Monopoly and Price Discrimination Quiz

Explore microeconomics with questions on monopoly, price discrimination types, profit-maximizing rules & market characteristics.

Practice Learn Test

In monopoly, what is the characteristic feature of the firm?

Multiple sellers

Single seller

Perfect competition

Price taker

What is price discrimination?

Selling different products at different prices

Charging different prices to different consumers for the same product

Changing prices randomly

Selling products at a fixed price

What is the profit-maximizing rule for a monopolist?

Produce where marginal cost equals average total cost

Produce where marginal revenue equals marginal cost

Produce where marginal revenue equals average total cost

Produce where average revenue equals marginal cost

Which of the following is an example of a natural monopoly?

Electricity distribution

Smartphone manufacturing

Fast food restaurants

Clothing retail stores

Which of the following is a condition necessary for price discrimination to occur?

Perfect competition

Homogeneous products

Market power

Identical consumer preferences

What is the main goal of price discrimination for a monopolist?

To increase consumer surplus

To decrease producer surplus

To maximize total surplus

To capture more consumer surplus as producer surplus

Which of the following is a characteristic of first-degree price discrimination?

The monopolist charges a different price for each unit of output

The monopolist segments the market into distinct groups and charges each group a different price

The monopolist charges the maximum price each consumer is willing to pay

The monopolist charges the same price to all consumers

What is a necessary condition for third-degree price discrimination?

The monopolist must have perfect information about consumer preferences

There must be no possibility of resale between consumer groups

The monopolist must have multiple units of a good to sell

The elasticity of demand must be different between consumer groups

Which of the following is NOT a potential consequence of price discrimination?

Increased consumer surplus

Reduction in deadweight loss

Loss of consumer welfare

Decreased producer surplus

#10

Which type of price discrimination occurs when a firm charges different prices based on the quantity consumed?

First-degree price discrimination

Second-degree price discrimination

Third-degree price discrimination

Perfect price discrimination

#11

Under perfect price discrimination, what happens to consumer surplus?

It increases

It decreases

It remains unchanged

It becomes zero

#12

What is a potential limitation of using perfect price discrimination in practice?

It requires significant market power

It leads to deadweight loss

It requires perfect information about consumer preferences

It results in decreased consumer surplus

#13

What is the primary objective of a monopolist engaging in price discrimination?

To maximize consumer surplus

To minimize deadweight loss

To increase total revenue

To capture more surplus from consumers