quiz 9 econ202s

Price discrimination refers to: A. selling a given product for different prices at two different points in time. B. any price above that which is equal to a minimum average total cost. C. the selling of a given product at different prices that do not reflect cost differences. D. the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.

The practice of price discrimination is associated with pure monopoly because: A. it can be practiced whenever a firm's demand curve is downsloping. B. monopolists have considerable ability to control output and price. C. monopolists usually realize economies of scale. D. most monopolists sell differentiated products.

Which of the following is not a precondition for price discrimination? A. The commodity involved must be a durable good. B. The good or service cannot be profitably resold by original buyers. C. The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand. D. The seller must possess some degree of monopoly power.

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers): A. different prices to compensate for differences in the characteristics of the product. B. the same price if per unit cost is constant for each unit of the product. C. that price which equals the buyer's marginal cost. D. the maximum price each would be willing to pay.

Other things equal, in which of the following cases would economic profit be the greatest? A. an unregulated monopolist which is able to engage in price discrimination B. an unregulated, nondiscriminating monopolist C. a regulated monopolist charging a price equal to average total cost D. a regulated monopolist charging a price equal to marginal cost

If a monopolist engages in price discrimination, it will: A. realize a smaller profit. B. charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic. C. produce a smaller output than when it did not discriminate. D. charge a competitive price to all its customers.

Price discrimination is: A. always legal. B. always illegal. C. only illegal if it hurts consumers more than non-discrimination. D. only illegal if used to lessen or eliminate competition

Other things equal, a price discriminating monopolist will: A. realize a smaller economic profit than a nondiscriminating monopolist. B. produce a larger output than a nondiscriminating monopolist. C. produce the same output as a nondiscriminating monopolist. D. produce a smaller output than a nondiscriminating monopolist.

A dilemma of regulation is that: A. the regulated price that achieves allocative efficiency is also likely to result in persistent economic profits. B. the regulated price that results in a "fair return" restricts output by more than would unregulated monopoly. C. regulated pricing always conflicts with the "due process" provision of the Constitution. D. the regulated price that achieves allocative efficiency is also likely to result in losses.

If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to: A. minimum average fixed cost. B. average total cost. C. marginal cost. D. marginal revenue.

If a regulatory commission wants to establish a socially optimal price for a natural monopoly, it should select a price: A. at which the marginal cost curve intersects the demand curve. B. at which marginal revenue is zero. C. at which the average total cost curve intersects the demand curve. D. which corresponds with the equality of marginal cost and marginal revenue.

Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC. This means that: A. both productive and allocative efficiency are being achieved. B. productive efficiency is being achieved, but not allocative efficiency. C. allocative efficiency is being achieved, but not productive efficiency. D. neither productive nor allocative efficiency is being achieved.

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then: A. the firm will realize an economic profit. B. the firm will earn only a normal profit. C. allocative efficiency will be worsened. D. the firm must be subsidized or it will go bankrupt.

(Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. This pricing system occurs because: A. children have an elastic demand for game ticket but an inelastic demand for concession items. B. children have an inelastic demand for game tickets but an elastic demand for concession items. C. the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults. D. children can personally "consume" only a single game ticket, but can personally consume more than one concession item.

(Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. Which of the following conditions of price discrimination explain why this occurs? A. The seller must have some monopoly power; that is, it must be able to set the product price. B. The seller must be able to identify buyers by group characteristics such as age or income. C. Groups must have different elasticities of demand for the product. D. The items cannot be bought by people in the low-price group and transferred to members of the high-price group.

Resource pricing is important because: A. resource prices are a major determinant of money incomes. B. resource prices allocate scarce resources among alternative uses. C. resource prices, along with resource productivity, are important to firms in minimizing their costs. D. of all of these reasons.

Which of the following statements best illustrates the concept of derived demand? A. As income goes up the demand for farm products will increase by a smaller relative amount. B. A decline in the price of margarine will reduce the demand for butter. C. A decline in the demand for shoes will cause the demand for leather to decline. D. When the price of gasoline goes up, the demand for motor oil will decline.

When economists say that the demand for labor is a derived demand, they mean that it is: A. dependent on government expenditures for public goods and services. B. related to the demand for the product or service labor is producing. C. based on the desire of businesses to exploit labor by paying below equilibrium wage rates. D. based on the assumption that workers are trying to maximize their money incomes.

The demand for airline pilots results from the demand for air travel. This fact is an example of: A. resource substitutability. B. rising marginal resource cost. C. elasticity of resource demand. D. the derived demand for labor.

We say that the demand for labor is a derived demand because: A. labor is a necessary input in the production of every good or service. B. we demand the product that labor helps produce rather than labor service per se. C. the forces of supply and demand do not apply directly to labor markets. D. labor is hired using the MRP = MRC rule.

The demand for a resource depends primarily on: A. the supply of that resource. B. the demand for the product or service that it helps produce. C. the price of that input. D. the elasticity of supply of substitute inputs.

In the United States professional football players earn much higher incomes than professional soccer players. This occurs because: A. most football players are good soccer players while the reverse is not true. B. consumers have a greater demand for football games than for soccer games. C. football and soccer games are highly substitutable products for most consumers. D. the marginal productivity of soccer players exceeds that of football players.

Marginal revenue product measures the: A. amount by which the extra production of one more worker increases a firm's total revenue. B. decline in product price that a firm must accept to sell the extra output of one more worker. C. increase in total resource cost resulting from the hire of one extra unit of a resource. D. increase in total revenue resulting from the production of one more unit of a product.

The marginal revenue product schedule is: A. the same whether the firm is selling in a purely competitive or imperfectly competitive market. B. the firm's resource demand schedule. C. the firm's resource supply schedule. D. upsloping.

The purely competitive employer of resource A will maximize the profits from A by equating the: A. price of A with the MRP of A. B. marginal productivity of A with the MRC of A. C. marginal productivity of A with the price of A. D. price of A with the MRC of A.

The MRP curve for labor: A. intersects the firm's labor demand curve from above. B. is the firm's labor demand curve. C. lies below the firm's labor demand curve. D. lies above the firm's labor demand curve.

Marginal product is: A. the output of the least skilled worker. B. a worker's output multiplied by the price at which each unit can be sold. C. the amount an additional worker adds to the firm's total output. D. the amount any given worker contributes to the firm's total revenue.

The labor demand curve of a purely competitive seller: A. slopes downward because the elasticity of demand is always less than unity. B. slopes downward because of diminishing marginal productivity. C. is perfectly elastic at the going wage rate. D. slopes downward because of diminishing marginal utility.

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is: A. $6. B. $12. C. $36. D. $72.

If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the: A. marginal revenue product of each worker is $25. B. marginal revenue product of the first worker is $20. C. marginal revenue product of the second worker is $20. D. data given do not permit the determination of the marginal revenue product of either worker

A competitive employer should hire additional labor as long as: A. the MRP exceeds the wage rate. B. the wage rate is less than MP. C. average product exceeds MP. D. MC exceeds MR.

A firm will find it profitable to hire workers up to the point at which their: A. marginal resource cost equals their wage rate. B. wage rate equals product price. C. MP is equal to their MRP. D. marginal resource cost is equal to their MRP.

A profit-maximizing firm employs resources to the point where: A. MRC = MP. B. Resource price equals product price. C. MRP = MRC. D. MP = product price.

The general rule for hiring any input (say, labor) in the profit-maximizing amount is MRC = MRP. This rule takes the special form W = MRP (where W is the wage rate) when the: A. labor supply curve is upsloping. B. supply of labor is inelastic. C. firm is hiring labor under purely competitive conditions. D. firm is hiring labor under imperfectly competitive conditions.

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information we can say that: A. profits will be increased by hiring additional workers. B. profits will be increased by hiring fewer workers. C. marginal revenue product must exceed average revenue product. D. the restaurant is maximizing profits.

Marginal resource cost is: A. the increase in total resource cost associated with the production of one more unit of output. B. the increase in total resource cost associated with the hire of one more unit of the resource. C. total resource cost divided by the number of inputs employed. D. the change in total revenue associated with the employment of one more unit of the resource.

Other things equal, the resource demand curve of an imperfectly competitive seller will: A. lie below its marginal revenue product curve. B. be subject to increasing marginal productivity. C. be less elastic than that of a purely competitive seller. D. be more elastic than that of a purely competitive seller.

The MRP curve is the resource demand curve for: A. neither the purely competitive nor the imperfectly competitive seller. B. the imperfectly competitive seller, but not the purely competitive seller. C. the purely competitive seller, but not the imperfectly competitive seller. D. both the purely competitive and imperfectly competitive seller.

The labor demand curve of an imperfectly competitive seller is downsloping: A. solely because of diminishing marginal utility. B. both because of diminishing returns and the necessity to lower price to sell more output. C. solely because product price must be reduced to sell more output. D. solely because of diminishing returns.

Other things equal, we would expect the labor demand curve of a monopolistic seller to: A. decline more rapidly than that of a purely competitive seller. B. decline less rapidly than that of a purely competitive seller. C. decline at the same rate as that of a purely competitive seller. D. be more elastic than that of a purely competitive seller.

The change in a firm's total revenue that results from hiring an additional worker is measured by: A. marginal product. B. marginal revenue. C. marginal revenue product. D. average revenue product.

The labor demand curve of a purely competitive seller: A. slopes downward because the firm must lower price to sell more output. B. slopes downward because labor productivity increases as successive workers are hired. C. is perfectly elastic because the firm is hiring an insignificant portion of the total labor supply. D. slopes downward because the marginal product of successive workers declines.

The MRP curve for labor: A. is downsloping and shows the relationship between wage rates and the quantity of labor demanded. B. is perfectly elastic if the firm is selling its output competitively. C. is upsloping and lies above the labor supply curve. D. will shift location when the wage rate changes.

If the wage rate increases: A. a purely competitive producer will hire less labor, but an imperfectly competitive producer will not. B. an imperfectly competitive producer will hire less labor, but a purely competitive producer will not. C. a purely competitive and an imperfectly competitive producer will both hire less labor. D. an imperfectly competitive producer may find it profitable to hire either more or less labor.