Question 1

At the profit-maximizing level of output for a monopolist,

Accepted Answer

A)  price is greater than marginal cost. 
B)  price is greater than average revenue. 
C)  average total cost equals marginal cost. 
D)  total revenue is greater than total cost. 
A)  price is greater than marginal cost. 
B)  price is greater than average revenue. 
C)  average total cost equals marginal cost. 
D)  total revenue is greater than total cost.

Question 2

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 3

Which of the following is not a possible source of natural monopoly?

Accepted Answer

A)  large-scale network effects 
B)  simultaneous consumption 
C)  greater use of specialized inputs 
D)  rent-seeking behavior 
A)  large-scale network effects 
B)  simultaneous consumption 
C)  greater use of specialized inputs 
D)  rent-seeking behavior

Question 4

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

Accepted Answer

A)  retain its current price-quantity combination. 
B)  increase both price and quantity sold. 
C)  charge a lower price. 
D)  charge a higher price. 
A)  retain its current price-quantity combination. 
B)  increase both price and quantity sold. 
C)  charge a lower price. 
D)  charge a higher price.

Question 5

Which is true of a price-discriminating pure monopolist?

Accepted Answer

A)  P > MR for the last unit sold. 
B)  Profit will be higher than in the nondiscriminating case. 
C)  The average price will be higher than in the nondiscriminating case. 
D)  Allocative inefficiency will be greater than in the nondiscriminating case. 
A)  P > MR for the last unit sold. 
B)  Profit will be higher than in the nondiscriminating case. 
C)  The average price will be higher than in the nondiscriminating case. 
D)  Allocative inefficiency will be greater than in the nondiscriminating case.

Question 6

Monopolists are said to be allocatively inefficient because

Accepted Answer

A)  they produce where MR > MC. 
B)  at the profit-maximizing output, price is greater than AVC. 
C)  they produce only the type of product they desire and do not consider the consumer. 
D)  at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost. 
A)  they produce where MR > MC. 
B)  at the profit-maximizing output, price is greater than AVC. 
C)  they produce only the type of product they desire and do not consider the consumer. 
D)  at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

X-inefficiency refers to a situation in which a firm

Accepted Answer

A)  is not as technologically progressive as it might be. 
B)  encounters diseconomies of scale. 
C)  fails to realize all existing economies of scale. 
D)  fails to achieve the minimum average total costs attainable at each level of output. 
A)  is not as technologically progressive as it might be. 
B)  encounters diseconomies of scale. 
C)  fails to realize all existing economies of scale. 
D)  fails to achieve the minimum average total costs attainable at each level of output.

Question 9

The monopolist's demand curve is more elastic than the industry demand curve.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Barriers to entering an industry

Accepted Answer

A)  encourage allocative efficiency. 
B)  encourage productive efficiency. 
C)  are the basis for monopoly. 
D)  apply only to purely monopolistic industries. 
A)  encourage allocative efficiency. 
B)  encourage productive efficiency. 
C)  are the basis for monopoly. 
D)  apply only to purely monopolistic industries.

Question 12

Answer the question on the basis of the accompanying demand schedule. $\begin{array} { | c | c| } 
\hline \text { Price } & \text {Quantity Demanded } \
\hline \$ 7 & 1 \
\hline 6 & 2 \
\hline 5 & 3 \
\hline 4 & 4 \
\hline 3 & 5 \
\hline
\end{array}$ The marginal revenue obtained from selling the third unit of output is

Accepted Answer

A)  $6. 
B)  $1. 
C)  $3. 
D)  $5. 
A)  $6. 
B)  $1. 
C)  $3. 
D)  $5.

Question 13

A monopoly is most likely to emerge and be sustained when

Accepted Answer

A)  output demand is relatively elastic. 
B)  firms have U-shaped average-total-cost curves. 
C)  fixed capital costs are small relative to total costs. 
D)  economies of scale are large relative to market demand. 
A)  output demand is relatively elastic. 
B)  firms have U-shaped average-total-cost curves. 
C)  fixed capital costs are small relative to total costs. 
D)  economies of scale are large relative to market demand.

Question 14

Which would definitely not be an example of price discrimination?

Accepted Answer

A)  A movie theater charges children less than adults for a movie ticket. 
B)  Universities charge higher tuition for out-of-state residents than for in-state students. 
C)  A doctor charges for services according to the income of individual patients. 
D)  An electric power company charges less for electricity used during off-peak hours, when production costs are lower. 
A)  A movie theater charges children less than adults for a movie ticket. 
B)  Universities charge higher tuition for out-of-state residents than for in-state students. 
C)  A doctor charges for services according to the income of individual patients. 
D)  An electric power company charges less for electricity used during off-peak hours, when production costs are lower.

Question 15

One feature of pure monopoly is that the demand curve

Accepted Answer

A)  is vertical. 
B)  is horizontal. 
C)  slopes upward. 
D)  slopes downward. 
A)  is vertical. 
B)  is horizontal. 
C)  slopes upward. 
D)  slopes downward.

Question 16

For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Accepted Answer

A)  marginal revenue is positive when total revenue is at a maximum. 
B)  total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing. 
C)  marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. 
D)  marginal revenue is positive so long as total revenue is positive. 
A)  marginal revenue is positive when total revenue is at a maximum. 
B)  total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing. 
C)  marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. 
D)  marginal revenue is positive so long as total revenue is positive.

Question 17

Answer the question on the basis of the provided demand and cost data for a pure monopolist. $ \quad$$ \quad$$ \quad$$ \quad$   $\text { Cost Data }$    $ \quad$$ \quad$$ \quad$  $\text { Demand Data }$ 
$\begin{array} { | c | c | c | c| } 
\hline \text { Price } & \begin{array} { c } 
\text { Quartity } \
\text { Dernarded }
\end{array} & \text { Output } & \text { Total Cost } \
\hline 55.50 & 3 & 3 & \$ 5.01 \
\hline 5.84 & 4 & 4 & 6.01 \
\hline 4.50 & 5 & 5 & 6.50 \
\hline 3.85 & 6 & 6 & 7.50 \
\hline 3.35 & 7 & 7 & 9.01 \
\hline 2.90 & 8 & 8 & 11.81 \
\hline 2.50 & 9 & 9 & 14.81 \
\hline
\end{array}$ 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 18

"Big data" collection by online firms about buyers and their behaviors allows the firms to practice

Accepted Answer

A)  fair-return pricing. 
B)  socially optimal pricing. 
C)  price discrimination. 
D)  price regulation. 
A)  fair-return pricing. 
B)  socially optimal pricing. 
C)  price discrimination. 
D)  price regulation.

Question 19

The government may create barriers to entry that serve to foster monopoly power of firms.

Accepted Answer

A) True 
 B)False

Question 20

If a pure monopolist is producing at that output where P = ATC, then

Accepted Answer

A)  its economic profits will be zero. 
B)  it will be realizing losses. 
C)  it will be producing less than the profit-maximizing level of output. 
D)  it will be realizing an economic profit. 
A)  its economic profits will be zero. 
B)  it will be realizing losses. 
C)  it will be producing less than the profit-maximizing level of output. 
D)  it will be realizing an economic profit.

Exam 12: Pure Monopoly

At the profit-maximizing level of output for a monopolist,

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

Which of the following is not a possible source of natural monopoly?

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

Which is true of a price-discriminating pure monopolist?

Monopolists are said to be allocatively inefficient because

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

X-inefficiency refers to a situation in which a firm

The monopolist's demand curve is more elastic than the industry demand curve.

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

Barriers to entering an industry

Answer the question on the basis of the accompanying demand schedule. Price Quantity Demanded \ 7 1 6 2 5 3 4 4 3 5 The marginal revenue obtained from selling the third unit of output is

A monopoly is most likely to emerge and be sustained when

Which would definitely not be an example of price discrimination?

One feature of pure monopoly is that the demand curve

For a pure monopolist, the relationship between total revenue and marginal revenue is such that

"Big data" collection by online firms about buyers and their behaviors allows the firms to practice

The government may create barriers to entry that serve to foster monopoly power of firms.

If a pure monopolist is producing at that output where P = ATC, then

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role 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

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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