Question 1

Which of the following is perfectly price-discriminating monopolist able to do?

A	maximize profit, and produce a socially optimal level of output
B	maximize profit, but not produce a socially optimal level of output
C	produce a socially optimal level of output, but not maximize profit
D	produce a socially optimal level of output, and minimize the total cost

Question 2

What situation is described by perfect price discrimination?

A	The monopolist knows the exact willingness to pay of each of its customers.
B	The monopolist charges exactly two different prices to exactly two different groups of customers.
C	The monopolist maximizes consumer surplus.
D	The monopolist experiences a zero economic profit.

Question 3

Scenario 17-4 Assume that a local bank sells two services, chequing accounts and ATM card services. Mr. Leung is willing to pay $10 a month for the bank to service his chequing account and $6 a month for unlimited use of his ATM card. Ms. Gardner is willing to pay only $6 for a chequing account but is willing to pay $10 for unlimited use of her ATM card. Assume that each customer uses only one service and that the bank can provide each of these services at zero marginal cost.

Refer to Scenario 17-4. If the bank is able to use tying to price a chequing account and the ATM service, what is the profit-maximizing price to charge for the tied good?

Question 3 options:

A	$6
B	$12
C	$16
D	$20

Question 4

Assume that Peach Computers has entered into a resale price maintenance agreement with Computer Super Stores Inc. (CSS Inc.) but not with CompuMart. In this case, what will result?

A	The wholesale price of Peach computers will be different for CSS Inc. than it is for CompuMart.
B	Peach computers will not succeed in increasing profits by having a resale price maintenance agreement with all retail outlets that sell its products.
C	CompuMart will benefit from customers who go to CSS Inc. for information about different computers.
D	CSS Inc. will sell Peach computers at a lower price than CompuMart.

Question 5

Which market force can eliminate the inefficiency inherent in monopoly pricing?

A	arbitrage
B	cost-plus pricing
C	price discrimination
D	regulations that force monopolies to reduce their levels of output

Question 6

As the number of firms in an oligopolistic market grows larger, what does the price approach?

A	average total cost
B	marginal cost
C	marginal revenue
D	the monopoly price

Question 7

Table 15-4 A monopolist faces the following demand curve:

Price	Quantity Demanded
$8	300
$7	400
$6	500
$5	600
$4	700
$3	800
$2	900
$1	1000

Refer to Table 15-4. Consider that the monopolist has fixed costs of $1000 and has a constant marginal cost of $3 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

A	400
B	500
C	700
D	800