econ chp8

Which of the following conditions is not required for price discrimination? Buyers with different elasticities must be physically separate from each other. The good or service cannot be resold by original buyers. The seller must be able to distinguish buyers with different elasticities of demand. The seller must possess some degree of monopoly power.

Buyers with different elasticities must be physically separate from each other.

Suppose a competitive firm and a monopolist are both charging $5 for their respective outputs in their respective industries. One can infer that marginal revenue is $5 for both firms. marginal revenue is $5 for the competitive firm and less than $5 for the monopolist. marginal revenue is less than $5 for both firms. the competitive firm is charging too much and the monopolist too little.

marginal revenue is $5 for the competitive firm and less than $5 for the monopolist.

The pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units. This explains why: there are barriers to entry in pure monopoly. a monopoly has a perfectly elastic demand curve. marginal revenue is less than average revenue at all levels of output. total revenues are greater than total costs at the profit-maximizing level of output.

marginal revenue is less than average revenue at all levels of output.

Price discrimination is: always legal. always illegal. only illegal if it hurts consumers more than nondiscrimination. only illegal if used to lessen or eliminate competition.

only illegal if used to lessen or eliminate competition.

Which statement is correct? In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest. In the short run, the pure monopolist will charge the highest price it can get for its product. Because of its ability to administer prices, the pure monopolist can increase its price and increase its volume of sales simultaneously. Pure monopolists do not always realize economic profits.

Pure monopolists do not always realize economic profits.

Firms are prohibited from entering into contracts, combinations, and conspiracies that restrain trade by: Section 2 of the Sherman Act. Section 8 of the Clayton Act. Section 1 of the Sherman Act. the Wheeler-Lea Act.

Section 1 of the Sherman Act.

Which of the following is not a precondition for price discrimination? The commodity involved must be a durable good. The good or service cannot be resold by the original buyers. The seller must be able to distinguish buyers with different elasticities of demand. The seller must possess some degree of monopoly power.

The commodity involved must be a durable good.

X-inefficiency is said to occur when a firm's: average costs of producing any output are greater than the minimum possible average costs. marginal costs of producing any output are greater than the minimum possible total costs. total costs of producing any output are greater than the minimum possible average costs. short-run costs of producing any output are greater than the long-run costs.

average costs of producing any output are greater than the minimum possible average costs.

The supply curve for a pure monopolist: is the portion of the marginal cost curve that lies above the average variable cost curve. is perfectly price-elastic at the market price. is upsloping across all relevant ranges of output. does not exist because there is no fixed relationship between price and quantity supplied.

does not exist because there is no fixed relationship between price and quantity supplied.

Which of the following is not an example of price discrimination? A rebate offer Eliminating all sales specials and reducing all prices by 10% After-Christmas sales Weekly grocery store coupon fliers

eliminating all sales specials and reducing all prices by 10%

Under conditions of pure monopoly: there are close substitutes. there is no advertising. the firm is a price taker. entry is blocked.

entry is blocked

If a natural monopoly sets price equal to its marginal cost, it will _____. earn an accounting profit earn an economic profit earn zero economic profit incur an economic loss

incur an economic loss

For a profit-maximizing pure monopoly: P = MC and P = minimum ATC. P = MC and P > minimum ATC. P > MC and P can be greater or less than the minimum of ATC. P > MC and P = minimum ATC.

P > MC and P can be greater or less than the minimum of ATC.

Which is not true of price discrimination? It exists when price differences depend critically on different buyers' evaluations of a product. Successful price discrimination will provide the firm with more profit than if it does not discriminate. Successful price discrimination implies that the producer can separate customers into easily identifiable groups. Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.

Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly

Assuming no economies of scale and identical costs, if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist, the likely result would be: an increase in both price and output. unchanged price and reduced output. an increase in price and unchanged output. an increase in price and reduced output.

an increase in price and reduced output.

If a monopolist finds that its marginal revenue exceeds its marginal costs at the current level of output, it should do nothing as it has maximized profits. contract production until marginal revenue equals marginal costs. expand production until marginal revenue equals marginal costs. expand production until price equals marginal costs.

expand production until marginal revenue equals marginal costs.

Comparing the non-price discriminating monopoly outcome to the perfectly price discriminating monopoly outcome, profits are the same. less when price discriminating. greater when price discriminating. greater when charging a uniform price.

greater when price discriminating

In general, the amount of X-inefficiency in an industry: increases as the amount of competition increases. increases as the amount of competition decreases. decreases as the amount of competition stays the same. has no relationship to the amount of competition in an industry.

increases as the amount of competition decreases

The nondiscriminating pure monopolist's demand curve: is the industry demand curve. shows a direct or positive relationship between price and quantity demanded. tends to be inelastic at high prices and elastic at low prices is identical to its marginal revenue curve.

is the industry demand curve

Some firms in the technology sector have achieved economies of scale because costs have been reduced by: price discrimination. socially optimal pricing. fair return pricing. simultaneous consumption.

simultaneous consumption

Which phrase would be most characteristic of pure monopoly? Close substitutes Efficient advertiser Price taker Single seller

single seller

Which does not necessarily apply to a pure monopoly? The product the firm produces must have no close substitutes. The firm must be the sole producer of a product. The firm must earn economic profits. Entry must be blocked.

the firm must earn economic profits

Once a firm has determined the quantity of output it wishes to sell, the price it can charge is determined by the cost of making the product. the firm's demand curve. market demand for the product minus cost. the explicit cost of making the product plus the implicit costs incurred by the firm's owner.

the firms demand curve

When a perfectly competitive firm sells additional units, its total revenues always rise. When a monopolist sells additional units, total revenues always rise. total revenues always fall. marginal revenues rise. total revenues may rise, fall, or remain unchanged.

total revenues may rise, fall, or remain unchanged.