Managerial Economics Questions

All of the following are examples of price discrimination except a. generally lower prices at Walmart than at Targetb. cheaper airfares if the traveler stays over a Saturdayc. discounts for senior citizens at the movies.d. discounts for families with young children at motels.

When firms price-discriminate, people with ________ price elasticity of demand will pay ________ prices relative to those purchasing the same product who have a ________ price elasticity of demand.a. higher; the same; lowerb. lower; higher; higherc. higher; higher; lowerd. lower; lower; higher

Marginal revenue for a monopolist is:a. greater than priceb. the change in total revenue divided by the change in outputc. not equal to priced. equal to price

You own a lemonade stand in competitive lemonade market and as such, you are a price-taking firm. Which of the following events would most likely increase your market power? a. The average total cost curve for firms in the industry is horizontalb. The government abolishes the system of patents and copyrightsc. You own exclusive rights to harvest lemons from all domestic citrus orchidsd. A booming economy increases the demand for lemonade and attracts entry into the market.

True or False?The government can reduce the inefficiency associated with a monopoly through a system of patents and copyrights

In contrast with perfect competition, a monopolist: a. produces where MR>MC, and a perfectly competitively firm produces where P=MCb. May have economic profits in the long runc. Earn zero economic profits in the long rund. produces more at a lower price

Public policies towards monopoly in the United States often consist of a. laws outlawing all of themb. forcing monopoly industries to become perfectly competitivec. the regulation of natural monopoliesd. government takeover if monopoly profit exceeds a certain level.

A monopolist is likely to ___ and ___ than a comparable perfectly competitive firma. produce less; charge lessb. produce less; charge morec. produce more; charge more d. produce more; charge less

True or False? A monopoly can choose the price price or it can choose the quantity, but it cannot choose price and quantity independent of each other.

Which of the following is true? a. The profit-maximizing solution occurs where MR>MCb. Additional units of a good should be produced as long as MR<MCc. Profit-maximizing behavior occurs only in a perfect competitive marketsd. The profit-maximizing solution occurs when MR=MC

A natural monopoly is one that: a. has increasing returns to scale over the entire relevant range of output. b. typically has low fixed costs, making it easy and "natural" for it to shut out competitors. c. monopolizes a natural resource such as a mineral springd. is based on control of something occurring in nature (such as diamonds)

The large barriers to entry are a reason a monopoly:a. maximizes its profits by producing where P=Mcb. produces at the minimum average total cost in the long run.c. Produces with no fixed costs in the long rund. earns an economic profit in the long run

True or False? If a local phone company, a monopolist, were to perfectly price-discriminate, it would reduce total surplus

The practice of selling the same product at different prices at different markets, without corresponding differences in cost, is:a. price discriminationb. output prioritizing c. privatizingd. monopolizing

True or False? Consumer surplus is higher under a single-price monopoly than under a perfectly price-discriminating monopoly

A statement that best reflects an evaluation of monopoly firms is that:a. they have little or no market powerb. they are economically inefficientc. Competition should replace all monopoliesd. consumers are given more choices, lower costs, and higher quality

Which of the following is not an example of price discrimination? a. College students receive a discount at the ice cream store when they show their college ID cardsb. A country club requires members to pay annual dues, but member receive discounted prices to golf. c. Street vendors increase the price of umbrellas when its raining.d. Ladies receive free admission into a nightclub, while men must pay a cover charge.

If a monopoly is forced to charge a price equal to marginal cost:a. output wil fallb. consumer surplus will decreasec. other firms will enter the industryd. the deadweight loss will decrease

Which of the following is true?a. The long-run industry supply curve relates the price of a good or service to the quantity produced after all adjustments to a price change have been madeb. In perfectly competitive industries, the long-run supply curve is always horizontal. c. In establishing the long-run industry supply curve, factor costs and the number of firms are held constant.d. Every point on along-run industry suppl curve shows a price and quantity supplied at which firms in the industry are earning positive economic profit.

In a perfectly competitive market, a. neither producers or consumers are price-takersb. producers are price-takersc. consumers are price-takersd. both producers and consumers are price-takers