Question 1

Patents grant

Accepted Answer

A)   permanent monopoly status to creators of inventions.
B)   permanent right to creators of inventions to produce the product they have invented.
C)   temporary monopoly status to creators of inventions.
D)   temporary right to creators of inventions to produce the product they have invented.E) B) and C)
F) A) and B)

Question 2

Which of the following is an example of price discrimination?

Accepted Answer

A)   Nestlé provides money off coupons for its products.
B)   Gautrain offers a lower price for weekend travel compared to weekday rates on the same routes.
C)   Hotel rates for members of the AA are lower than for non-members.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

Public ownership of natural monopolies

Accepted Answer

A)   creates synergies between the newly acquired firm and other government owned companies.
B)   usually lowers the cost of production dramatically.
C)   tends to be inefficient.
D)   does none of the things described in these answers.E) A) and B)
F) A) and C)

Question 4

-Refer to the above graph. The profit-maximising monopolist will choose the price and quantity represented by point

Accepted Answer

A)   Point A.
B)   Point B.
C)   Point C.
D)   Point D.
E)   none of these four pointsF) A) and B)
G) B) and C)

Question 5

Monopolists are price takers.

Accepted Answer

A) True 
 B)False

Question 6

Monopolies use their market power to

Accepted Answer

A)   charge prices that equal minimum average total cost.
B)   attain normal profits in the long run.
C)   restrict output and increase price.
D)   dump excess supplies of their product on the market.E) A) and B)
F) All of the above

Question 7

What are the four ways that government policymakers can respond to the problem of monopoly?

Accepted Answer

First, the government can try to make mo...

Question 8

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Accepted Answer

A)   Competition laws.
B)   Price discrimination.
C)   Doing nothing.
D)   Breaking up a natural monopoly into more than one firm.E) A) and B)
F) B) and C)

Question 9

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)   produces that output where average total cost is at a maximum.
B)   is protected by barriers to entry.
C)   operates as a price taker rather than a price maker.
D)   realises revenues that exceed variable costs.E) A) and B)
F) A) and C)

Question 10

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel and later releases a cheaper paperback edition. Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy. The answer should address the three basic lessons of price discrimination.

Accepted Answer

First, price discrimination is a rationa...

Question 11

A benefit of a monopoly is

Accepted Answer

A)   efficient production.
B)   decreasing long-run marginal costs.
C)   profit that can be invested in research and development.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 12

Perfect price discrimination is efficient, but all of the surplus is received by the consumer.

Accepted Answer

A) True 
 B)False

Question 13

The purpose of competition laws is to

Accepted Answer

A)   Ensure prices are the same for all consumers.
B)   regulate the prices charged by a monopoly.
C)   increase merger activity to help generate synergies that reduce costs and raise efficiency.
D)   create public ownership of natural monopolies.
E)   increase competition in an industry by preventing mergers, and breaking up large firms.F) A) and B)
G) B) and E)

Question 14

A monopoly is the sole seller of a product with no close substitutes.

Accepted Answer

A) True 
 B)False

Question 15

Sizable economic profits can persist over time under monopoly if the monopolist

Accepted Answer

A)   produces that output where average total cost is at a maximum.
B)   is protected by barriers to entry.
C)   operates as a price taker rather than a price maker.
D)   earns revenues that exceed variable costs.E) A) and B)
F) None of the above

Question 16

A monopolist produces an efficient quantity of output, but it is still inefficient because it charges a price that exceeds marginal cost, and the resulting profit is a social cost.

Accepted Answer

A) True 
 B)False

Question 17

If regulators break up a natural monopoly into many smaller firms, the cost of production

Accepted Answer

A)   will remain the same.
B)   will fall.
C)   will rise.
D)   could either rise or fall depending on the elasticity of the monopolist's supply curve.E) All of the above
F) None of the above

Question 18

The demand curve facing a monopolist is the market demand curve for its product.

Accepted Answer

A) True 
 B)False

Question 19

If marginal revenue exceeds marginal cost, a monopolist should

Accepted Answer

A)   raise the price.
B)   decrease output.
C)   keep output the same because profits are maximised when marginal revenue exceeds marginal cost.
D)   increase output.E) A) and B)
F) None of the above

Question 20

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Accepted Answer

A)   marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
B)   marginal cost equals price, while a monopolist produces where marginal cost exceeds price.
C)   price exceeds marginal cost, while a monopolist produces where marginal cost equals price.
D)   marginal cost exceeds price, while a monopolist produces where marginal cost equals price.E) All of the above
F) B) and C)

Exam 14: Market Structures I: Monopoly

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Correct Answer
verified

If regulators break up a natural monopoly into many smaller firms, the cost of production

Correct Answer
verified

What are the four ways that government policymakers can respond to the problem of monopoly?

Correct Answer
verified
First, the government can try to make mo...
View Answer

The demand curve facing a monopolist is the market demand curve for its product.

Correct Answer
verified

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct Answer
verified

Sizable economic profits can persist over time under monopoly if the monopolist

Correct Answer
verified

Perfect price discrimination is efficient, but all of the surplus is received by the consumer.

Correct Answer
verified

A monopoly is the sole seller of a product with no close substitutes.

Correct Answer
verified

Sizable economic profits can persist over time under monopoly if the monopolist

Correct Answer
verified

A monopolist produces an efficient quantity of output, but it is still inefficient because it charges a price that exceeds marginal cost, and the resulting profit is a social cost.

Correct Answer
verified

If marginal revenue exceeds marginal cost, a monopolist should

Correct Answer
verified

-Refer to the above graph. The profit-maximising monopolist will choose the price and quantity represented by point

Correct Answer
verified

Which of the following is an example of price discrimination?

Correct Answer
verified

Patents grant

Correct Answer
verified

The purpose of competition laws is to

Correct Answer
verified

Monopolies use their market power to

Correct Answer
verified

Correct Answer
verified
First, price discrimination is a rationa...
View Answer

Monopolists are price takers.

Correct Answer
verified

A benefit of a monopoly is

Correct Answer
verified

Public ownership of natural monopolies

Correct Answer
verified

Exam 14: Market Structures I: Monopoly

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

Correct AnswerverifiedShow Answer

If regulators break up a natural monopoly into many smaller firms, the cost of production

Correct AnswerverifiedShow Answer

What are the four ways that government policymakers can respond to the problem of monopoly?

Correct AnswerverifiedFirst, the government can try to make mo...View AnswerShow Answer

The demand curve facing a monopolist is the market demand curve for its product.

Correct AnswerverifiedShow Answer

Which of the following strategies is not an effective strategy to reduce monopoly inefficiency?

Correct AnswerverifiedShow Answer

Sizable economic profits can persist over time under monopoly if the monopolist

Correct AnswerverifiedShow Answer

Perfect price discrimination is efficient, but all of the surplus is received by the consumer.

Correct AnswerverifiedShow Answer

A monopoly is the sole seller of a product with no close substitutes.

Correct AnswerverifiedShow Answer

Sizable economic profits can persist over time under monopoly if the monopolist

Correct AnswerverifiedShow Answer

A monopolist produces an efficient quantity of output, but it is still inefficient because it charges a price that exceeds marginal cost, and the resulting profit is a social cost.

Correct AnswerverifiedShow Answer

If marginal revenue exceeds marginal cost, a monopolist should

Correct AnswerverifiedShow Answer

-Refer to the above graph. The profit-maximising monopolist will choose the price and quantity represented by point

Correct AnswerverifiedShow Answer

Which of the following is an example of price discrimination?

Correct AnswerverifiedShow Answer

Patents grant

Correct AnswerverifiedShow Answer

The purpose of competition laws is to

Correct AnswerverifiedShow Answer

Monopolies use their market power to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFirst, price discrimination is a rationa...View AnswerShow Answer

Monopolists are price takers.

Correct AnswerverifiedShow Answer

A benefit of a monopoly is

Correct AnswerverifiedShow Answer

Public ownership of natural monopolies

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First, the government can try to make mo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First, price discrimination is a rationa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified