econ2001 chap10 T&F

LeadingTellurium avatar
LeadingTellurium
·
·
Download

Start Quiz

Study Flashcards

21 Questions

A firm with monopoly power will always charge a price equal to its marginal cost.

False

The Lerner Index of Monopoly Power is calculated as the difference between price and marginal cost divided by price.

False

Measuring monopoly power only involves qualitative terms.

False

The Lerner Index of Monopoly Power can be expressed in terms of the elasticity of demand facing the firm.

True

A monopolist might supply several different quantities at the same price.

True

In a monopolistic market, there is a one-to-one relationship between price and quantity produced.

False

If the demand curve shifts in a monopoly market, the profit-maximizing output will always change.

False

When a tax of $t$ per unit is levied on a monopolist, the firm's effective marginal cost increases by $t$.

True

In a monopolistic market, if the demand becomes more elastic, the price will always decrease.

False

A monopolist can supply the same quantity at different prices.

True

If a firm's demand is elastic, the markup will be small and the firm will have little monopoly power.

True

A single supermarket can raise its prices significantly without losing customers due to the small elasticity of market demand for food.

False

Small convenience stores typically charge lower prices than supermarkets due to their less price-sensitive customers.

False

In a monopsonistic market, the monopsonist purchases quantity Q*m where marginal expenditure and marginal value intersect.

True

In a competitive market, price and quantity are both lower compared to a monopsonistic market.

False

In a monopoly, average revenue exceeds marginal revenue, leading to a situation where price exceeds marginal cost.

True

A monopsonist purchases up to the point where marginal expenditure intersects average expenditure.

False

Monopsony power depends on the elasticity of demand.

False

When supply is inelastic in a monopsonistic market, the price paid by the monopsonist is close to what it would be in a competitive market.

False

Patent laws protect the monopoly positions of firms that developed unique innovations.

True

Predatory pricing is a practice of pricing to drive future competitors out of business and to discourage new entrants in a market.

True

Explore the relationship between pricing, markup, and the elasticity of demand in microeconomics. Understand how different levels of demand elasticity impact a firm's monopoly power and pricing strategies. Example scenarios further illustrate the concept of markup pricing.

Make Your Own Quizzes and Flashcards

Convert your notes into interactive study material.

Get started for free

More Quizzes Like This

Pricing Theory and Microeconomics
0 questions
Intermediate Microeconomics Concepts Quiz
12 questions
Use Quizgecko on...
Browser
Browser