Question 1

Which of the following is characteristic of a pure monopolist's demand curve?

Accepted Answer

A)  Average revenue is less than price. 
B)  Its elasticity coefficient is 1 at all levels of output. 
C)  Price and marginal revenue are equal at all levels of output. 
D)  It is the same as the market demand curve. 
A)  Average revenue is less than price. 
B)  Its elasticity coefficient is 1 at all levels of output. 
C)  Price and marginal revenue are equal at all levels of output. 
D)  It is the same as the market demand curve.

Question 2

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 3

Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC.This means that:

Accepted Answer

A)  both productive and allocative efficiency are being achieved. 
B)  productive efficiency is being achieved,but not allocative efficiency. 
C)  allocative efficiency is being achieved,but not productive efficiency. 
D)  neither productive nor allocative efficiency is being achieved. 
A)  both productive and allocative efficiency are being achieved. 
B)  productive efficiency is being achieved,but not allocative efficiency. 
C)  allocative efficiency is being achieved,but not productive efficiency. 
D)  neither productive nor allocative efficiency is being achieved.

Question 4

Which of the following is correct?

Accepted Answer

A)  Both purely competitive and monopolistic firms are "price takers." 
B)  Both purely competitive and monopolistic firms are "price makers." 
C)  A purely competitive firm is a "price taker," while a monopolist is a "price maker." 
D)  A purely competitive firm is a "price maker," while a monopolist is a "price taker." 
A)  Both purely competitive and monopolistic firms are "price takers." 
B)  Both purely competitive and monopolistic firms are "price makers." 
C)  A purely competitive firm is a "price taker," while a monopolist is a "price maker." 
D)  A purely competitive firm is a "price maker," while a monopolist is a "price taker."

Question 5

Under which of the following situations would a monopolist increase profits by lowering price (and increasing output):

Accepted Answer

A)  if it discovered that it was producing where MC = MR. 
B)  if it discovered that it was producing where its MC curve intersects its demand curve. 
C)  if it discovered that it was producing where MC < MR. 
D)  under none of these circumstances because a monopolist would never lower price. 
A)  if it discovered that it was producing where MC = MR. 
B)  if it discovered that it was producing where its MC curve intersects its demand curve. 
C)  if it discovered that it was producing where MC < MR. 
D)  under none of these circumstances because a monopolist would never lower price.

Question 6

If a regulatory commission wants to provide a natural monopoly with a fair return,it should establish a price that is equal to:

Accepted Answer

A)  minimum average fixed cost. 
B)  average total cost. 
C)  marginal cost. 
D)  marginal revenue. 
A)  minimum average fixed cost. 
B)  average total cost. 
C)  marginal cost. 
D)  marginal revenue.

Question 7

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35,its marginal revenue:

Accepted Answer

A)  may be either greater or less than $35. 
B)  will also be $35. 
C)  will be less than $35. 
D)  will be greater than $35. 
A)  may be either greater or less than $35. 
B)  will also be $35. 
C)  will be less than $35. 
D)  will be greater than $35.

Question 8

A single-price pure monopoly is economically inefficient:

Accepted Answer

A)  only because it produces beyond the point of minimum average total cost. 
B)  only because it produces short of the point of minimum average total cost. 
C)  because it produces short of minimum average total cost and price is greater than marginal cost. 
D)  because it produces beyond minimum average total cost and marginal cost is greater than price. 
A)  only because it produces beyond the point of minimum average total cost. 
B)  only because it produces short of the point of minimum average total cost. 
C)  because it produces short of minimum average total cost and price is greater than marginal cost. 
D)  because it produces beyond minimum average total cost and marginal cost is greater than price.

Question 9

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.

Question 10

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 11

An unregulated pure monopolist will maximize profits by producing that output at which:

Accepted Answer

A)  P = MC. 
B)  P = ATC. 
C)  MR = MC. 
D)  MC = AC. 
A)  P = MC. 
B)  P = ATC. 
C)  MR = MC. 
D)  MC = AC.

Question 12

Which of the following statements is correct?

Accepted Answer

A)  The pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero. 
B)  In seeking the profit-maximizing output,the pure monopolist underallocates resources to its production. 
C)  The pure monopolist maximizes profits by producing that output at which the differential between price and average cost is the greatest. 
D)  Purely monopolistic sellers earn only normal profits in the long run. 
A)  The pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero. 
B)  In seeking the profit-maximizing output,the pure monopolist underallocates resources to its production. 
C)  The pure monopolist maximizes profits by producing that output at which the differential between price and average cost is the greatest. 
D)  Purely monopolistic sellers earn only normal profits in the long run.

Question 13

Answer the question on the basis of the following information for a pure monopolist: $\begin{array}{ccc}
\begin{array}{ccc}
\
\text { Output } & & \text { Total Cost } \
\hline
0 & & \$ 250 \
1 & & 260 \
2 & & 290 \
3 & & 350 \
4 & & 480 \
5 & & 700
\end{array}
\begin{array}{l}
\text { Product }\
\begin{array}{c}
\text { Price } \
\hline \$ 500 \
300 \
250 \
200 \
150 \
100
\end{array}
\end{array}
\end{array}$ The given nondiscriminating monopolist should set its price at:

Accepted Answer

A)  $300. 
B)  $250. 
C)  $200. 
D)  $150. 
A)  $300. 
B)  $250. 
C)  $200. 
D)  $150.

Question 14

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 15

Because the monopolist's demand curve is downsloping:

Accepted Answer

A)  MR will equal price. 
B)  price must be lowered to sell more output. 
C)  the elasticity coefficient will increase as price is lowered. 
D)  its supply curve will also be downsloping. 
A)  MR will equal price. 
B)  price must be lowered to sell more output. 
C)  the elasticity coefficient will increase as price is lowered. 
D)  its supply curve will also be downsloping.

Question 16

A pure monopolist should never produce in the:

Accepted Answer

A)  elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. 
B)  inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price. 
C)  inelastic segment of its demand curve because it can always increase total revenue by more than it increases total cost by reducing price. 
D)  segment of its demand curve where the price elasticity coefficient is greater than one. 
A)  elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. 
B)  inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price. 
C)  inelastic segment of its demand curve because it can always increase total revenue by more than it increases total cost by reducing price. 
D)  segment of its demand curve where the price elasticity coefficient is greater than one.

Question 17

(Last Word): Amazon's rise to become the world's largest online retailer was largely driven by:

Accepted Answer

A)  an exclusive license granted by the U.S.government. 
B)  patents on online selling that keeps other firms out of the market. 
C)  far superior products than other online sellers could offer. 
D)  massive economies of scale in distribution logistics and data storage. 
A)  an exclusive license granted by the U.S.government. 
B)  patents on online selling that keeps other firms out of the market. 
C)  far superior products than other online sellers could offer. 
D)  massive economies of scale in distribution logistics and data storage.

Question 18

To maximize profit,a pure monopolist must:

Accepted Answer

A)  maximize its total revenue. 
B)  maximize the difference between marginal revenue and marginal cost. 
C)  maximize the difference between total revenue and total cost. 
D)  produce where average total cost is at a minimum. 
A)  maximize its total revenue. 
B)  maximize the difference between marginal revenue and marginal cost. 
C)  maximize the difference between total revenue and total cost. 
D)  produce where average total cost is at a minimum.

Question 19

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 20

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 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.

Which of the following is characteristic of a pure monopolist's demand curve?

There is some evidence to suggest that X-inefficiency is:

Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC.This means that:

Which of the following is correct?

Under which of the following situations would a monopolist increase profits by lowering price (and increasing output):

If a regulatory commission wants to provide a natural monopoly with a fair return,it should establish a price that is equal to:

If a nondiscriminating imperfectly competitive firm is selling its 100^th unit of output for $35,its marginal revenue:

A single-price pure monopoly is economically inefficient:

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

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

An unregulated pure monopolist will maximize profits by producing that output at which:

Which of the following statements is correct?

Answer the question on the basis of the following information for a pure monopolist: Output Total Cost 0 \ 250 1 260 2 290 3 350 4 480 5 700 Product Price \ 500 300 250 200 150 100 The given nondiscriminating monopolist should set its price at:

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

Because the monopolist's demand curve is downsloping:

A pure monopolist should never produce in the:

(Last Word): Amazon's rise to become the world's largest online retailer was largely driven by:

To maximize profit,a pure monopolist must:

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:

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

Exam 12: Pure Monopoly

Which of the following is characteristic of a pure monopolist's demand curve?

There is some evidence to suggest that X-inefficiency is:

Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC.This means that:

Which of the following is correct?

Under which of the following situations would a monopolist increase profits by lowering price (and increasing output):

If a regulatory commission wants to provide a natural monopoly with a fair return,it should establish a price that is equal to:

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35,its marginal revenue:

A single-price pure monopoly is economically inefficient:

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

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

An unregulated pure monopolist will maximize profits by producing that output at which:

Which of the following statements is correct?

Answer the question on the basis of the following information for a pure monopolist: Output Total Cost 0 \ 250 1 260 2 290 3 350 4 480 5 700 Product Price \ 500 300 250 200 150 100 The given nondiscriminating monopolist should set its price at:

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

Because the monopolist's demand curve is downsloping:

A pure monopolist should never produce in the:

(Last Word): Amazon's rise to become the world's largest online retailer was largely driven by:

To maximize profit,a pure monopolist must:

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:

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

If a nondiscriminating imperfectly competitive firm is selling its 100^th unit of output for $35,its marginal revenue: