At equilibrium, monopolist will charge a ______________ price and sell a ______________ quantity as compared to pertfecly competitive firm.

• A) Lower; smaller
• B) Higher; larger
• C) Higher; smaller
• D) Lower; larger

The benefit of a subsidy accrues mostly to producers:

• A) In every instance.
• B) If Ed/Es is large.
• C) If Ed/Es is small.
• D) If Ed and Es are equal.

A monopolist firm will determine its profit maximizing level of output where:

• A) Price equals marginal cost.
• B) Marginal revenue equals marginal cost.
• C) Price equals marginal revenue.
• D) Total revenue equals average total cost.

A lawyer charges different fee from his customers according to their ability to pay. This is an example of:

• A) Second degree price discrimination.
• B) First degree price discrimination.
• C) None of the given options.
• D) Third degree price discrimination.

In a market with a bilateral monopoly:

• A) There are a few buyers and many sellers.
• B) There are many buyers and a single seller.
• C) There is a single buyer and few sellers.
• D) There is a single buyer and a single seller.

The monopolist that maximizes profit:

• A) Does not impose a cost on society because the selling price is above marginal cost.
• B) Imposes a cost on society because the selling price is equal to marginal cost.
• C) Imposes a cost on society because the selling price is above marginal cost.
• D) Does not impose a cost on society because price is equal to marginal cost.

Governments may successfully intervene in competitive markets in order to achieve economic efficiency:

• A) In cases of both positive and negative externalities.
• B) In cases of positive externalities only.
• C) At no time; competitive markets are always efficient without government intervention.
• D) In cases of negative externalities only.

A downward-sloping demand curve exists for:

• A) Both a monopoly and a perfectly competitive firm.
• B) A perfectly competitive firm, but not for a monopoly.
• C) Neither a monopoly nor a perfectly competitive firm.
• D) A monopoly, but not for a perfectly competitive firm.

Unemployment arises when firms are not allowed to pay:

• A) More than minimum wage
• B) All of the given options
• C) Equilibrium wage
• D) Less than minimum wage

Most of the burden of a tax per unit of output will be borne by consumers when demand is relatively ______________ and supply is relatively ______________.

• A) Inelastic; elastic
• B) Elastic; elastic
• C) Inelastic; inelastic
• D) Elastic; inelastic

Monopoly power explains the firm's ability to:

• A) Equate marginal cost to marginal revenue.
• B) Set price above average variable cost.
• C) Set price above marginal cost.
• D) Set price equal to marginal cost.

A local restaurant offers "early bird" price discounts for dinners ordered from 4:30 to 6:30 PM. This is an example of:

• A) Tying.
• B) Peak-load pricing.
• C) Second-degree price discrimination.
• D) A two-part tariff.

The monopolist has no supply curve because:

• A) The relationship between price and quantity depends on both marginal cost and average cost.
• B) The monopolist's marginal cost curve changes considerably over time.
• C) The quantity supplied at any particular price depends on the monopolist's demand curve.
• D) There is a single seller in the market.

When a firm charges each customer the maximum price that the customer is willing to pay, the firm:

• A) Engages in a discrete pricing strategy.
• B) Charges the average reservation price.
• C) Engages in second-degree price discrimination.
• D) Engages in first-degree price discrimination.

All of the following factors determine the degree of monopsony power EXCEPT:

• A) Interaction among buyers
• B) Elasticity of market supply
• C) Elasticity of market demand
• D) Number of buyers in the market

Elasticity of supply is represented by Es and own price elasticity of demand by Ed, the fraction of the tax passed on to consumers in the form of higher prices is:

• A) Es/(Es-Ed).
• B) Es/(Ed-Es).
• C) Ed/(Ed-Es).
• D) Ed/(Es-Ed).

Discrimination based upon the quantity consumed is referred to as ______________ price discrimination.

• A) First-degree
• B) Third-degree
• C) Second degree
• D) Group

The benefit of a subsidy accrues mostly to consumers:

• A) If Ed and Es are equal.
• B) In every instance.
• C) If Ed/Es is small.
• D) If Ed/Es is large.

Which of the following is NOT associated with a high degree of monopoly power?

• A) A small number of firms in the market.
• B) Significant barriers to entry.
• C) Significant price competition among firms in the market.
• D) A relatively inelastic demand curve for the firm.

Suppose total revenue of a monopolist increases from Rs.105 to Rs.108 as a result of increase in output from 3 units to 4 units. The marginal revenue for the 4th unit will be:

• A) 3
• B) 2
• C) 8
• D) 4