Question 1

Which of the following is not a precondition for price discrimination?

Accepted Answer

A)  The commodity involved must be a durable good. 
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)  The commodity involved must be a durable good. 
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

Question 2

If a regulatory commission wants to establish a socially optimal price for a natural monopoly,it should select a price:

Accepted Answer

A)  at which the marginal cost curve intersects the demand curve. 
B)  at which marginal revenue is zero. 
C)  at which the average total cost curve intersects the demand curve. 
D)  that corresponds with the equality of marginal cost and marginal revenue. 
A)  at which the marginal cost curve intersects the demand curve. 
B)  at which marginal revenue is zero. 
C)  at which the average total cost curve intersects the demand curve. 
D)  that corresponds with the equality of marginal cost and marginal revenue. A

Question 3

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. D

Question 4

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 5

In which one of the following market models is X-inefficiency most likely to be the greatest?

Accepted Answer

A)  Pure competition. 
B)  Oligopoly. 
C)  Monopolistic competition. 
D)  Pure monopoly. 
A)  Pure competition. 
B)  Oligopoly. 
C)  Monopolistic competition. 
D)  Pure monopoly.

Question 6

Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist: $\begin{array}{ccc}
P & & Q_{d} \
\hline
\$10 & & 1 \
7&&2\
5 & & 3 \
3 & & 4 \
1 & & 5
\end{array}$ Refer to the table.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 7

A single-price monopoly is economically inefficient because,at the profit-maximizing output:

Accepted Answer

A)  marginal revenue exceeds product price at all profitable levels of production. 
B)  monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production. 
C)  MC > P. 
D)  society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce. 
A)  marginal revenue exceeds product price at all profitable levels of production. 
B)  monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production. 
C)  MC > P. 
D)  society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce.

Question 8

The supply curve of a pure monopolist:

Accepted Answer

A)  is that portion of its marginal cost curve that lies above average variable cost. 
B)  is the same as that of a purely competitive industry. 
C)  is its average variable cost curve. 
D)  does not exist because prices are not "given" to a monopolist. 
A)  is that portion of its marginal cost curve that lies above average variable cost. 
B)  is the same as that of a purely competitive industry. 
C)  is its average variable cost curve. 
D)  does not exist because prices are not "given" to a monopolist.

Question 9

The demand curve faced by a pure monopolist:

Accepted Answer

A)  may be either more or less elastic than that faced by a single purely competitive firm. 
B)  is less elastic than that faced by a single purely competitive firm. 
C)  has the same elasticity as that faced by a single purely competitive firm. 
D)  is more elastic than that faced by a single purely competitive firm. 
A)  may be either more or less elastic than that faced by a single purely competitive firm. 
B)  is less elastic than that faced by a single purely competitive firm. 
C)  has the same elasticity as that faced by a single purely competitive firm. 
D)  is more elastic than that faced by a single purely competitive firm.

Question 10

In the short run,a monopolist's economic profits:

Accepted Answer

A)  are always positive because the monopolist is a price-maker. 
B)  are usually negative because of government price regulation. 
C)  are always zero because consumers prefer to buy from competitive sellers. 
D)  may be positive or negative depending on market demand and cost conditions. 
A)  are always positive because the monopolist is a price-maker. 
B)  are usually negative because of government price regulation. 
C)  are always zero because consumers prefer to buy from competitive sellers. 
D)  may be positive or negative depending on market demand and cost conditions.

Question 11

Price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market.

Accepted Answer

A) True 
 B)False

Question 12

Answer the question on the basis of the following demand and cost data for a pure monopolist: $\begin{array}{l}
\begin{array}{ccc}
&\text { Demand Data }&\
&&\text { Quantity }\
\text { Price } & & \text { Demanded } \
\hline
\$ 5.50 & & 3 \
5.00 & & 4 \
4.50 & & 5 \
3.85 & & 6 \
3.35 & & 7 \
2.90 & & 8 \
2.50 & & 9
\end{array}
\begin{array}{ccc}
&\text { Cost Data }&
\\
\text { Output } & & \text { Total Cost } \
\hline
3& & \$ 5.00 \
4&&6.00\
5 & & 6.00 \
6 & & 7.50 \
7 & & 9.00 \
8 & & 11.00 \
9 & & 14.00
\end{array}
\end{array}$ Refer to the data.The profit-maximizing price for the monopolist will be:

Accepted Answer

A)  $5.00. 
B)  $2.90. 
C)  $3.35. 
D)  $4.50. 
A)  $5.00. 
B)  $2.90. 
C)  $3.35. 
D)  $4.50.

Question 13

With respect to the pure monopolist's demand curve,it can be said that:

Accepted Answer

A)  the stronger the barriers to entry,the more elastic is the monopolist's demand curve. 
B)  price exceeds marginal revenue at all outputs greater than 1. 
C)  demand is perfectly inelastic. 
D)  marginal revenue equals price at all outputs. 
A)  the stronger the barriers to entry,the more elastic is the monopolist's demand curve. 
B)  price exceeds marginal revenue at all outputs greater than 1. 
C)  demand is perfectly inelastic. 
D)  marginal revenue equals price at all outputs.

Question 14

In the long run,a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:

Accepted Answer

A)  average total cost. 
B)  marginal revenue. 
C)  average variable cost. 
D)  average cost. 
A)  average total cost. 
B)  marginal revenue. 
C)  average variable cost. 
D)  average cost.

Question 15

A purely monopolistic firm:

Accepted Answer

A)  has no entry barriers. 
B)  faces a downsloping demand curve. 
C)  produces a product or service for which there are many close substitutes. 
D)  earns only a normal profit in the long run. 
A)  has no entry barriers. 
B)  faces a downsloping demand curve. 
C)  produces a product or service for which there are many close substitutes. 
D)  earns only a normal profit in the long run.

Question 16

When a pure monopolist is producing its profit-maximizing output,price will:

Accepted Answer

A)  be less than MR. 
B)  equal neither MC nor MR. 
C)  equal MR. 
D)  equal MC. 
A)  be less than MR. 
B)  equal neither MC nor MR. 
C)  equal MR. 
D)  equal MC.

Question 17

Because of their large-scale level of production,pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Accepted Answer

A) True 
 B)False

Question 18

The practice of price discrimination is associated with pure monopoly because:

Accepted Answer

A)  it can be practiced whenever a firm's demand curve is downsloping. 
B)  monopolists have considerable ability to control output and price. 
C)  monopolists usually realize economies of scale. 
D)  most monopolists sell differentiated products. 
A)  it can be practiced whenever a firm's demand curve is downsloping. 
B)  monopolists have considerable ability to control output and price. 
C)  monopolists usually realize economies of scale. 
D)  most monopolists sell differentiated products.

Question 19

The nondiscriminating monopolist's demand curve:

Accepted Answer

A)  is less elastic than a purely competitive firm's demand curve. 
B)  is perfectly elastic. 
C)  coincides with its marginal revenue curve. 
D)  is perfectly inelastic. 
A)  is less elastic than a purely competitive firm's demand curve. 
B)  is perfectly elastic. 
C)  coincides with its marginal revenue curve. 
D)  is perfectly inelastic.

Question 20

Answer the question on the basis of the demand schedule shown below: $$\begin{array}{l}
\begin{array} { c c c } 
&&\text { Quantity }\
\text { Price } && \text { Demanded } \
\hline
\$ 77 & & 1 \
6 & & 2 \
5 & & 3 \
4 & & 4 \
3 & & 5
\end{array}
\end{array}$$ Refer to the data.At the point where 3 units are being sold,the coefficient of price elasticity of demand:

Accepted Answer

A)  cannot be estimated. 
B)  suggests that the market is purely competitive. 
C)  is less than unity (one). 
D)  is greater than unity (one). 
A)  cannot be estimated. 
B)  suggests that the market is purely competitive. 
C)  is less than unity (one). 
D)  is greater than unity (one).

Which of the following is not a precondition for price discrimination?

If a regulatory commission wants to establish a socially optimal price for a natural monopoly,it should select a price:

X-inefficiency refers to a situation in which a firm:

The supply curve for a monopolist is:

In which one of the following market models is X-inefficiency most likely to be the greatest?

Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist: P \1 0 1 7 2 5 3 3 4 1 5 Refer to the table.The profit-maximizing monopolist will sell at a price:

A single-price monopoly is economically inefficient because,at the profit-maximizing output:

The supply curve of a pure monopolist:

The demand curve faced by a pure monopolist:

In the short run,a monopolist's economic profits:

Price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market.

With respect to the pure monopolist's demand curve,it can be said that:

In the long run,a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:

A purely monopolistic firm:

When a pure monopolist is producing its profit-maximizing output,price will:

Because of their large-scale level of production,pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

The practice of price discrimination is associated with pure monopoly because:

The nondiscriminating monopolist's demand curve:

Answer the question on the basis of the demand schedule shown below: Quantity Price Demanded \ 77 1 6 2 5 3 4 4 3 5 Refer to the data.At the point where 3 units are being sold,the coefficient of price elasticity of demand:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Monopolistic Competition and Oligopoly

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

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Exam 12: Pure Monopoly

Which of the following is not a precondition for price discrimination?

If a regulatory commission wants to establish a socially optimal price for a natural monopoly,it should select a price:

X-inefficiency refers to a situation in which a firm:

The supply curve for a monopolist is:

In which one of the following market models is X-inefficiency most likely to be the greatest?

Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist: P \1 0 1 7 2 5 3 3 4 1 5 Refer to the table.The profit-maximizing monopolist will sell at a price:

A single-price monopoly is economically inefficient because,at the profit-maximizing output:

The supply curve of a pure monopolist:

The demand curve faced by a pure monopolist:

In the short run,a monopolist's economic profits:

Price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market.

With respect to the pure monopolist's demand curve,it can be said that:

In the long run,a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:

A purely monopolistic firm:

When a pure monopolist is producing its profit-maximizing output,price will:

Because of their large-scale level of production,pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

The practice of price discrimination is associated with pure monopoly because:

The nondiscriminating monopolist's demand curve:

Answer the question on the basis of the demand schedule shown below: Quantity Price Demanded \ 77 1 6 2 5 3 4 4 3 5 Refer to the data.At the point where 3 units are being sold,the coefficient of price elasticity of demand:

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Monopolistic Competition and Oligopoly

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

Filters