Question 1

The supply curve for a monopolist is

Accepted Answer

A)  perfectly elastic. 
B)  upsloping. 
C)  that portion of the marginal cost curve lying above minimum average variable cost. 
D)  nonexistent. 
A)  perfectly elastic. 
B)  upsloping. 
C)  that portion of the marginal cost curve lying above minimum average variable cost. 
D)  nonexistent.

Question 2

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that

Accepted Answer

A)  demand is inelastic at this price. 
B)  the firm is maximizing profits. 
C)  total revenue is increasing. 
D)  total revenue is at a maximum. 
A)  demand is inelastic at this price. 
B)  the firm is maximizing profits. 
C)  total revenue is increasing. 
D)  total revenue is at a maximum.

Question 3

Which of the following is a barrier to entry?

Accepted Answer

A)  patents and licenses 
B)  buyers' incomes 
C)  close substitutes 
D)  diminishing marginal returns 
A)  patents and licenses 
B)  buyers' incomes 
C)  close substitutes 
D)  diminishing marginal returns

Question 4

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Accepted Answer

A)  children's demand for food is elastic and adults' demand for food is inelastic. 
B)  adults' demand for food is elastic and children's demand for food is inelastic. 
C)  there can be exchange of the product from children, whoâ€™d buy it at a lower price, to adults. 
D)  there can be exchange of the product from adults, whoâ€™d buy it at a higher price, to children. 
A)  children's demand for food is elastic and adults' demand for food is inelastic. 
B)  adults' demand for food is elastic and children's demand for food is inelastic. 
C)  there can be exchange of the product from children, whoâ€™d buy it at a lower price, to adults. 
D)  there can be exchange of the product from adults, whoâ€™d buy it at a higher price, to children.

Question 5

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 6

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following best approximates a pure monopoly?

Accepted Answer

A)  the foreign exchange market 
B)  the Kansas City wheat market 
C)  the only grocery store in a small isolated town 
D)  the soft drink market 
A)  the foreign exchange market 
B)  the Kansas City wheat market 
C)  the only grocery store in a small isolated town 
D)  the soft drink market

Question 8

Pure monopolists always earn economic profits.

Accepted Answer

A) True 
 B)False

Question 9

Possible reasons for X-inefficiency include the following, except

Accepted Answer

A)  managers having other goals besides maximizing profits. 
B)  workers being poorly motivated or poorly supervised. 
C)  costs of materials rising due to tight supply conditions. 
D)  the firm being lethargic due to the absence of competition. 
A)  managers having other goals besides maximizing profits. 
B)  workers being poorly motivated or poorly supervised. 
C)  costs of materials rising due to tight supply conditions. 
D)  the firm being lethargic due to the absence of competition.

Question 10

In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.

Accepted Answer

A) True 
 B)False

Question 11

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Accepted Answer

A) True 
 B)False

Question 12

In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist is free to charge whatever price it wishes, to sell a certain level of output.

Accepted Answer

A) True 
 B)False

Question 14

Which is the best example of price discrimination?

Accepted Answer

A)  an airline company charging lower fares per pound for air freight than for passengers 
B)  a telephone company charging lower rates to weekend users than weekday users 
C)  a supermarket charging lower prices in its city stores than its out-of-the-way rural store 
D)  a private doctor charging higher fees to patients receiving special services than patients receiving regular services 
A)  an airline company charging lower fares per pound for air freight than for passengers 
B)  a telephone company charging lower rates to weekend users than weekday users 
C)  a supermarket charging lower prices in its city stores than its out-of-the-way rural store 
D)  a private doctor charging higher fees to patients receiving special services than patients receiving regular services

Question 15

A nondiscriminating pure monopolist is generally viewed as

Accepted Answer

A)  productively efficient but allocatively inefficient. 
B)  productively inefficient but allocatively efficient. 
C)  both productively and allocatively inefficient. 
D)  both productively and allocatively efficient. 
A)  productively efficient but allocatively inefficient. 
B)  productively inefficient but allocatively efficient. 
C)  both productively and allocatively inefficient. 
D)  both productively and allocatively efficient.

Question 16

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 17

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a non discriminating monopolist $\begin{array}{|c|c|}
\hline \mathrm{P} & \mathrm{Qd} \
\hline \$ 10 & 1 \
\hline 7 & 2 \
\hline 5 & 3 \
\hline 3 & 4 \
\hline 1 & 5 \
\hline
\end{array}$ Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

Accepted Answer

A)  $10. 
B)  $7. 
C)  $5. 
D)  $3. 
A)  $10. 
B)  $7. 
C)  $5. 
D)  $3.

Question 18

A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the price must be cut to $7.00. The marginal revenue of the 21st toy is

Accepted Answer

A)  âˆ'$10. 
B)  âˆ'$13. 
C)  +$7. 
D)  +$21. 
A)  âˆ'$10. 
B)  âˆ'$13. 
C)  +$7. 
D)  +$21.

Question 19

There is some evidence to suggest that X-inefficiency is

Accepted Answer

A)  absent whenever two or more producers are competing with one another. 
B)  not encountered in either competitive or monopolistic firms. 
C)  more likely to occur in monopolistic firms than in competitive firms. 
D)  more likely to occur in competitive firms than in monopolistic firms. 
A)  absent whenever two or more producers are competing with one another. 
B)  not encountered in either competitive or monopolistic firms. 
C)  more likely to occur in monopolistic firms than in competitive firms. 
D)  more likely to occur in competitive firms than in monopolistic firms.

Question 20

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist. $\begin{array}{|c|c|}
\hline \mathrm{P} & \mathrm{Qd} \
\hline \$ 10 & 1 \
\hline 7 & 2 \
\hline 5 & 3 \
\hline 3 & 4 \
\hline 1 & 5 \
\hline
\end{array}$ The monopolist will select its profit-maximizing level of output somewhere within the

Accepted Answer

A)  3-5 unit range of output. 
B)  1-3 unit range of output. 
C)  1-4 unit range of output. 
D)  2-4 unit range of output. 
A)  3-5 unit range of output. 
B)  1-3 unit range of output. 
C)  1-4 unit range of output. 
D)  2-4 unit range of output.

Exam 12: Pure Monopoly

The supply curve for a monopolist is

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that

Which of the following is a barrier to entry?

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

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

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Which of the following best approximates a pure monopoly?

Pure monopolists always earn economic profits.

Possible reasons for X-inefficiency include the following, except

In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

A monopolist is free to charge whatever price it wishes, to sell a certain level of output.

Which is the best example of price discrimination?

A nondiscriminating pure monopolist is generally viewed as

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

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a non discriminating monopolist \ 10 1 7 2 5 3 3 4 1 5 Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the price must be cut to $7.00. The marginal revenue of the 21st toy is

There is some evidence to suggest that X-inefficiency is

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist. \ 10 1 7 2 5 3 3 4 1 5 The monopolist will select its profit-maximizing level of output somewhere within the

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

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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