Question 1

A pure monopolist

Accepted Answer

A)  will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. 
B)  will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output. 
C)  will realize an economic loss if MC intersects the downsloping portion of MR. 
D)  always realizes an economic profit. 
A)  will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. 
B)  will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output. 
C)  will realize an economic loss if MC intersects the downsloping portion of MR. 
D)  always realizes an economic profit.

Question 2

The table shows the relationship between output, total costs, and total revenue for a pure monopoly. $\begin{array} { | c | c | c | } 
\hline \text { Output } & \text { TC } & \text { TR } \
\hline 50 & \$ 750 & \$ 1,000 \
\hline 60 & 800 & 1,100 \
\hline 70 & 950 & 1,250 \
\hline 80 & 1,200 & 1,450 \
\hline 90 & 1,300 & 1,500 \
\hline
\end{array}$ Within which of the following ranges of output will the firm earn maximum economic profits?

Accepted Answer

A)  50 to 60 units 
B)  60 to 70 units 
C)  70 to 80 units 
D)  80 to 90 units 
A)  50 to 60 units 
B)  60 to 70 units 
C)  70 to 80 units 
D)  80 to 90 units

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the 21st unit of output is

Accepted Answer

A)  $9.75. 
B)  $204.75. 
C)  $4.75. 
D)  $.25. 
A)  $9.75. 
B)  $204.75. 
C)  $4.75. 
D)  $.25.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest. 
B)  In the short run, the pure monopolist will charge the highest price it can get for its product. 
C)  Because of its ability to set its own price, the pure monopolist can increase price and increase its volume of sales simultaneously. 
D)  Pure monopolists do not always realize positive profits, sometimes they suffer losses. 
A)  In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest. 
B)  In the short run, the pure monopolist will charge the highest price it can get for its product. 
C)  Because of its ability to set its own price, the pure monopolist can increase price and increase its volume of sales simultaneously. 
D)  Pure monopolists do not always realize positive profits, sometimes they suffer losses.

Question 6

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 7

A nondiscriminating monopolist will find that marginal revenue

Accepted Answer

A)  exceeds average revenue or price. 
B)  is identical to price. 
C)  is sometimes greater and sometimes less than price. 
D)  is less than average revenue or price. 
A)  exceeds average revenue or price. 
B)  is identical to price. 
C)  is sometimes greater and sometimes less than price. 
D)  is less than average revenue or price.

Question 8

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Accepted Answer

A)  increase total revenue, increase total cost, and decrease profit. 
B)  decrease total revenue, increase total cost, and decrease profit. 
C)  increase total revenue, decrease total cost, and decrease profit. 
D)  decrease total revenue, total cost, and profit. 
A)  increase total revenue, increase total cost, and decrease profit. 
B)  decrease total revenue, increase total cost, and decrease profit. 
C)  increase total revenue, decrease total cost, and decrease profit. 
D)  decrease total revenue, total cost, and profit.

Question 9

Refer to the diagrams. With the industry structures represented by diagram

Accepted Answer

A)  (
B) , there will be allocative efficiency. 
B)  (
A) , economic profit can persist in the long run. 
C)  (
B) , output will be less than in diagram (
A) . 
D)  (
B) , output will be the same as in diagram (
A) . 
A)  (
B) , there will be allocative efficiency. 
B)  (
A) , economic profit can persist in the long run. 
C)  (
B) , output will be less than in diagram (
A) . 
D)  (
B) , output will be the same as in diagram (
A) .

Question 10

(Last Word): The ability of personalized pricing by online retailers to price discriminate

Accepted Answer

A)  is enhanced by Big Data's ability to accurately determine a buyer's reservation price. 
B)  is only effective at the group level. 
C)  means that buyers with more elastic demand face systematically higher prices. 
D)  is limited by buyers' willingness and ability to easily search out lower prices at other online sites. 
A)  is enhanced by Big Data's ability to accurately determine a buyer's reservation price. 
B)  is only effective at the group level. 
C)  means that buyers with more elastic demand face systematically higher prices. 
D)  is limited by buyers' willingness and ability to easily search out lower prices at other online sites.

Question 11

Extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using.

Accepted Answer

A) True 
 B)False

Question 12

A monopolist will avoid setting a price in the elastic segment of the demand curve and prefer to set the price in the inelastic segment.

Accepted Answer

A) True 
 B)False

Question 13

When compared with the purely competitive industry with identical costs of production, a monopolist will produce

Accepted Answer

A)  more output and charge the same price. 
B)  more output and charge a higher price. 
C)  less output and charge a higher price. 
D)  less output and charge the same price. 
A)  more output and charge the same price. 
B)  more output and charge a higher price. 
C)  less output and charge a higher price. 
D)  less output and charge the same price.

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? $\begin{array} { | c | c | c | } 
\hline p & Q & \text { TC } \
\hline 22 & 0 & 20 \
\hline 20 & 1 & 24 \
\hline 18 & 2 & 27 \
\hline 16 & 3 & 32 \
\hline 14 & 4 & 40 \
\hline 12 & 5 & 49 \
\hline 10 & 6 & 59 \
\hline
\end{array}$

Accepted Answer

A)  P = $12; Q = 5 
B)  P = $14; Q = 4 
C)  P = $15; Q = 3 
D)  P = $18; Q = 2 
A)  P = $12; Q = 5 
B)  P = $14; Q = 4 
C)  P = $15; Q = 3 
D)  P = $18; Q = 2

Question 15

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Accepted Answer

A)  the marginal revenue curve and the total revenue curve will now coincide. 
B)  the marginal revenue curve will now shift to a position above the demand curve. 
C)  the firm will face multiple marginal revenue curves. 
D)  marginal revenue will become less at each level of output than it would be without price discrimination. 
A)  the marginal revenue curve and the total revenue curve will now coincide. 
B)  the marginal revenue curve will now shift to a position above the demand curve. 
C)  the firm will face multiple marginal revenue curves. 
D)  marginal revenue will become less at each level of output than it would be without price discrimination.

Question 16

Economic profit in the long run is

Accepted Answer

A)  possible for both a pure monopoly and a pure competitor. 
B)  possible for a pure monopoly but not for a pure competitor. 
C)  impossible for both a pure monopolist and a pure competitor. 
D)  only possible when barriers to entry are nonexistent. 
A)  possible for both a pure monopoly and a pure competitor. 
B)  possible for a pure monopoly but not for a pure competitor. 
C)  impossible for both a pure monopolist and a pure competitor. 
D)  only possible when barriers to entry are nonexistent.

Question 17

Which of the following is incorrect? Imperfectly competitive producers

Accepted Answer

A)  face downsloping demand curves. 
B)  do not compete with one another. 
C)  can alter their output by changing price. 
D)  find that, when they reduce price, their total revenue increases by less than the new price. 
A)  face downsloping demand curves. 
B)  do not compete with one another. 
C)  can alter their output by changing price. 
D)  find that, when they reduce price, their total revenue increases by less than the new price.

Question 18

Natural monopolies result from

Accepted Answer

A)  patents and copyrights. 
B)  pricing strategies. 
C)  extensive economies of scale in production. 
D)  control over an essential natural resource. 
A)  patents and copyrights. 
B)  pricing strategies. 
C)  extensive economies of scale in production. 
D)  control over an essential natural resource.

Question 19

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

Question 20

In response to a cost-reducing technological breakthrough in the production of its product, a profit-maximizing monopolist will normally

Accepted Answer

A)  increase price and decrease production. 
B)  not change its level of output or price. 
C)  decrease the price it charges for its product. 
D)  increase its output and practice price discrimination. 
A)  increase price and decrease production. 
B)  not change its level of output or price. 
C)  decrease the price it charges for its product. 
D)  increase its output and practice price discrimination.

Exam 12: Pure Monopoly

A pure monopolist

The table shows the relationship between output, total costs, and total revenue for a pure monopoly. Output TC TR 50 \ 750 \ 1,000 60 800 1,100 70 950 1,250 80 1,200 1,450 90 1,300 1,500 Within which of the following ranges of output will the firm earn maximum economic profits?

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

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the 21st unit of output is

Which of the following statements is correct?

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

A nondiscriminating monopolist will find that marginal revenue

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Refer to the diagrams. With the industry structures represented by diagram

(Last Word): The ability of personalized pricing by online retailers to price discriminate

Extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using.

A monopolist will avoid setting a price in the elastic segment of the demand curve and prefer to set the price in the inelastic segment.

When compared with the purely competitive industry with identical costs of production, a monopolist will produce

The data relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist? p Q TC 22 0 20 20 1 24 18 2 27 16 3 32 14 4 40 12 5 49 10 6 59

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Economic profit in the long run is

Which of the following is incorrect? Imperfectly competitive producers

Natural monopolies result from

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

In response to a cost-reducing technological breakthrough in the production of its product, a profit-maximizing monopolist will normally

Limits, Alternatives, and Choices

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