efficient price and quantity are represented by point

Correct AnswerverifiedShow Answer

The monopolist's supply curve

Correct AnswerverifiedShow Answer

Compared to a perfectly competitive market, a monopoly market will usually generate

Correct AnswerverifiedShow Answer

A monopoly is able to continue to generate economic profits in the long run because

Correct AnswerverifiedShow Answer

Give some examples of the benefits and costs of competition laws.

Correct AnswerverifiedCompetition laws act against cartels and...View AnswerShow Answer

Which of the follow statements about price discrimination is not true?

Correct AnswerverifiedShow Answer

If a monopolist can sell 7 units when the price is R3 and 8 units when the price is R2, then marginal revenue of selling the eighth unit is equal to

Correct AnswerverifiedShow Answer

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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The government can create a monopoly by ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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½ x (110-1...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Competition laws act against cartels and...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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