Question

1.    Which statement below is FALSE?

A         A monopoly faces a downward-sloping demand curve for the good that it sells.

B          A single-price monopoly cannot sell further units of the good without cutting the price.

C          Total revenue is maximized where marginal revenue is zero.

D         In the short run, a single-price monopoly maximizes profit where average cost equals average revenue.

E          In the long run, a single-price monopoly seeking to maximize profit would exit the industry if average total cost were to exceed price.

2.    Which statement below is FALSE?

A         In the case of a monopoly, marginal revenue is less than price at each level of output.

B          In the case of a monopoly, marginal revenue rises as output increases.

C          Ceteris paribus, a single-price monopoly charges a higher price than if it were organized as a competitive industry.

D         Ceteris paribus, a single-price monopoly sells a lower output than if it were organized as a competitive industry.

3.         Which statement below is FALSE?

A         Ceteris paribus, a single-price monopoly sells a lower output than if it were organized as a competitive industry.

B          If the scope for price discrimination were sufficiently great, a monopoly might have a higher output than would occur if it were organized as a competitive industry.

C          If economies of scale were sufficiently great, a monopoly might have a higher output than if it were a competitive industry.

4.    Which statement is FALSE?

A         A monopoly faces a falling demand curve for the good that it sells.

B          A monopoly can never make a loss.

C          A single-price monopoly can sell another unit only by cutting the price.

D         A monopoly faces a marginal revenue curve that is below the demand curve that it faces.

E          A single-price monopoly charges a price that exceeds the marginal revenue obtained through the sale of the last unit.

5.         Which of the following is NOT a necessary condition for price discrimination?

A         A seller who faces a downward-sloping demand curve for the good that she sells.

B          A seller who can charge each customer a different price.

C          A seller who can identify people with different price elasticities of demand.

D         A seller who can separate these people into different groups.

E          A seller who can prevent resale of the good by members of one group to members of another.

6.    Which is NOT an example of price discrimination?

A         A seller charging two different prices for a good with the difference in price entirely explained by the difference in the cost of supply.

B          A seller charging the same price for a good in two different markets where costs of supply differ between the two markets.

C          A doctor charging different prices to different patients.

D         Simultaneous publication of cloth and paperback editions of a book.

E       Showing a movie on broadcast TV several years after its first run in movie theaters.

7.    Which statement below is TRUE?

A      Successful price discrimination necessarily increases output.

B       Successful price discrimination necessarily increases consumer welfare.

C       Successful price discrimination necessarily increases profit for the seller.

D      Successful price discrimination necessarily raises prices for everyone.

E       Successful price discrimination necessarily lowers prices for everyone.

8.         Tying and bundling both involve selling two or more goods. Which business practice always pairs complements?

A         tying

B          bundling

Answer 1

as per guideline more than 4 questions have been answered.

1. (D)  In the short run, a single-price monopoly maximizes profit where average cost equals average revenue.

reason In the short run, Profit maximization occurs where MR=MC monopolist maximizes profit or minimizes losses by producing that quantity where marginal revenue = marginal cost.

2. (B)

When a monopolist increases sales by one unit, it have to reduce prices and it loses some marginal revenue. rising in marginal revenue with rise in output can not be possible.

3. (B) If the scope for price discrimination were sufficiently great, a monopoly might have a higher output than would occur if it were organized as a competitive industry.

Reason If the scope for price discrimination were sufficiently great, a monopoly might have a higher Price than would occur if it were organized as a competitive industry.

4. (B) A monopoly can never make a loss.

if AC is sufficiently higher than price it will make loss.

5. (D)

it is not possible for monopolist to separate these people into different groups.

6. B          A seller charging the same price for a good in two different markets where costs of supply differ between the two markets.

reason in second degree price discrimination A seller charging the same price for a good in two different markets where costs of supply differ between the two markets is not acceptable.