Question 1

A price-maker can charge a price above marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own.This is evidence that they have a monopoly position to some degree.

Accepted Answer

A) True 
 B)False

Question 3

When a firm operates under conditions of a monopoly, its price is constrained by demand.

Accepted Answer

A) True 
 B)False

Question 4

The profits that a monopoly makes are:

Accepted Answer

A)  a dead-weight loss to society
B)  inefficient as they hurt consumers
C)  a direct transfer of economic surplus from consumers to producers
D)  the amount by which total surplus is lower as a result of monopolyE) B) and D)
F) B) and C)

Question 5

In many cases additional firms do not try to compete with a natural monopoly because:

Accepted Answer

A)  the natural monopoly doesn't make a huge profit
B)  they are unsure of the size of the market in general
C)  they know they cannot achieve the same low costs that the monopolist enjoys
D)  they fear retaliation in the form of pricing wars from the natural monopolistE) A) and C)
F) B) and C)

Question 6

In a market characterised by monopoly, the market demand curve is:

Accepted Answer

A)  downward-sloping
B)  horizontal
C)  upward-sloping
D)  verticalE) A) and D)
F) A) and C)

Question 7

Graph 15-2  curve B B) curve B > curve C C) curve B > curve D D) curve D > curve B" class="answers-bank-image d-inline" rel="preload" > This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s) .
-Refer to Graph 15-2.Profit can always be increased by decreasing the level of output by one unit if the monopolist is currently operating at a level of output in which:

Accepted Answer

A)  curve C > curve B
B)  curve B > curve C
C)  curve B > curve D
D)  curve D > curve BE) All of the above
F) A) and B)

Question 8

Which of the following are barriers to entry that can give rise to a monopoly?
(i)  a patent giving exclusive right to manufacture a new electronic device
(ii)  a single firm buys all the rights to mine iron ore in Australia
(iii)  a single firm can produce at lower cost than several firms

Accepted Answer

A)  (i)  only
B)  (i)  and (ii)  only
C)  (ii)  and (iii)  only
D)  (i) , (ii) , and (iii) E) A) and B)
F) A) and D)

Question 9

Many bus companies allow discount tickets to be sold to students because:

Accepted Answer

A)  education laws mandate such discounts
B)  it signals that the companies care about education
C)  they are profit maximisers
D)  students have argued forcefully for the right to cheaper ticketsE) A) and C)
F) A) and B)

Question 10

When a firm operates under conditions of a monopoly, its price is:

Accepted Answer

A)  constrained by marginal cost
B)  constrained by demand
C)  constrained only by its social agenda
D)  not constrainedE) B) and C)
F) C) and D)

Question 11

Price discrimination requires the firm to:

Accepted Answer

A)  differentiate between different units of its product
B)  engage in arbitrage
C)  separate customers according to their willingness to pay
D)  do all of the aboveE) All of the above
F) B) and C)

Question 12

When a natural monopoly exists, it is always more cost-effective for two or more private firms to produce the product.

Accepted Answer

A) True 
 B)False

Question 13

Governments should always avoid creating monopolies, as it leads to prices above marginal costs.

Accepted Answer

A) True 
 B)False

Question 14

A monopolist's marginal-revenue curve is less than price for which of the following reasons?
(i)  to sell additional units of the good, the price charged on all units must decrease
(ii)  with the sale of an additional unit, the monopolist receives less revenue for each of the previous units it planned to sell
(iii)  because of the downward-sloping demand curve

Accepted Answer

A)  (i)  and (ii) 
B)  (ii)  and (iii) 
C)  (i)  and (iii) 
D)  (i) , (ii)  and (iii) E) A) and D)
F) A) and C)

Question 15

Graph 15-2  This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s) .
-Refer to Graph 15-2.The marginal-revenue curve for a monopoly firm is depicted by curve:

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) All of the above
F) None of the above

Question 16

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Accepted Answer

A) True 
 B)False

Question 17

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Accepted Answer

A)  airlines are attempting to charge people based on their willingness to pay
B)  airlines are practicing imperfect price discrimination to raise their profits
C)  airlines charge a different rate based on the different nature of peoples' travel needs
D)  all of the above are trueE) A) and B)
F) None of the above

Question 18

For a profit-maximising monopolist, output should be increased to enhance economic wellbeing as long as:

Accepted Answer

A)  marginal revenue exceeds marginal cost
B)  marginal revenue exceeds average total cost
C)  average revenue exceeds average total cost
D)  average revenue exceeds marginal costE) All of the above
F) C) and D)

Question 19

Excessive monopoly profits themselves represent:

Accepted Answer

A)  a deadweight loss
B)  a shrinkage in total surplus
C)  a shrinkage in consumer surplus
D)  all of the aboveE) B) and C)
F) A) and D)

Question 20

Graph 15-5  This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s) .
-Refer to Graph 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Accepted Answer

A)  rectangle ACDB
B)  rectangle CFGD
C)  triangle BDE
D)  triangle BGEE) A) and B)
F) A) and C)

Exam 15: Monopoly

When a natural monopoly exists, it is always more cost-effective for two or more private firms to produce the product.

Correct Answer
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Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s) . -Refer to Graph 15-2.The marginal-revenue curve for a monopoly firm is depicted by curve:

Correct Answer
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Correct Answer
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Correct Answer
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When a firm operates under conditions of a monopoly, its price is:

Correct Answer
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Which of the following are barriers to entry that can give rise to a monopoly? (i) a patent giving exclusive right to manufacture a new electronic device (ii) a single firm buys all the rights to mine iron ore in Australia (iii) a single firm can produce at lower cost than several firms

Correct Answer
verified

Excessive monopoly profits themselves represent:

Correct Answer
verified

In a market characterised by monopoly, the market demand curve is:

Correct Answer
verified

Graph 15-5 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s) . -Refer to Graph 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Correct Answer
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Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Correct Answer
verified

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own.This is evidence that they have a monopoly position to some degree.

Correct Answer
verified

For a profit-maximising monopolist, output should be increased to enhance economic wellbeing as long as:

Correct Answer
verified

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Correct Answer
verified

In many cases additional firms do not try to compete with a natural monopoly because:

Correct Answer
verified

Many bus companies allow discount tickets to be sold to students because:

Correct Answer
verified

A price-maker can charge a price above marginal cost.

Correct Answer
verified

The profits that a monopoly makes are:

Correct Answer
verified

Governments should always avoid creating monopolies, as it leads to prices above marginal costs.

Correct Answer
verified

Price discrimination requires the firm to:

Correct Answer
verified

When a firm operates under conditions of a monopoly, its price is constrained by demand.

Correct Answer
verified

Exam 15: Monopoly

When a natural monopoly exists, it is always more cost-effective for two or more private firms to produce the product.

Correct AnswerverifiedShow Answer

Graph 15-2 This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s) . -Refer to Graph 15-2.The marginal-revenue curve for a monopoly firm is depicted by curve:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a firm operates under conditions of a monopoly, its price is:

Correct AnswerverifiedShow Answer

Which of the following are barriers to entry that can give rise to a monopoly? (i) a patent giving exclusive right to manufacture a new electronic device (ii) a single firm buys all the rights to mine iron ore in Australia (iii) a single firm can produce at lower cost than several firms

Correct AnswerverifiedShow Answer

Excessive monopoly profits themselves represent:

Correct AnswerverifiedShow Answer

In a market characterised by monopoly, the market demand curve is:

Correct AnswerverifiedShow Answer

Graph 15-5 This graph depicts the demand, marginal-revenue and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s) . -Refer to Graph 15-5.Which of the following areas represents the deadweight loss due to monopoly pricing?

Correct AnswerverifiedShow Answer

Round-trip airline tickets are usually cheaper if you stay over a Saturday night before you fly back.What is the reason for this price discrepancy?

Correct AnswerverifiedShow Answer

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own.This is evidence that they have a monopoly position to some degree.

Correct AnswerverifiedShow Answer

For a profit-maximising monopolist, output should be increased to enhance economic wellbeing as long as:

Correct AnswerverifiedShow Answer

If a resource can be traded internationally, then it is less likely that a single domestic supplier will be able to price at the monopoly price.

Correct AnswerverifiedShow Answer

In many cases additional firms do not try to compete with a natural monopoly because:

Correct AnswerverifiedShow Answer

Many bus companies allow discount tickets to be sold to students because:

Correct AnswerverifiedShow Answer

A price-maker can charge a price above marginal cost.

Correct AnswerverifiedShow Answer

The profits that a monopoly makes are:

Correct AnswerverifiedShow Answer

Governments should always avoid creating monopolies, as it leads to prices above marginal costs.

Correct AnswerverifiedShow Answer

Price discrimination requires the firm to:

Correct AnswerverifiedShow Answer

When a firm operates under conditions of a monopoly, its price is constrained by demand.

Correct AnswerverifiedShow Answer

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