Economics Quiz

Key for Homework 5
Question For a monopolist to sell more units of output,
Answer

the price must be increased. the price must be reduced. demand must become more elastic. the other competing firms must sell fewer units.

Question In a monopoly, the market demand curve is
Answer

the same as the demand curve facing the firm. the summation of all the individual firm s demand curves. nonexistent. the marginal cost curve above minimum average variable cost.

Question A monopolist maximizes total revenue when its marginal revenue is ________.
Answer

positive zero negative equal to price

Question For a monopolist, price
Answer

equals marginal revenue. is less than marginal revenue. is greater than marginal revenue.
zero. positive. negative.

Question Relative to a competitively organized industry, a monopoly produces Answer

more output, charges higher prices and, earns economic profits. less output, charges lower prices and, earns economic profits. less output, charges lower prices and, earns only a normal profit. less output, charges higher prices and, earns economic profits.

Question Which of the following is NOT an example of price discrimination?
Answer

Airlines charging lower prices to travelers who stay over a Saturday night
Student discounts at movie theaters
Back-to-school sales
Discounted coffee for senior citizens at restaurants

Question Perfect price discrimination
Answer

is charging different prices to different buyers. is an attempt by monopolists to capture consumer surplus as profit. can eliminate the deadweight loss to society of a monopoly. do all of these.

Question A monopolist who has a horizontal ATC schedule and perfectly price discriminates
Answer

leaves buyers a decreased but still positive amount of consumer surplus. increases the amount of consumer surplus that is lost to the buyers and not gained by the monopolist. appropriates all consumer surplus as