Econ 101 Final Practice

Which of the following conditions is NOT required for price discrimination? A. Buyer with different elasticities must be physically separate from each other B. The good or service cannot be profitably resold by original buyers C. The seller must be able to segment the markey, that is, to distinguish buyers with different elasticities of demand D. The seller must possess some degree of monopoly power

A. Buyer with different elasticities must be physically separate from each other

If a regulatory commission wants to provide a natural monopoly with a fair return, establish a price that is equal to: A. minimum average fixed cost B. average total cost C. marginal cost D. marginal revenue

B. average total cost

The practice of price discrimination is associated with pure monopoly because: A. it can be practiced whenever a firm's demand curve is downsloping B. monopolist have considerable ability to control output and price C. monopolist usually realize economies of scale D. most monopolists sell differentiated products

B. monopolist have considerable ability to control output and price

Economic profit in the long run is: A. possible for both a pure monopoly and a pure competitor B. possible for a pure monopoly, but not for a pure competitor C. impossible for both a pure monopolist and a pure competitor D. only possible when barriers to entry are nonexistent

B. possible for a pure monopoly, but not for a pure competitor

Price discrimination refers to: A. selling a given product for different prices at two different points in time B. any price above that which is equal to a minimum average total cost C. the selling of a given product at different prices that do not reflect cost differences D. the difference between the prices a purely competitive seller and a purely monopolistic selling would charge

C. the selling of a given product at different prices that do not reflect cost differences

An important economic problem associated with pure monopoly is that, at the profit maximizing output, resources areL A. overallocated because price exceeds marginal cost B. overallocated because marginal cost exceeds price C. underallocated because price exceeds marginal cost D. underallocated because marginal cost exceeds price

C. underallocated because price exceeds marginal cost

A pure monopolist will maximize profits by producing at that output where price and marginal cost are equal: True False

False

In the short run a pure monopolist will charge the highest price the market will bear for its product: True False

False

In the short run, a pure monopolist will maximize profits by producing that level of output where the difference between price and average total cost is at a maximum: True False

False

Pure monopolists always earn economic profits

False