Question 1

The supply curve for a monopoly is

Accepted Answer

A)   the portion of the marginal cost curve that lies above the average variable cost curve.
B)   the portion of the marginal cost curve that lies above the average total cost curve.
C)   the portion of the marginal cost curve that lies above the average fixed cost curve.
D)   not clearly defined.E) A) and B)
F) C) and D)

Question 2

X-inefficiency is said to occur when a monopolist's

Accepted Answer

A)   average cost is greater than the minimum possible average cost.
B)   marginal costs are greater than the minimum possible average cost.
C)   output level is higher than is socially optimal.
D)   price is higher than its average cost.E) B) and D)
F) B) and C)

Question 3

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Accepted Answer

A)   more elastic in market X than in market Y.
B)   less elastic in market X than in market Y.
C)   less elastic in market Y than in market X.
D)   the same in both markets X and Y.E) A) and D)
F) A) and C)

Question 4

Which of the following is a characteristic of pure monopoly?

Accepted Answer

A)   close substitute products
B)   barriers to entry
C)   the absence of market power
D)   "price taking"E) All of the above
F) B) and C)

Question 5

An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are

Accepted Answer

A)   overallocated because price exceeds marginal cost.
B)   overallocated because marginal cost exceeds price.
C)   underallocated because price exceeds marginal cost.
D)   underallocated because marginal cost exceeds price.E) A) and B)
F) C) and D)

Question 6

One defining characteristic of pure monopoly is that

Accepted Answer

A)   the monopolist is a price taker.
B)   the monopolist uses advertising.
C)   the monopolist produces a product with no close substitutes.
D)   there is relatively easy entry into the industry, but exit is difficult.E) A) and D)
F) A) and C)

Question 7

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Accepted Answer

A) True 
 B)False

Question 8

A price-discriminating monopolist will set a higher price where demand is more elastic and a lower price where demand is less elastic.

Accepted Answer

A) True 
 B)False

Question 9

Assume that a monopolist faces a linear demand curve. If the firm is operating at an output level where marginal revenue is positive, the firm

Accepted Answer

A)   has maximized total revenues.
B)   could raise revenues by raising prices.
C)   can always increase profits by lowering its price.
D)   is operating on the elastic portion of its demand curve.E) None of the above
F) A) and B)

Question 10

Which of the following is not a precondition for price discrimination?

Accepted Answer

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.E) B) and D)
F) B) and C)

Question 11

A nondiscriminating profit-maximizing monopolist

Accepted Answer

A)   will never produce in the output range where marginal revenue is positive.
B)   will never produce in the output range where demand is inelastic.
C)   will never produce in the output range where demand is elastic.
D)   may produce where demand is either elastic or inelastic, depending on the level of production costs.E) C) and D)
F) A) and C)

Question 12

Which of the following is not a barrier to entry in an industry?

Accepted Answer

A)   economies of scale
B)   profit maximization
C)   strategic pricing
D)   government licensingE) A) and B)
F) None of the above

Question 13

Pure monopolists

Accepted Answer

A)   maximize MR.
B)   are price takers.
C)   operate where P > MC.
D)   face demand curves that are perfectly inelastic.E) C) and D)
F) A) and B)

Question 14

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist.  PQd$10172533415\begin{array}{|c|c|}\hline \mathrm{P} & \mathrm{Qd} \\hline \$ 10 & 1 \\hline 7 & 2 \\hline 5 & 3 \\hline 3 & 4 \\hline 1 & 5 \\hline\end{array}P$107531​Qd12345​​  The profit-maximizing monopolist will sell at a price

Accepted Answer

A)   of $10.
B)   of $7.
C)   of $5.
D)   that cannot be determined with the information provided. E) A) and B)
F) A) and C)

Question 15

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

Accepted Answer

A)   a loss that could be reduced by producing more output.
B)   a loss that could be reduced by producing less output.
C)   an economic profit that could be increased by producing more output.
D)   an economic profit that could be increased by producing less output.E) A) and B)
F) C) and D)

Question 16

An unregulated pure monopolist will maximize profits by producing that output at which

Accepted Answer

A)   P = MC.
B)   P = ATC.
C)   MR = MC.
D)   MC = AC.E) B) and D)
F) All of the above

Question 17

Suppose that a monopolist calculates that at its present output level, marginal revenue is $1.00 and marginal cost is $2.00. It could maximize profits or minimize losses by

Accepted Answer

A)   decreasing price and increasing output.
B)   increasing price and decreasing output.
C)   decreasing price and leaving output unchanged.
D)   decreasing output and leaving price unchanged.E) C) and D)
F) B) and C)

Question 18

A monopolist can use its pricing strategy as a barrier to entry by other firms.

Accepted Answer

A) True 
 B)False

Question 19

A firm will earn economic profits whenever

Accepted Answer

A)   marginal revenue exceeds marginal costs.
B)   marginal revenue exceeds variable costs.
C)   average revenue exceeds average total costs.
D)   average revenue exceeds average variable costs.E) A) and D)
F) A) and C)

Question 20

Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by

Accepted Answer

A)   decreasing price and increasing output.
B)   increasing price and decreasing output.
C)   decreasing price and leaving output unchanged.
D)   decreasing output and leaving prices unchanged.E) All of the above
F) B) and D)

Exam 12: Pure Monopoly

An unregulated pure monopolist will maximize profits by producing that output at which

Correct Answer
verified

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Correct Answer
verified

Which of the following is not a barrier to entry in an industry?

Correct Answer
verified

Pure monopolists

Correct Answer
verified

Which of the following is not a precondition for price discrimination?

Correct Answer
verified

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct Answer
verified

X-inefficiency is said to occur when a monopolist's

Correct Answer
verified

A price-discriminating monopolist will set a higher price where demand is more elastic and a lower price where demand is less elastic.

Correct Answer
verified

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

Correct Answer
verified

Which of the following is a characteristic of pure monopoly?

Correct Answer
verified

Correct Answer
verified

A monopolist can use its pricing strategy as a barrier to entry by other firms.

Correct Answer
verified

Suppose that a monopolist calculates that at its present output level, marginal revenue is $1.00 and marginal cost is $2.00. It could maximize profits or minimize losses by

Correct Answer
verified

A firm will earn economic profits whenever

Correct Answer
verified

Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by

Correct Answer
verified

One defining characteristic of pure monopoly is that

Correct Answer
verified

A nondiscriminating profit-maximizing monopolist

Correct Answer
verified

Assume that a monopolist faces a linear demand curve. If the firm is operating at an output level where marginal revenue is positive, the firm

Correct Answer
verified

An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are

Correct Answer
verified

The supply curve for a monopoly is

Correct Answer
verified

Exam 12: Pure Monopoly

An unregulated pure monopolist will maximize profits by producing that output at which

Correct AnswerverifiedShow Answer

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to entry in an industry?

Correct AnswerverifiedShow Answer

Pure monopolists

Correct AnswerverifiedShow Answer

Which of the following is not a precondition for price discrimination?

Correct AnswerverifiedShow Answer

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct AnswerverifiedShow Answer

X-inefficiency is said to occur when a monopolist's

Correct AnswerverifiedShow Answer

A price-discriminating monopolist will set a higher price where demand is more elastic and a lower price where demand is less elastic.

Correct AnswerverifiedShow Answer

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of pure monopoly?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolist can use its pricing strategy as a barrier to entry by other firms.

Correct AnswerverifiedShow Answer

Suppose that a monopolist calculates that at its present output level, marginal revenue is $1.00 and marginal cost is $2.00. It could maximize profits or minimize losses by

Correct AnswerverifiedShow Answer

A firm will earn economic profits whenever

Correct AnswerverifiedShow Answer

Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by

Correct AnswerverifiedShow Answer

One defining characteristic of pure monopoly is that

Correct AnswerverifiedShow Answer

A nondiscriminating profit-maximizing monopolist

Correct AnswerverifiedShow Answer

Assume that a monopolist faces a linear demand curve. If the firm is operating at an output level where marginal revenue is positive, the firm

Correct AnswerverifiedShow Answer

An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are

Correct AnswerverifiedShow Answer

The supply curve for a monopoly is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified