6. Which of the following is TRUE? A) Charging all customers the same price when
ID: 1237006 • Letter: 6
Question
6. Which of the following is TRUE?A) Charging all customers the same price when costs vary can actually be a case of price discrimination.
B) Price discrimination guarantees that the monopolist will make a profit.
C) Monopoly results in a higher quantity of output being sold compared with perfect competition.
D) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
7. When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price, the differences are called
A) monopoly profits.
B) consumer surplus.
C) deadweight loss.
D) opportunity cost.
8. A monopolist would probably earn fewer profits if
A) the importance of specialized capital equipment in its production techniques increased.
B) tariffs on competing products were lowered.
C) the time length of patents increased.
D) environmental regulations increased that required the purchase of special capital equipment.
9. The monopolist determines the price and quantity combination that maximizes short-run profits by
A) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
B) finding the quantity at which average revenue and average total cost are furthest apart.
C) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
D) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.
10. A pure monopolist is selling 7 units at a price of $12. If the marginal revenue of the 8th unit is $4, then the price of the 8th unit is
A) $11.
B) greater than $12.
C) $4.
D) $10.
Explanation / Answer
6. C) Monopoly results in a higher quantity of output being sold compared with perfect competition. 7. D) opportunity cost. 8. A) the importance of specialized capital equipment in its production techniques increased. 9. B) finding the quantity at which average revenue and average total cost are furthest apart. 10. B) greater than $12.
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