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Quiz 15
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Questions in this quiz (20)
1Which of the following is not an example of a barrier to entry?
- ARuby's Mining Company owns a unique plot of land in Utah, under which lies the only large deposit of Red beryl in the world.
- BA pharmaceutical company obtains a patent for a specific allergy medication.
- CA musician obtains a copyright for her original song.
- DAn entrepreneur opens a popular new hair salon.
2A natural monopoly occurs when
- Athe product is sold in its natural state, such as water or diamonds
- Bthere are economies of scale over the relevant range of output
- Cthe firm is characterized by a rising marginal cost curve
- Dproduction requires the use of free natural resources, such as water or air
3Monopoly firms face
- Adownward-sloping demand curves, so they can sell as much output as they desire at the market price
- Bdownward-sloping demand curve, so they can sell only the specific price-quantity combinations that lie on the demand curve.
- Chorizontal demand curves, so they can sell as much output as they desire at the market price.
- Dhorizontal demand curve, so they can sell only a limited quantity of output at each price.
4Refer to Figure 15-5. Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?
- A$700
- B$980
- C$490
- D$280
5Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?
- A$7
- B$10.50
- C$14
- D$12
6Refer to Figure 15-5. Based upon the information shown, how many units will Bearclaws produce to maximize profits?
- A70
- B90
- C105
- D130
7For a firm to price discriminate,
- Ait must be a natural monopoly
- Bit must have some market power
- Cit must be regulated by the government
- Dconsumers must tell the firm what they are willing to pay for the product
8Price discrimination
- Ais illegal in the United States and Europe
- Bcan occur in both perfectly competitive and monopoly markets
- Cis it illogical because it does not maximize profits
- Dcan maximize profits if the seller can prevent the resale of goods between customers
9A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it
- Aonly shows G- rated movies
- Bhas no monopoly pricing power
- Ccannot easily distinguish between the two groups of customers
- Dcan prevent children from buying the lower-priced tickets and selling them to adults
10Vincent operates a scenic tour business in Boston. He has one bus that can fit 50 people per tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
Assume that Vincent's customers are always available for the tour, therefore, he can fill his bus for each tour as long as there is sufficient demand for the day.
Refer to scenarios 15-2. What is vincent's total revenue on a typical day?- A$1,500
- B$1,800
- C$2,170
- D$2, 700
11Refer to Figure 15-8. What are the socially efficient price and quantity for this natural monopolist?
- AD and T
- BE and T
- CE and U
- DF and V
12When regulators use a marginal- cost pricing strategy to regulate a natural monopoly, the regulated monopoly
- Awill experience positive profits
- Bwill experience a price above average total costs
- Cdoes not need a government subsidy to remain in business
- Dwill experience
13Refer to Table 15-1. What is the maximum profit that the monopolist can earn?
- A$10
- B$20
- C$30
- D$40
14In order for antitrust laws to raise social welfare, the government must
- Adisallow synergy benefits from accruing to monopolists
- Bdisallow any mergers from taking place
- Cbe able to determine which mergers are desirable and which are not
- Dalways attempt to keep markets in their most competitive form
15Monopolies are socially inefficient because the price they charge is
- Aequal to marginal revenue
- Babove marginal cost
- Cequal to demand
- Dabove demand
16If a profit-maximizing monopolist faces a downward-sloping market demand curve, its
- Aaverage revenue is less than the price of the product
- Baverage revenue is less than marginal revenue
- Cmarginal revenue is less than the price of the product
- Dmarginal revenue is greater than the price of the product
17Which of the following is not an example of price discrimination by a firm?
- AChildren's meals at a restaurant
- BA natural gas company charging all customers a higher rate in the winter than in the summer
- CDiscounts for education at a clothing store
- DOnline coupon codes
18For a monopoly, the socially efficient level of output occurs where
- Amarginal revenue equals marginal cost
- Bprice equals marginal cost
- Cmarginal revenue equals average total cost
- Dprice equals average total cost
19If a monopolist is able to perfectly price discriminate
- Aconsumer surplus is always increased
- Btotal surplus is always decreased
- Cconsumer surplus and deadweight losses are transformed into monopoly profits
- Dthe price effect dominates the output effect on monopoly revenue
20Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has
- Aless incentive to advertise than it would otherwise have
- Bless market power than it would otherwise have
- Cmore control over the price of diamonds than it would otherwise have
- Dhigher profits than it would otherwise have
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- Quiz on Quiz 15, created by Rylee Nen on 01/05/2021.
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- Rylee Nen
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- English
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