Question 1

In the accompanying diagram, demand is relatively inelastic

Accepted Answer

A)  at price P₃.
B)  at any price below P₂.
C)  in the P₂ P₄ price range.
D)  in the P₂ P₃ price range.

Question 2

The nondiscriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why

Accepted Answer

A)  there are barriers to entry in pure monopoly.
B)  a monopoly has a perfectly elastic demand curve.
C)  marginal revenue is less than average revenue.
D)  total revenues are greater than total costs at the profit maximizing level of output.

Question 3

Refer to the graph, which shows the revenue curves for a monopolist. What price should be charged in order to maximize total revenue?

Accepted Answer

A)  P₁
B)  P₂
C)  P₃
D)  P₄

Question 4

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.

Question 5

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be

Accepted Answer

A)  $300.
B)  $248.
C)  $198.
D)  $126.

Question 6

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.

Question 7

In many large U.S. cities, taxicab companies operate as near monopolies because of

Accepted Answer

A)  patents.
B)  licenses.
C)  economies of scale.
D)  strategic pricing.

Question 8

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.

Question 9

Suppose that a monopolist calculates that at its present output level, marginal cost is $2.00 and marginal revenue is $3.00. The firm could increase profits by

Accepted Answer

A)  increasing price and decreasing output.
B)  decreasing price and increasing output.
C)  decreasing price and leaving output unchanged.
D)  decreasing output and leaving price unchanged.

Question 10

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5, then the

Accepted Answer

A)  price of the seventh unit is $10.
B)  price of the seventh unit is $11.
C)  price of the seventh unit is greater than $12.
D)  firm's demand curve is perfectly elastic.

Question 11

If the variable costs of a profit-maximizing pure monopolist decline, the firm should

Accepted Answer

A)  produce more output and charge a higher price.
B)  produce more output and charge a lower price.
C)  reduce both output and price.
D)  raise both output and price.

Question 12

A patent for a new product or a new business process is typically granted for a hundred years.

Accepted Answer

A) True 
 B)False

Question 13

The graphs represent the demand for use of a local golf course for which there is no significant competition. (It has a local monopoly.) P denotes the price of a round of golf, and Q is the quantity of rounds "sold" each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, this profit-maximizing golf course will earn how much economic profit over the course of a full seven-day week?

Accepted Answer

A)  $4,200
B)  $3,700
C)  $3,400
D)  $2,700

Question 14

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

Accepted Answer

A)  A price cut from P₁ to P₂ would lead to a decrease in the amount of dollars consumers spend on the product.
B)  A price cut from P₁ to P₂ would lead to an increase in the amount of dollars consumers spend on the product.
C)  A price cut from P₂ to P₃ would lead to no change in the amount of dollars consumers spend on the product.
D)  A price cut from P₂ to P₃ would lead to an increase in the amount of dollars consumers spend on the product.

Question 15

Answer the question on the basis of the accompanying demand schedule.  The marginal revenue obtained from selling the fourth unit of output is

Accepted Answer

A)  $2.
B)  $16.
C)  $8.
D)  $14.

Question 16

Answer the question on the basis of the provided demand and cost data for a pure monopolist.  The profit-maximizing price for the monopolist will be

Accepted Answer

A)  $4.60.
B)  $4.40.
C)  $4.20.
D)  $4.00.

Question 17

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Accepted Answer

A) True 
 B)False

Question 18

In a monopoly at equilibrium, price is greater than marginal cost.

Accepted Answer

A) True 
 B)False

Question 19

When a firm is on the inelastic segment of its demand curve, it can

Accepted Answer

A)  increase total revenue by reducing price.
B)  decrease total costs by decreasing price.
C)  increase profits by increasing price.
D)  increase total revenue by more than the increase in total cost by increasing price.

Question 20

"Big Data"

Accepted Answer

A)  has completely eliminated the monopoly pricing power of online retailers.
B)  is used by firms to price discriminate through personalized pricing.
C)  is a significant barrier to entry to new Internet retailers.
D)  makes it easier for government to regulate monopolistic industries.

Exam 12: Pure Monopoly

In the short run, a monopolist's economic profits

Correct Answer
verified

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

Correct Answer
verified

Refer to the graph, which shows the revenue curves for a monopolist. What price should be charged in order to maximize total revenue?

Correct Answer
verified

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5, then the

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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When a firm is on the inelastic segment of its demand curve, it can

Correct Answer
verified

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

Correct Answer
verified

Suppose that a monopolist calculates that at its present output level, marginal cost is $2.00 and marginal revenue is $3.00. The firm could increase profits by

Correct Answer
verified

Answer the question on the basis of the accompanying demand schedule. The marginal revenue obtained from selling the fourth unit of output is

Correct Answer
verified

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be

Correct Answer
verified

In many large U.S. cities, taxicab companies operate as near monopolies because of

Correct Answer
verified

A patent for a new product or a new business process is typically granted for a hundred years.

Correct Answer
verified

In a monopoly at equilibrium, price is greater than marginal cost.

Correct Answer
verified

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing price for the monopolist will be

Correct Answer
verified

"Big Data"

Correct Answer
verified

The nondiscriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why

Correct Answer
verified

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct Answer
verified

If the variable costs of a profit-maximizing pure monopolist decline, the firm should

Correct Answer
verified

In the accompanying diagram, demand is relatively inelastic

Correct Answer
verified

Exam 12: Pure Monopoly

In the short run, a monopolist's economic profits

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the graph, which shows the revenue curves for a monopolist. What price should be charged in order to maximize total revenue?

Correct AnswerverifiedShow Answer

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5, then the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a firm is on the inelastic segment of its demand curve, it can

Correct AnswerverifiedShow Answer

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

Correct AnswerverifiedShow Answer

Suppose that a monopolist calculates that at its present output level, marginal cost is $2.00 and marginal revenue is $3.00. The firm could increase profits by

Correct AnswerverifiedShow Answer

Answer the question on the basis of the accompanying demand schedule. The marginal revenue obtained from selling the fourth unit of output is

Correct AnswerverifiedShow Answer

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be

Correct AnswerverifiedShow Answer

In many large U.S. cities, taxicab companies operate as near monopolies because of

Correct AnswerverifiedShow Answer

A patent for a new product or a new business process is typically granted for a hundred years.

Correct AnswerverifiedShow Answer

In a monopoly at equilibrium, price is greater than marginal cost.

Correct AnswerverifiedShow Answer

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing price for the monopolist will be

Correct AnswerverifiedShow Answer

"Big Data"

Correct AnswerverifiedShow Answer

The nondiscriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why

Correct AnswerverifiedShow Answer

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct AnswerverifiedShow Answer

If the variable costs of a profit-maximizing pure monopolist decline, the firm should

Correct AnswerverifiedShow Answer

In the accompanying diagram, demand is relatively inelastic

Correct AnswerverifiedShow Answer

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