Question 1

Refer to the diagrams. In diagram (B)the profit-maximizing quantity is

Accepted Answer

A) g, and the profit-maximizing price is e. 
B) h, and the profit-maximizing price is e. 
C) g, and the profit-maximizing price is f. 
D) g, and the profit-maximizing price is d. 
A) g, and the profit-maximizing price is e. 
B) h, and the profit-maximizing price is e. 
C) g, and the profit-maximizing price is f. 
D) g, and the profit-maximizing price is d.

Question 2

With nonrivalrous consumption, such as in the case of online music and movies, as more consumers buy the product,

Accepted Answer

A) the average cost of the output declines because the marginal cost is very small. 
B) marginal cost is low, but the average cost of the output will be rising. 
C) the average cost of the output will be rising because marginal cost is quite high. 
D) marginal cost is quite high, but the average cost of the output will be declining. 
A) the average cost of the output declines because the marginal cost is very small. 
B) marginal cost is low, but the average cost of the output will be rising. 
C) the average cost of the output will be rising because marginal cost is quite high. 
D) marginal cost is quite high, but the average cost of the output will be declining.

Question 3

In the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum.

Accepted Answer

A) True 
 B)False

Question 4

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Accepted Answer

A) the existence of good heating substitutes. 
B) economies of scale in electric heat generation. 
C) prices for electric heat being set at the socially optimal level. 
D) strict government regulation of the price charged for electric heat. 
A) the existence of good heating substitutes. 
B) economies of scale in electric heat generation. 
C) prices for electric heat being set at the socially optimal level. 
D) strict government regulation of the price charged for electric heat.

Question 5

If the industry depicted in this graph were served by a pure monopoly, the price and output quantity would be

Accepted Answer

A) P₃ and Q₁. 
B) P₁ and Q₃. 
C) P₂ and Q₂. 
D) P₁ and Q₁. 
A) P₃ and Q₁. 
B) P₁ and Q₃. 
C) P₂ and Q₂. 
D) P₁ and Q₁.

Question 6

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)

Accepted Answer

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 that equals the buyer's marginal cost. 
D) the maximum price each would be willing to pay. 
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 that equals the buyer's marginal cost. 
D) the maximum price each would be willing to pay.

Question 7

Do you agree or disagree with the statement that: "A monopolist always charges the highest possible price." Explain.

Accepted Answer

I disagree with that statement. Monopoly

Question 8

Which of the following conditions is not required for price discrimination?

Accepted Answer

A) Buyers with different elasticities must be physically separate from each other. 
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) Buyers with different elasticities must be physically separate from each other. 
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.

Question 9

Answer the question on the basis of the provided demand and cost data for a pure monopolist.   The profit-maximizing monopolist will realize a

Accepted Answer

A) profit of $8.50. 
B) profit of $7.50. 
C) profit of $16. 
D) loss of $14. 
A) profit of $8.50. 
B) profit of $7.50. 
C) profit of $16. 
D) loss of $14.

Question 10

Refer to the graph, which shows the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity

Accepted Answer

A) 0 to Q₄. 
B) Q₂ to Q₄. 
C) 0 to Q₃. 
D) Q₃ to Q₄. 
A) 0 to Q₄. 
B) Q₂ to Q₄. 
C) 0 to Q₃. 
D) Q₃ to Q₄.

Question 11

Confronted with the same unit cost data, a monopolistic producer will charge

Accepted Answer

A) the same price and produce the same output as a competitive firm. 
B) a higher price and produce a larger output than a competitive firm. 
C) a higher price and produce a smaller output than a competitive firm. 
D) a lower price and produce a smaller output than a competitive firm. 
A) the same price and produce the same output as a competitive firm. 
B) a higher price and produce a larger output than a competitive firm. 
C) a higher price and produce a smaller output than a competitive firm. 
D) a lower price and produce a smaller output than a competitive firm.

Question 12

For an imperfectly competitive firm,

Accepted Answer

A) total revenue is a straight, upsloping line because a firm's sales are independent of product price. 
B) the marginal revenue curve lies above the demand curve because any reduction in price applies to all units sold. 
C) the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold. 
D) the marginal revenue curve lies below the demand curve because any reduction in price applies only to the extra unit sold. 
A) total revenue is a straight, upsloping line because a firm's sales are independent of product price. 
B) the marginal revenue curve lies above the demand curve because any reduction in price applies to all units sold. 
C) the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold. 
D) the marginal revenue curve lies below the demand curve because any reduction in price applies only to the extra unit sold.

Question 13

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing quantity of output for the monopolist will be

Accepted Answer

A) 5. 
B) 4. 
C) 6. 
D) 3. 
A) 5. 
B) 4. 
C) 6. 
D) 3.

Question 14

The data relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

Accepted Answer

A) P = $48; Q = 6 
B) P = $56; Q = 5 
C) P = $64; Q = 4 
D) P = $72; Q = 3 
A) P = $48; Q = 6 
B) P = $56; Q = 5 
C) P = $64; Q = 4 
D) P = $72; Q = 3

Question 15

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price

Accepted Answer

A) equals marginal revenue. 
B) will vertically intersect demand where MR = MC. 
C) will always equal ATC. 
D) always exceeds ATC. 
A) equals marginal revenue. 
B) will vertically intersect demand where MR = MC. 
C) will always equal ATC. 
D) always exceeds ATC.

Question 16

Refer to the graph, which shows a total revenue curve for a monopolist. When the total revenue curve reaches a maximum, marginal revenue is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) greater than price at that level of output. 
A) positive. 
B) negative. 
C) zero. 
D) greater than price at that level of output.

Question 17

Refer to the graph for a pure monopoly. If the government regulated the monopoly and made it produce the level of output that would achieve allocative efficiency, what price and quantity levels would we observe in the short run?

Accepted Answer

A) P₁ and Q₁ 
B) P₂ and Q₃ 
C) P₃ and Q₂ 
D) P₄ and Q₁ 
A) P₁ and Q₁ 
B) P₂ and Q₃ 
C) P₃ and Q₂ 
D) P₄ and Q₁

Question 18

Refer to the graphs of D and MR for a monopolist. We know that to maximize profits the firm will set a price

Accepted Answer

A) above P₁. 
B) below P₂. 
C) above P₂. 
D) below P₃. 
A) above P₁. 
B) below P₂. 
C) above P₂. 
D) below P₃.

Question 19

What are the consequences of price discrimination for a business? What are the consequences for the consumer?

Accepted Answer

Price discrimination results in higher p

Question 20

Pure monopolists

Accepted Answer

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

Exam 12: Pure Monopoly

Refer to the diagrams. In diagram (B)the profit-maximizing quantity is

With nonrivalrous consumption, such as in the case of online music and movies, as more consumers buy the product,

In the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum.

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

If the industry depicted in this graph were served by a pure monopoly, the price and output quantity would be

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)

Do you agree or disagree with the statement that: "A monopolist always charges the highest possible price." Explain.

Which of the following conditions is not required for price discrimination?

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing monopolist will realize a

Refer to the graph, which shows the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity

Confronted with the same unit cost data, a monopolistic producer will charge

For an imperfectly competitive firm,

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing quantity of output for the monopolist will be

The data relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price

Refer to the graph, which shows a total revenue curve for a monopolist. When the total revenue curve reaches a maximum, marginal revenue is

Refer to the graph for a pure monopoly. If the government regulated the monopoly and made it produce the level of output that would achieve allocative efficiency, what price and quantity levels would we observe in the short run?

Refer to the graphs of D and MR for a monopolist. We know that to maximize profits the firm will set a price

What are the consequences of price discrimination for a business? What are the consequences for the consumer?

Pure monopolists

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

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Oligopoly and Strategic Behavior

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The Demand for Resources

Wage Determination

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Natural Resource and Energy Economics

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Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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