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microeconomics Questions

November 26, 2014| Papers Haven

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Barriers to entering an industry:

i. result in productive efficiency

ii. result in allocative efficiency

iii. are the basis for monopolies to exist

iv. apply in the United States to only to industries dominated by a single firm

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Question 22.5 ptsA patent or copyright is a barrier to entry based on:
A patent or copyright is a barrier to entry based on:

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Question 32.5 ptsSkip to question text.
A ‘natural’ monopoly, such as a local electricity provider, is the result of:

i. a firm owning or controlling a key input used in the production process

ii. long-run average total costs declining continuously as output increases

iii. long-run total costs declining continuously as output increases

iv. economies of scale existing over a wide range of output

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Question 42.5 ptsFor a purely competitive firm _______________; and for a uniform-price monopolist _______________ :
For a purely competitive firm _______________; and for a uniform-price monopolist _______________ :

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Question 52.5 ptsIn contrast to firms operating in purely competitive industries, demand curves faced by monopolists are:
In contrast to firms operating in purely competitive industries, demand curves faced by monopolists are:

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Question 62.5 ptsAssuming that the market demand curve does not shift (i.e., there are no changes in the determinants of demand), the monopolist that practices uniform pricing:
Assuming that the market demand curve does not shift (i.e., there are no changes in the determinants of demand), the monopolist that practices uniform pricing:

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Question 72.5 ptsIf a monopolist’s total output increases as the quantity of labor that it employs increases, then the:
If a monopolist’s total output increases as the quantity of labor that it employs increases, then the:

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Question 82.5 ptsLike a perfectly competitive firm, if a monopolist wants to know how much it will save by reducing output, it will evaluate its:
Like a perfectly competitive firm, if a monopolist wants to know how much it will save by reducing output, it will evaluate its:

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Question 92.5 ptsThe notion that a firm should produce that level of output such that MR = MC to maximize profit or minimize operating losses applies:
The notion that a firm should produce that level of output such that MR = MC to maximize profit or minimize operating losses applies:

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Question 102.5 ptsFor a monopolist that employs a uniform pricing strategy, marginal revenue is less than price because:
For a monopolist that employs a uniform pricing strategy, marginal revenue is less than price because:

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Question 112.5 ptsIf a monopolist is producing a level of output that maximizes total profit, then it will necessarily be:
If a monopolist is producing a level of output that maximizes total profit, then it will necessarily be:

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Question 122.5 ptsSuppose that a monopolist is producing a level of output such that AVC = $6, AFC = $4, P = $8, MR = $10, and MC = $6. Based on this information, the firm is realizing:
Suppose that a monopolist is producing a level of output such that AVC = $6, AFC = $4, P = $8, MR = $10, and MC = $6. Based on this information, the firm is realizing:

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Question 132.5 ptsIf a profit maximizing monopolist is producing such that marginal cost is $10 and its marginal revenue is $4, it will increase its profits by:
If a profit maximizing monopolist is producing such that marginal cost is $10 and its marginal revenue is $4, it will increase its profits by:

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Question 142.5 ptsIf a monopolist is confronted with economic losses in the short run, it will decide whether or not to produce by comparing:
If a monopolist is confronted with economic losses in the short run, it will decide whether or not to produce by comparing:

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Question 152.5 ptsA profit-maximizing monopolist that sells all units of its output for a single (uniform) price will set this price:
A profit-maximizing monopolist that sells all units of its output for a single (uniform) price will set this price:

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Question 162.5 ptsSkip to question text.
Suppose a firm has monopoly power in the production of a particular good. If it finds that revenue and cost conditions are such that at all levels of output the price it can charge in order to sell all of the units is less than the average variable costs then it is in the firm’s best interest to:

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Question 172.5 ptsSimilar to a perfectly competitive firm, a monopolist that is confronted with fixed costs in the short run should produce versus shut down if the total revenue that it can generate is sufficient to cover its:
Similar to a perfectly competitive firm, a monopolist that is confronted with fixed costs in the short run should produce versus shut down if the total revenue that it can generate is sufficient to cover its:

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Question 182.5 ptsSkip to question text.
Suppose that a monopolist finds itself to be operating at a break-even point. It follows that its:

i. total revenue is equal to total variable cost

ii. total revenue is equal to total cost

iii. average revenue is equal to average variable cost

iv. average revenue is equal to average total cost

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Question 192.5 ptsSkip to question text.
Suppose that at 200 units of output a monopolist is producing such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $5 per unit and is incurring average variable costs of $3 per unit and average total costs of $4 per unit. On the basis of this information we can conclude that the firm:

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Question 202.5 ptsSuppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. Therefore:
Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. Therefore:

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Question 212.5 ptsSuppose that at 500 units of output a monopolist is producing such that marginal revenue is equal to marginal cost. The firm is selling its output at $6 per unit and average total cost at 500 units of output is $5. On the basis of this information we:
Suppose that at 500 units of output a monopolist is producing such that marginal revenue is equal to marginal cost. The firm is selling its output at $6 per unit and average total cost at 500 units of output is $5. On the basis of this information we:

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Question 222.5 ptsIf the uniform price of a monopolist’s good is $50 per unit and its marginal cost is $25, then:
If the uniform price of a monopolist’s good is $50 per unit and its marginal cost is $25, then:

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Question 232.5 ptsConsider a profit maximizing monopolist that employs a uniform pricing strategy. If it were to produce and price at a point on the inelastic segment of its demand curve, then it could:
Consider a profit maximizing monopolist that employs a uniform pricing strategy. If it were to produce and price at a point on the inelastic segment of its demand curve, then it could:

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Question 242.5 ptsSkip to question text.
Suppose that at 100 units of output a monopolist is producing such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $8 per unit and is incurring average variable costs of $5 per unit and average fixed costs of $4 per unit. On the basis of this information we can conclude that the firm is:

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Question 252.5 ptsUnder which of the following situations would a monopolist increase profits by reducing output and raising price:
Under which of the following situations would a monopolist increase profits by reducing output and raising price:

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Question 262.5 ptsThe uniform price that is most profitable for the monopolist to charge for its product is:
The uniform price that is most profitable for the monopolist to charge for its product is:

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Question 272.5 ptsUnder uniform pricing, a profit maximizing monopolist’s price is:
Under uniform pricing, a profit maximizing monopolist’s price is:

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Question 282.5 ptsSkip to question text.
If a public utilities regulatory agency requires a local electricity provider (a natural monopoly) to set the price of its output equal to marginal cost and this price is below its average total cost then:

i. the firm will realize an economic profit

ii. the firm will break even

iii. there will be no deadweight loss

iv. the firm will suffer a loss

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Question 292.5 ptsSkip to question text.
Consider a monopolist whose total cost function is TC = 20 + 10Q + 0.3Q2 and whose marginal cost function is MC = 10 + 0.6Q. The demand function for the firm’s good is P = 120 – 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then the firm will:

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Question 302.5 ptsSkip to question text.
Consider a monopolist whose total cost function is TC = 20 + 10Q + 0.3Q2 and whose marginal cost function is MC = 10 + 0.6Q. The demand function for the firm’s good is P = 120 – 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then the price elasticity of demand (ED) at the profit maximizing price is equal to:

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Question 312.5 ptsSkip to question text.
Consider a monopolist whose total cost function is TC = 20 + 10Q + 0.3Q2 and whose marginal cost function is MC = 10 + 0.6Q. The demand function for the firm’s good is P = 120 – 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then rounded to the nearest dollar the deadweight loss that results is:

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Question 322.5 ptsPrice discrimination is the practice of:
Price discrimination is the practice of:

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Question 332.5 ptsSkip to question text.
The ability of a firm to increase profits by practicing discriminatory pricing can be undermined by:

i. arbitrage

ii. the market in which it operates being highly competitive

iii. differences in the price elasticity of demand between groups of consumers

iv. the firm having considerable market share

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Question 342.5 ptsPrice discrimination is a rational strategy for a profit-maximizing firm to adopt when:
Price discrimination is a rational strategy for a profit-maximizing firm to adopt when:

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Question 352.5 ptsThe act of purchasing a good at a low price and reselling it at a higher price is referred to as:
The act of purchasing a good at a low price and reselling it at a higher price is referred to as:

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Question 362.5 ptsSkip to question text.
Children are often charged less than adults for admission to movies, theme parks, and professional sporting events. However, they are charged the same prices as adults at the concession stands. Which of the following best explains such pricing arrangements:

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Question 372.5 ptsIf a monopolist engages in perfect (first-degree) price discrimination, then relative to uniform pricing:
If a monopolist engages in perfect (first-degree) price discrimination, then relative to uniform pricing:

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Question 382.5 ptsWith perfect (first-degree) price discrimination there is:
With perfect (first-degree) price discrimination there is:

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Question 392.5 ptsA perfectly competitive firm is not able to successfully price discriminate because:
A perfectly competitive firm is not able to successfully price discriminate because:

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Question 402.5 ptsSkip to question text.
De Beers, the South African diamond syndicate, has historically had monopoly power in the global diamond market. One source of competition that it confronts comes from individuals who sell diamonds that originated through previous sales by De Beers. Which of the following best explains why these secondary sales might be of concern to De Beers?

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Question 412.5 ptsSkip to question text.
Consider a monopolist whose total cost function is TC = 20 + 10Q + 0.3Q2 and whose marginal cost function is MC = 10 + 0.6Q. The demand function for the firm’s good is P = 120 – 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm is able to practice first degree (or perfect) price discrimination then it will:

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