ECON 2302 Week 3 Quiz

ECON 2302 Week 3 Quiz  | Assignment Help | Central Texas College

Question 1

Figure 15-14                        

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Refer to Figure 15-14. If the monopoly operates at an output level less than Q0, then an increase in output toward (but not exceeding) Q0 would

a. lower the price and lower total surplus.

 b. lower the price and raise total surplus.

c. raise the price and raise total surplus.

d. raise the price and lower total surplus.

Question 2

A monopolist's profits with price discrimination will be                                 

a. higher than if the firm charged just one price because the firm will capture more consumer surplus.

b. higher than if the firm charged a single price because the costs of selling the good will be lower.

c. lower than if the firm charged a single, profit-maximizing price

d. the same as if the firm charged a single, profit-maximizing price.

Question 3

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301 st unit of output is                             

a. $75.40.

b. -$0.40.

c. -$120.00.

 d. -$75.40.

Question 4

Price discrimination explains why Ivy League universities often base tuition costs on students'                         

a. age.

b. gender.

 c. financial resources.

d. high school GPA.

Question 5

A monopolist faces the following demand curve:

Price   Quantity

$8        300

$7        400

$6        500

$5        600

$4        700

$3        800

$2        900

$1        1,000

The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?                                

a. 400

b. 4,200

 c. 900

d. 500

Question 6

Allowing an inventor to have the exclusive rights to market her new invention will lead to

(i)        a product that is priced higher than it would be without the exclusive rights.

(ii)       desirable behavior in the sense that inventors are encouraged to invent.

(iii)     higher profits for the inventor.

a. (i) and (ii) only

 b. (i), (ii), and (iii)

c. (i) and (iii) only

d. (ii) and (iii) only

Question 7

An industry is a natural monopoly when

(i)        the government assists the firm in maintaining the monopoly.

(ii)       a single firm owns a key resource.

(iii)     a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

a. (ii) and (iii) only

b. (ii) only

c. (i) and (ii) only

 d. (iii) only

Question 8

Microsoft faces very little competition from other firms for its Windows software. Why isn’t the price of the software $1,000 per copy?                              

a. because the government would not allow such a high price

b. because stockholders would not allow such a high price

 c. because the company would sell so few copies that they would earn higher profits by selling at a lower price

d. All of the above are correct.

Question 9

Refer to Figure 15-15. To maximize its profit, a monopolist would choose which of the following outcomes?

a. Q = 30 and P = 60

b. Q = 45 and P = 45

c. Q = 60 and P = 30

d. Q = 30 and P = 30

Question 10

A firm that is a natural monopoly                        

a. is not likely to be concerned about new entrants eroding its monopoly power.

b. is taking advantage of economies of scale.

c. would experience a higher average total cost if more firms entered the market.

 d. All of the above are correct.