Ch. 13 Quiz

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price:

N.

Price discrimination is the practice of:

charging different prices to buyers of the same good.

A natural monopoly exists whenever a single firm:

has economies of scale over the entire range of production that is relevant to its market.

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and you are the only firm providing this service. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:

increasing returns to scale.

At a monopoly's profit-maximizing level of output:

marginal revenue equals marginal cost.

Most electric, gas, and water companies are examples of:

natural monopolies.

Microsoft and its operating system are often cited as an example of a company that grew into a monopolist through:

network externalities.

Price discrimination can occur in all of the following market structures EXCEPT:

perfect competition.

Because monopoly firms are price setters:

they can sell more only by lowering price.

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge higher prices to _____ because their demand is _____.

women; inelastic

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing rule is satisfied by the intersection at point:

L.

_____ firms have the most market power.

Monopoly

A monopoly is a market characterized by:

a single seller.

Conditions that keep new firms out of a monopoly market are:

barriers to entry.

If a monopolist can engage in perfect price discrimination:

it produces at the socially efficient level.

A community college charges lower tuition fees to town residents than to nonresidents. This pricing strategy increases the profits of the community college. Using this information, we can conclude that nonresidents must have a _____ demand for attending the community college than residents.

less price-elastic

A monopolist is likely to produce _____ and charge _____ than a comparable perfectly competitive firm.

less; more

In contrast to perfect competition, a monopoly:

produces less at a higher price.

Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect price to _____, output to _____, consumer surplus to _____, producer surplus to _____, and deadweight loss to _____.

rise; fall; fall; rise; rise

A monopoly is most likely to be temporary if the monopoly power is derived from:

technological change.

The demand curve for a monopoly is:

the industry demand curve.

Market structures are categorized by:

the number of firms and whether products are differentiated.

Price-discriminating firms will impose a price structure that offers customers with a _____ demand a _____ price and offers customers with a(n) _____ demand a _____ price.

B. less elastic; higher; more elastic; lower

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing quantity of output is quantity:

R.

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The marginal cost of producing the profit-maximizing quantity is cost:

P.