Question 1

Which is not true of price discrimination?

Accepted Answer

A)   Successful price discrimination requires that different segments of the market have different demand elasticities.
B)   Successful price discrimination will provide the firm with more profit than if it does not discriminate.
C)   Successful price discrimination implies that the producer can separate customers into easily identifiable groups.
D)   Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.

Question 2

Under pure monopoly, a profit-maximizing firm will produce

Accepted Answer

A)   in the inelastic range of its demand curve.
B)   in the elastic range of its demand curve.
C)   only where marginal costs are decreasing.
D)   only where marginal revenue is increasing.

Question 3

Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously.

Accepted Answer

A) True 
 B)False

Question 4

The pure monopolist's demand curve is relatively elastic

Accepted Answer

A)   in the price range where total revenue is declining.
B)   at all points where the demand curve lies above the horizontal axis.
C)   in the price range where marginal revenue is negative.
D)   in the price range where marginal revenue is positive.

Question 5

The nondiscriminating pure monopolist's demand curve

Accepted Answer

A)   is the industry demand curve.
B)   shows a direct or positive relationship between price and quantity demanded.
C)   tends to be inelastic at high prices and elastic at low prices.
D)   is identical to its marginal revenue curve.

Question 6

If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a

Accepted Answer

A)   purely competitive firm in St Louis.
B)   monopoly firm in St Louis.
C)   monopoly firm in Major League Baseball.
D)   purely competitive firm in Major League Baseball.

Question 7

If a monopolist finds itself operating in the inelastic portion of its demand curve, then it should never lower its price because doing so would reduce its profits.

Accepted Answer

A) True 
 B)False

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.

Question 9

Price discrimination occurs whenever a firm sells a good for two different prices.

Accepted Answer

A) True 
 B)False

Question 10

If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Accepted Answer

A)   reduce price and reduce quantity of output.
B)   reduce price and increase quantity of output.
C)   increase price and reduce quantity of output.
D)   increase price and increase quantity of output.

Question 11

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then

Accepted Answer

A)   the firm will realize an economic profit.
B)   the firm will earn only a normal profit.
C)   allocative efficiency will be worsened.
D)   the firm must be subsidized or it will go bankrupt.

Question 12

Other things equal, in which of the following cases would economic profit be the greatest?

Accepted Answer

A)   an unregulated monopolist that is able to engage in price discrimination
B)   an unregulated, nondiscriminating monopolist
C)   a regulated monopolist charging a price equal to average total cost
D)   a regulated monopolist charging a price equal to marginal cost

Question 13

(Consider This)  Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. Which of the following conditions of price discrimination explains why this occurs?

Accepted Answer

A)   The seller must have some monopoly power; that is, it must be able to set the product price.
B)   The seller must be able to identify buyers by group characteristics such as age or income.
C)   Groups must have different elasticities of demand for the product.
D)   The items can be bought by people in the low-price group and transferred to members of the high-price group.

Question 14

Answer the question on the basis of the accompanying demand schedule.   Price Quantity Demanded $7162534435\begin{array} { | c | c| } \hline 	ext { Price } & 	ext {Quantity Demanded } \\hline \$ 7 & 1 \\hline 6 & 2 \\hline 5 & 3 \\hline 4 & 4 \\hline 3 & 5 \\hline\end{array} Price $76543​Quantity Demanded 12345​​  The marginal revenue obtained from selling the fourth unit of output is

Accepted Answer

A)   $16.
B)   $3.
C)   $1.
D)   $4.

Question 15

For a pure nondiscriminating monopolist, marginal revenue is less than price because

Accepted Answer

A)   the monopolist's demand curve is perfectly elastic.
B)   the monopolist's demand curve is perfectly inelastic.
C)   when a monopolist lowers price to sell more output, the lower price applies to all units sold.
D)   the monopolist's total revenue curve is linear and slopes upward to the right.

Question 16

At its profit-maximizing output, a pure nondiscriminating monopolist achieves

Accepted Answer

A)   neither productive efficiency nor allocative efficiency.
B)   both productive efficiency and allocative efficiency.
C)   productive efficiency but not allocative efficiency.
D)   allocative efficiency but not productive efficiency.

Question 17

Which of the following does not necessarily apply to a pure monopoly?

Accepted Answer

A)   The product the firm produces must have no close substitutes.
B)   The firm must be the sole producer of a product.
C)   The firm will charge the highest price possible.
D)   Entry must be blocked.

Question 18

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.

Question 19

A market where there are many firms, but one firm dominates and has the bulk (85 percent)  of sales in the market, is called a

Accepted Answer

A)   natural monopoly.
B)   monopolistically competitive market.
C)   pure monopoly.
D)   near-monopoly.

Question 20

Successful price discrimination requires that buyers charged the different prices be physically separated.

Accepted Answer

A) True 
 B)False

Exam 12: Pure Monopoly

Other things equal, in which of the following cases would economic profit be the greatest?

Correct Answer
verified

At its profit-maximizing output, a pure nondiscriminating monopolist achieves

Correct Answer
verified

Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously.

Correct Answer
verified

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then

Correct Answer
verified

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

Correct Answer
verified

For a pure nondiscriminating monopolist, marginal revenue is less than price because

Correct Answer
verified

Correct Answer
verified

(Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. Which of the following conditions of price discrimination explains why this occurs?

Correct Answer
verified

A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

Correct Answer
verified

A single-price pure monopoly is economically inefficient

Correct Answer
verified

Which of the following does not necessarily apply to a pure monopoly?

Correct Answer
verified

If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Correct Answer
verified

Under pure monopoly, a profit-maximizing firm will produce

Correct Answer
verified

Which is not true of price discrimination?

Correct Answer
verified

If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a

Correct Answer
verified

Successful price discrimination requires that buyers charged the different prices be physically separated.

Correct Answer
verified

The pure monopolist's demand curve is relatively elastic

Correct Answer
verified

If a monopolist finds itself operating in the inelastic portion of its demand curve, then it should never lower its price because doing so would reduce its profits.

Correct Answer
verified

Price discrimination occurs whenever a firm sells a good for two different prices.

Correct Answer
verified

The nondiscriminating pure monopolist's demand curve

Correct Answer
verified

Exam 12: Pure Monopoly

Other things equal, in which of the following cases would economic profit be the greatest?

Correct AnswerverifiedShow Answer

At its profit-maximizing output, a pure nondiscriminating monopolist achieves

Correct AnswerverifiedShow Answer

Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously.

Correct AnswerverifiedShow Answer

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a pure nondiscriminating monopolist, marginal revenue is less than price because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

(Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. Which of the following conditions of price discrimination explains why this occurs?

Correct AnswerverifiedShow Answer

A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

Correct AnswerverifiedShow Answer

A single-price pure monopoly is economically inefficient

Correct AnswerverifiedShow Answer

Which of the following does not necessarily apply to a pure monopoly?

Correct AnswerverifiedShow Answer

If marginal costs decrease and the MC curve shifts down, a typical monopolist will

Correct AnswerverifiedShow Answer

Under pure monopoly, a profit-maximizing firm will produce

Correct AnswerverifiedShow Answer

Which is not true of price discrimination?

Correct AnswerverifiedShow Answer

If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a

Correct AnswerverifiedShow Answer

Successful price discrimination requires that buyers charged the different prices be physically separated.

Correct AnswerverifiedShow Answer

The pure monopolist's demand curve is relatively elastic

Correct AnswerverifiedShow Answer

If a monopolist finds itself operating in the inelastic portion of its demand curve, then it should never lower its price because doing so would reduce its profits.

Correct AnswerverifiedShow Answer

Price discrimination occurs whenever a firm sells a good for two different prices.

Correct AnswerverifiedShow Answer

The nondiscriminating pure monopolist's demand curve

Correct AnswerverifiedShow Answer

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