G202 EXAMINATION TEST 2026 QUESTIONS
WITH ANSWERS GRADED A+
◉ What type of market power does a monopoly have Answer: A
monopoly has 100% market power.
◉ How can market power exist among multiple firms Answer: Market
power can exist if products are differentiated or markets are segmented,
leading to customer loyalty.
◉ What is the manager's role in gaining market power Answer: The
manager's job is to sustain factors that limit competition.
◉ Name a market strategy to restrict competition.. Answer: Guarding
trade secrets.
◉ What is an example of a non-market strategy to restrict competition
Answer: Government licensing.
◉ What is the profit-maximizing sales target Answer: The profit-
maximizing sales target occurs where marginal revenue equals marginal
cost.
, ◉ What happens if marginal revenue is greater than marginal cost
Answer: The firm could make a profit by selling one more unit.
◉ How is the optimal price determined Answer: The optimal price is
found as a markup over cost, depending on the demand for the product.
◉ What effect does more inelastic demand have on pricing Answer:
More inelastic demand results in a higher markup over costs.
◉ How does a firm with market power set prices and output Answer: A
firm sets price higher and output lower than socially efficient levels.
◉ What is imperfect price discrimination Answer: Imperfect price
discrimination occurs when different groups of consumers are charged
different prices based on their willingness to pay.
◉ What is perfect price discrimination Answer: Perfect price
discrimination charges each consumer a price equal to their willingness
to pay, resulting in no consumer surplus.
◉ What is the impact of increasing the number of segmented groups in
pricing Answer: It increases producer surplus (profits) but decreases
consumer surplus.
WITH ANSWERS GRADED A+
◉ What type of market power does a monopoly have Answer: A
monopoly has 100% market power.
◉ How can market power exist among multiple firms Answer: Market
power can exist if products are differentiated or markets are segmented,
leading to customer loyalty.
◉ What is the manager's role in gaining market power Answer: The
manager's job is to sustain factors that limit competition.
◉ Name a market strategy to restrict competition.. Answer: Guarding
trade secrets.
◉ What is an example of a non-market strategy to restrict competition
Answer: Government licensing.
◉ What is the profit-maximizing sales target Answer: The profit-
maximizing sales target occurs where marginal revenue equals marginal
cost.
, ◉ What happens if marginal revenue is greater than marginal cost
Answer: The firm could make a profit by selling one more unit.
◉ How is the optimal price determined Answer: The optimal price is
found as a markup over cost, depending on the demand for the product.
◉ What effect does more inelastic demand have on pricing Answer:
More inelastic demand results in a higher markup over costs.
◉ How does a firm with market power set prices and output Answer: A
firm sets price higher and output lower than socially efficient levels.
◉ What is imperfect price discrimination Answer: Imperfect price
discrimination occurs when different groups of consumers are charged
different prices based on their willingness to pay.
◉ What is perfect price discrimination Answer: Perfect price
discrimination charges each consumer a price equal to their willingness
to pay, resulting in no consumer surplus.
◉ What is the impact of increasing the number of segmented groups in
pricing Answer: It increases producer surplus (profits) but decreases
consumer surplus.
