Question 1

Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist:  PQd$10172533415\begin{array}{ccc}P & & Q_{d} \\hline\$10 & & 1 \7&&2\5 & & 3 \3 & & 4 \1 & & 5\end{array}P$107531​​Qd​12345​​  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.

Question 2

Answer the question on the basis of the following demand and cost data for a pure monopolist:   Demand Data  Quantity  Price  Demanded $5.5035.0044.5053.8563.3572.9082.509 Cost Data  Output  Total Cost 3$5.0046.0056.0067.5079.00811.00914.00\begin{array}{l}\begin{array}{ccc}&	ext { Demand Data }&\&&	ext { Quantity }\	ext { Price } & & 	ext { 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}&	ext { Cost Data }&\\	ext { Output } & & 	ext { Total Cost } \\hline3& & \$ 5.00 \4&&6.00\5 & & 6.00 \6 & & 7.50 \7 & & 9.00 \8 & & 11.00 \9 & & 14.00\end{array}\end{array} Price $5.505.004.503.853.352.902.50​ Demand Data ​ Quantity  Demanded 3456789​​ Output 3456789​ Cost Data ​ Total Cost $5.006.006.007.509.0011.0014.00​​​  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.

Question 3

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 4

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 5

Answer the question on the basis of the demand schedule shown below:   Quantity  Price  Demanded $77162534435\begin{array}{l}\begin{array} { c c c } &&	ext { Quantity }\	ext { Price } && 	ext { Demanded } \\hline\$ 77 & & 1 \6 & & 2 \5 & & 3 \4 & & 4 \3 & & 5\end{array}\end{array} Price $776543​​ Quantity  Demanded 12345​​​  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) .

Question 6

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

Question 7

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. D

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.

Question 9

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.

Question 10

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 11

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.

Question 12

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.

Question 13

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 14

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 15

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.

Question 16

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.

Question 17

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.

Question 18

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 19

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.

Question 20

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

Exam 12: Pure Monopoly

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:

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

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

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

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A

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

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D

The supply curve of a pure monopolist:

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The nondiscriminating monopolist's demand curve:

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

Correct Answer
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The supply curve for a monopolist is:

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

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

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

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

Correct Answer
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The demand curve faced by a pure monopolist:

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

Correct Answer
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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.

Correct Answer
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A purely monopolistic firm:

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

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A

Exam 12: Pure Monopoly

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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

Correct AnswerverifiedD

The supply curve of a pure monopolist:

Correct AnswerverifiedShow Answer

The nondiscriminating monopolist's demand curve:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The supply curve for a monopolist is:

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand curve faced by a pure monopolist:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A purely monopolistic firm:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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A

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D

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A