Question 1

For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be

Accepted Answer

A)   > $8 and 
B)   
C)   = $8.
D)   > $16.

Question 2

Price discrimination is illegal in the United States under all circumstances due to antitrust regulations.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   pure competition
B)   oligopoly
C)   monopolistic competition
D)   pure monopoly

Question 4

If a pure monopolist is producing more output than the MR = MC output,

Accepted Answer

A)   the firm may, or may not, be maximizing profits.
B)   it will be in the interest of the firm, but not necessarily of society, to reduce output.
C)   it will be in the interest of the firm and society to increase output.
D)   it will be in the interest of the firm and society to reduce output.

Question 5

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.

Question 6

If the XYZ Company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5.

Accepted Answer

A) True 
 B)False

Question 7

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.

Question 8

(Last Word)  "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.

Question 9

Many people believe that monopolies charge any price they want to without affecting sales. In fact, the output and sales level for a profit- maximizing monopoly is codetermined with price where

Accepted Answer

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

Question 10

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.

Question 11

"Price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product.

Accepted Answer

A) True 
 B)False

Question 12

A monopoly results in productive inefficiency because at the profit-maximizing output level,

Accepted Answer

A)   P > MC.
B)   ATC is not at its minimum level.
C)   MC is not at its minimum level.
D)   P > AVC.

Question 13

Price discrimination is more common in service industries because

Accepted Answer

A)   low-price buyers will find it virtually impossible to resell the products of such industries to high-price buyers.
B)   the costs of providing such industries' products to different groups of buyers vary dramatically.
C)   the price elasticity of demand is the same for all groups of buyers in these industries.
D)   all firms in these industries have significant monopoly power over price.

Question 14

A nondiscriminating pure monopolist finds that it can sell its 50th unit of output for $50. We can surmise that the marginal

Accepted Answer

A)   cost of the 50th unit is also $50.
B)   revenue of the 50th unit is also $50.
C)   revenue of the 50th unit is less than $50.
D)   revenue of the 50th unit is greater than $50.

Question 15

A natural monopoly occurs when

Accepted Answer

A)   long-run average costs decline continuously through the range of demand.
B)   a firm owns or controls some resource essential to production.
C)   long-run average costs rise continuously as output is increased.
D)   economies of scale are obtained at relatively low levels of output.

Question 16

The economic incentive for price discrimination is based upon

Accepted Answer

A)   prejudices of business managers.
B)   differences among sellers' costs.
C)   a desire to evade antitrust legislation.
D)   differences among buyers' elasticities of demand.

Question 17

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 18

Which of the following is not a barrier to entry?

Accepted Answer

A)   patents
B)   X-inefficiency
C)   economies of scale
D)   ownership of essential resources

Question 19

A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than

Accepted Answer

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

Question 20

Large minimum efficient scale of plant combined with limited market demand may lead to

Accepted Answer

A)   natural monopoly.
B)   patent monopoly.
C)   government franchise monopoly.
D)   shared monopoly.

Exam 12: Pure Monopoly

A nondiscriminating pure monopolist finds that it can sell its 50th unit of output for $50. We can surmise that the marginal

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a pure monopolist is producing more output than the MR = MC output,

Correct AnswerverifiedShow Answer

If the XYZ Company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5.

Correct AnswerverifiedShow Answer

Many people believe that monopolies charge any price they want to without affecting sales. In fact, the output and sales level for a profit- maximizing monopoly is codetermined with price where

Correct AnswerverifiedShow Answer

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

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(Last Word) "Big Data"

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For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be

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The supply curve of a pure monopolist

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Price discrimination is more common in service industries because

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A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than

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The economic incentive for price discrimination is based upon

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A monopoly results in productive inefficiency because at the profit-maximizing output level,

Correct AnswerverifiedShow Answer

Large minimum efficient scale of plant combined with limited market demand may lead to

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Price discrimination is illegal in the United States under all circumstances due to antitrust regulations.

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A natural monopoly occurs when

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

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

Correct AnswerverifiedShow Answer

"Price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product.

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to entry?

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