The long-run supply curve of a decreasing cost industry is:

• A) Downward sloping.
• B) Vertical.
• C) Horizontal.
• D) Upward sloping.

A pricing strategy that requires consumers pay an up-front fee plus an additional fee for each unit of product purchased is a:

• A) Form of perfect price discrimination.
• B) Two-part tariff.
• C) None of the given options.
• D) Tying contract.

When people pay a monthly fee to have a hookup to the telephone company's line plus a fee for each call actually made, we would say that the telephone company is using:

• A) Limit pricing.
• B) A two-part tariff.
• C) Two stage price discrimination.
• D) Second-degree price discrimination.

Which of the following is NOT true for monopoly?

• A) The profit maximizing output is the one at which the difference between total revenue and total cost is largest.
• B) At the profit maximizing output level, price equals marginal cost.
• C) The monopolist's demand curve is the same as the market demand curve.
• D) The profit maximizing output is the one at which marginal revenue is equal to marginal cost.

In peak load pricing:

• A) Marginal revenue is equal in both periods.
• B) Marginal revenue in the peak period is less than in the off-peak period.
• C) The sum of the marginal revenues is greater than the sum of the marginal costs.
• D) Marginal revenue in the peak period is greater than in the off-peak period.

A monopsonist will buy _____ units of input than a competitor, and will pay _____ per unit.

• A) More; more
• B) Fewer; less
• C) More; less
• D) Fewer; more

The situation in which buyers are able to affect the price of a good is referred to as ______________ power.

• A) Countervailing
• B) Monopoly
• C) Monopsony
• D) Purchasing

Which of the following factors determine the firm's elasticity of demand?

• A) All of the given options.
• B) Number of firms.
• C) Elasticity of market demand.
• D) Nature of interaction among firms.

Competitive markets generate inefficient allocation of resources when there is/are:

• A) Lack of information.
• B) Externalities.
• C) Government intervene without market failure.
• D) All of the given options.

A price support may be pictured by:

• A) Shifting the demand curve to the left by the amount of the government purchase.
• B) Shifting the supply curve to the left by the amount of the government purchase.
• C) Shifting the supply curve to the right by the amount of the government purchase.
• D) Shifting the demand curve to the right by the amount of the government purchase.

Government intervention without market failure creates:

• A) Efficiency
• B) Economies of scale
• C) Inefficiency
• D) Economies of scope

An amusement park charges an entrance fee of $75 per person, then $2.50 per ride. This is an example of:

• A) Bundling.
• B) A two-part tariff.
• C) Second-degree price discrimination.
• D) First-degree price discrimination.

A tennis pro charges $15 per hour for tennis lessons for children and $30 per hour for tennis lessons for adults. The tennis pro is practicing:

• A) Third-degree price discrimination.
• B) Fourth-degree price discrimination.
• C) First-degree price discrimination.
• D) Second-degree price discrimination.

All of the following options are true for monopoly EXCEPT?

• A) The profit maximizing output is the one at which the difference between total revenue and total cost is largest.
• B) At the profit maximizing output, price equals marginal cost.
• C) The monopolist's demand curve is the same as the market demand curve.
• D) The profit maximizing output is the one at which marginal revenue and marginal cost are equal.

Due to imposition of a specific tax per unit on a product imposed by the government, consumer surplus will ________ and producer surplus will _________.

• A) Decrease; increase
• B) Decrease; decrease
• C) Increase; decrease
• D) Increase; increase

Which of the following is unlikely to occur as a result of a price support program?

• A) An increase in quantity purchased.
• B) An economic cost to government.
• C) A reduction in producer surplus.
• D) A reduction in consumer surplus.

Import tariffs generally result in:

• A) Less consumer surplus.
• B) A deadweight loss.
• C) All of the given options.
• D) Higher domestic prices.

With respect to monopolies, deadweight loss refers to the:

• A) None of the given options.
• B) Lost consumer surplus from monopolistic pricing.
• C) Socially unproductive amounts of money spent to obtain or acquire a monopoly.
• D) Net loss in consumer and producer surplus due to a monopolist’s pricing strategy/policy.

Which of the following strategies are used by business firms to capture consumer surplus?

• A) Two-part tariffs.
• B) All of the given options.
• C) Bundling.
• D) Price discrimination.

A monopoly is a market structure characterized by:

• A) Limited entry and exit.
• B) A product with many close substitutes.
• C) A large number of small firms.
• D) A single buyer.