Question

Compared to the case of perfect competition, a monopolist is more likely to: a) Charge a higher price b) Produce a lower quantity of the product c) Make a greater amount of economic profit d) All of the above

46. Which of the following is true about the way by which SDG&E has been regulated by the PUC? a) SDG&E has been allowed to earn very high economic profits b) The profits of SDG&E are calculated as a percent of the value of the capital goods c) When the demand for electricity would fall, the price of electricity would also fall d) All of the above

47. Which of the following best defines price discrimination? a) Charging different prices on the basis of race b) Charging different prices for goods with different costs of production c) Charging different prices based on cost-of-service differences d) Selling a certain product of given quality and cost per unit at different prices to different buyers

48. In order to practice price discrimination, which of the following is needed? a) Some degree of monopoly power b) An ability to separate the market c) An ability to prevent reselling d) All of the above

49. In price discrimination, which section of the market is charged the higher price? a) The section with the richest people b) The section with the oldest people c) The section with the most inelastic demand d) The section with the most elastic demand

50. Right to wealth is with Government/state is a) Islamic Economic System b) Capitalism c) Socialism d) All of the above

Answer 1

* charge a Higher price

( In a monopoly, there is only a single seller for product with no close substitutes. So he is the price maker. Even if he charges a high price, people have no option of buying from other sellers.)

46) profits of SDG and E are calculated as a percentage of the Value of Capital.

( PUC regulated SDG and E by banning from making high economic profits. Objective was to make electricity affordable for all. In order to make solidify the regulation profits were to be determined as percent of the Value of Capital used.)

47) selling a product of a given quality and cost per unit at different prices to different buyers.

( Price discrimination is the practice of charging different buyers different prices for the same product. Charging different prices based on cost, cost of service and race doesn't Covey the exact meaning of price discrimination.)

48) All the above

( If there is no monopoly power, seller won't be able to charge different prices. If markets were not segmented ,it would have been easier for the consumer to get the good from another market. Possibility of reselling also would have eliminated the possibility of price discrimination as it would enable the consumers to purchase the same product as a lower price.)

49) section with the most inelastic demand.

( If demand is inelastic, it means that change in price won't affect quantity demanded. It enables the producer will be able to sell the same for two or more different prices. Otherwise charging increased price in one market, would lead to a huge fall in demand.)

50) socialism

( Socialism is the form economic system in which state is the most superior. Resources are controlled by the state and state interfers in all the economic activities.state is the owner of wealth. Capitalism on the other hand, gives more importance to market mechanism. .lslam believes that,God is the owner of all the wealth )