Question 1

If a pure monopolist is operating in a range of output where demand is elastic,

Accepted Answer

A) it cannot possibly be maximizing profits. 
B) marginal revenue will be positive but declining. 
C) marginal revenue will be positive and rising. 
D) total revenue will be declining. 
A) it cannot possibly be maximizing profits. 
B) marginal revenue will be positive but declining. 
C) marginal revenue will be positive and rising. 
D) total revenue will be declining.

Question 2

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. 
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.

Question 3

Refer to the diagram. At the profit-maximizing level of output, total revenue will be

Accepted Answer

A) NM times 0 M. 
B) 0 AJE. 
C) 0 EGC. 
D) 0 EHB. 
A) NM times 0 M. 
B) 0 AJE. 
C) 0 EGC. 
D) 0 EHB.

Question 4

A dilemma of regulation is that

Accepted Answer

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. 
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.

Question 5

If the industry depicted in the graph comprises only one seller, the profit-maximizing price and quantity will be

Accepted Answer

A) P₃ and Q₃. 
B) P₁ and Q₃. 
C) P₂ and Q₂. 
D) indeterminate on the basis of the information given. 
A) P₃ and Q₃. 
B) P₁ and Q₃. 
C) P₂ and Q₂. 
D) indeterminate on the basis of the information given.

Question 6

In the short-run equilibrium, a monopolist's profits

Accepted Answer

A) may be positive, negative, or zero. 
B) are positive because of the monopolist's market power. 
C) are positive if the product's elasticity of demand is less than 1. 
D) are positive if the product's elasticity of demand is greater than 1. 
A) may be positive, negative, or zero. 
B) are positive because of the monopolist's market power. 
C) are positive if the product's elasticity of demand is less than 1. 
D) are positive if the product's elasticity of demand is greater than 1.

Question 7

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

Accepted Answer

A) children have an elastic demand for game tickets 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. 
A) children have an elastic demand for game tickets 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.

Question 8

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the 10th unit of sales per week is

Accepted Answer

A) $−1,000. 
B) $9,000. 
C) $1,000. 
D) $10,000. 
A) $−1,000. 
B) $9,000. 
C) $1,000. 
D) $10,000.

Question 9

If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how many units will the firm produce?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 10

In the long-run equilibrium, a monopolist will earn zero economic profits.

Accepted Answer

A) True 
 B)False

Question 11

The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist's demand curve measures

Accepted Answer

A) the quantity demanded. 
B) product price and marginal revenue. 
C) total revenue. 
D) product price and average revenue. 
A) the quantity demanded. 
B) product price and marginal revenue. 
C) total revenue. 
D) product price and average revenue.

Question 12

When the value of a product to each user, including existing users, increases due to an increase in the total number of users-as in the case of Facebook-we refer to this as

Accepted Answer

A) income transfer. 
B) price discrimination. 
C) simultaneous consumption. 
D) network effects. 
A) income transfer. 
B) price discrimination. 
C) simultaneous consumption. 
D) network effects.

Question 13

Refer to the diagram. To maximize profits or minimize losses, this firm should produce

Accepted Answer

A) E units and charge price C. 
B) E units and charge price A. 
C) M units and charge price N. 
D) L units and charge price LK. 
A) E units and charge price C. 
B) E units and charge price A. 
C) M units and charge price N. 
D) L units and charge price LK.

Question 14

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist.   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. 
A) of $10. 
B) of $7. 
C) of $5. 
D) that cannot be determined with the information provided.

Question 15

A natural monopoly occurs when

Accepted Answer

A) long-run average costs decline continuously through the range of demand. 
B) a firm owns or controls some resource essential to production. 
C) long-run average costs rise continuously as output is increased. 
D) economies of scale are obtained at relatively low levels of output. 
A) long-run average costs decline continuously through the range of demand. 
B) a firm owns or controls some resource essential to production. 
C) long-run average costs rise continuously as output is increased. 
D) economies of scale are obtained at relatively low levels of output.

Question 16

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Accepted Answer

A) True 
 B)False

Question 17

If the industry depicted in the graph is purely monopolistic, the profit-maximizing price and quantity will be

Accepted Answer

A) P₃ and Q₃. 
B) P₁ and Q₁. 
C) P₂ and Q₂. 
D) indeterminate on the basis of the information given. 
A) P₃ and Q₃. 
B) P₁ and Q₁. 
C) P₂ and Q₂. 
D) indeterminate on the basis of the information given.

Question 18

Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

Accepted Answer

A) price, output, and average total cost would all be higher. 
B) price and average total cost would be higher, but output would be lower. 
C) price, output, and average total cost would all be lower. 
D) price and output would be lower, but average total cost would be higher. 
A) price, output, and average total cost would all be higher. 
B) price and average total cost would be higher, but output would be lower. 
C) price, output, and average total cost would all be lower. 
D) price and output would be lower, but average total cost would be higher.

Question 19

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50, it will increase its profits by

Accepted Answer

A) reducing output and raising price. 
B) reducing both output and price. 
C) increasing both price and output. 
D) raising price while keeping output unchanged. 
A) reducing output and raising price. 
B) reducing both output and price. 
C) increasing both price and output. 
D) raising price while keeping output unchanged.

Question 20

The graphs represent the demand for use of a local golf course for which there is no significant competition. (It has a local monopoly.)P denotes the price of a round of golf, and Q is the quantity of rounds "sold" each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, then over the course of a full seven-day week, this price-discriminating, profit-maximizing golf course should sell a total of

Accepted Answer

A) 300 rounds. 
B) 740 rounds. 
C) 900 rounds. 
D) 1,200 rounds. 
A) 300 rounds. 
B) 740 rounds. 
C) 900 rounds. 
D) 1,200 rounds.

Exam 12: Pure Monopoly

If a pure monopolist is operating in a range of output where demand is elastic,

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

Refer to the diagram. At the profit-maximizing level of output, total revenue will be

A dilemma of regulation is that

If the industry depicted in the graph comprises only one seller, the profit-maximizing price and quantity will be

In the short-run equilibrium, a monopolist's profits

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 monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the 10th unit of sales per week is

If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how many units will the firm produce?

In the long-run equilibrium, a monopolist will earn zero economic profits.

The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist's demand curve measures

When the value of a product to each user, including existing users, increases due to an increase in the total number of users-as in the case of Facebook-we refer to this as

Refer to the diagram. To maximize profits or minimize losses, this firm should produce

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist. The profit-maximizing monopolist will sell at a price

A natural monopoly occurs when

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

If the industry depicted in the graph is purely monopolistic, the profit-maximizing price and quantity will be

Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50, it will increase its profits by

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

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

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Natural Resource and Energy Economics

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Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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The Balance of Payments, Exchange Rates, and Trade Deficits

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