Question

Question 22

Which of the following is NOT an example of a legal barrier to entry?

patents

government granted franchise

copyrights

information

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Question 23

To be able to price discriminate, a firm must

have a public franchise.

be a natural monopoly.

prevent resales.

have a patent.

Question 24

For a single-price monopolist, price is

equal to marginal revenue.

greater than marginal revenue.

less than marginal revenue.

equal to zero because the firm is not a price taker.

Question 25

To maximize its profit, a single-price monopolist will produce an output level where its marginal revenue

equals zero.

equals its marginal cost.

exceeds its marginal cost.

is less than its marginal cost.

Question 26

If we compare perfect competition to a single-price monopolist, we see that the monopolist sells

the same quantity at higher prices.

a smaller quantity at higher prices.

a larger quantity at lower prices.

a larger quantity at higher prices.

Question 27

One way a monopoly can convert additional consumer surplus into economic profit is to

lower prices.

raise prices.

price discriminate.

become more competitive.

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Question 28

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the deadweight loss

increases.

decreases.

remains the same.

might change, but more information is needed to determine if it increases, decreases, or remains constant.

Question 29

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the Consumer Surplus

increases.

decreases.

remains the same.

might change, but more information is needed to determine if it increases, decreases, or remains constant.

Question 30

The total revenue test using the price elasticity of demand

explains why monopolies will only operate on the elastic portion of their demand curve.

explains why monopolies will only operate on the inelastic portion of their demand curves.

helps regulators decide whether to use a marginal cost pricing rule or an average cost pricing rule.

determines whether a monopoly can perfectly price discriminate or not.

Answer 1

Question 22

Which of the following is NOT an example of a legal barrier to entry?

Answer: information

Information asymmetry is not caused by the government.

Question 23

To be able to price discriminate, a firm must

Answer: prevent resales.

Resales of commodity make it impossible to practice price discrimination.

Question 24

For a single-price monopolist, price is

Answer: greater than marginal revenue.

MR = MC and price is above the MR.

.

Question 25

To maximize its profit, a single-price monopolist will produce an output level where its marginal revenue

Answer: equals its marginal cost.

Profit is maximized where MR = MC.

Question 26

If we compare perfect competition to a single-price monopolist, we see that the monopolist sells

Answer: a smaller quantity at higher prices.

Monopoly restricts output and increases price.

Question 28

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the deadweight loss

Answer: decreases.

Under the perfect price discrimination, firm operates where P = MC, thus DWL decreases.

Question 29

Compared to a single-price monopoly, when a monopoly can perfectly price discriminate, the Consumer Surplus

Answer: increases.

Consumer surplus rises but it usurped by the producer.

Question 30

The total revenue test using the price elasticity of demand

Answer: explains why monopolies will only operate on the elastic portion of their demand curve.

TR will rise as long as firm operate on elastic portion.