Question 1

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 2

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 3

Barriers to entering an industry:

Accepted Answer

A)   encourage allocative efficiency.
B)   encourage productive efficiency.
C)   are the basis for monopoly.
D)   apply only to purely monopolistic industries.

Question 4

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price:

Accepted Answer

A)   equals marginal revenue.
B)   will vertically intersect demand where MR = MC.
C)   will always equal ATC.
D)   always exceeds ATC.

Question 5

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 monopolist will select its profit-maximizing level of output somewhere within the:

Accepted Answer

A)   3-5 unit range of output.
B)   1-3 unit range of output.
C)   1-4 unit range of output.
D)   2-4 unit range of output.

Question 6

If a monopolist engages in price discrimination,it will:

Accepted Answer

A)   realize a smaller profit.
B)   charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic.
C)   produce a smaller output than when it did not discriminate.
D)   charge a competitive price to all its customers.

Question 7

Natural monopoly may result where products produce substantial network effects and can be simultaneously consumed by a large number of consumers.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Answer the question on the basis of the following information for a pure monopolist:   Output  Total Cost 0$25012602290335044805700 Product  Price $500300250200150100\begin{array}{ccc}\begin{array}{ccc}\	ext { Output } & & 	ext { Total Cost } \\hline0 & & \$ 250 \1 & & 260 \2 & & 290 \3 & & 350 \4 & & 480 \5 & & 700\end{array}\begin{array}{l}	ext { Product }\\begin{array}{c}	ext { Price } \\hline \$ 500 \300 \250 \200 \150 \100\end{array}\end{array}\end{array} Output 012345​​ Total Cost $250260290350480700​​ Product  Price $500300250200150100​​​​  If the given profit-maximizing monopolist is able to price discriminate,charging each customer the price associated with each given level of output,how many units will the firm produce?

Accepted Answer

A)   2.
B)   3.
C)   4.
D)   5.

Question 10

Which of the following best approximates a pure monopoly?

Accepted Answer

A)   The foreign exchange market.
B)   The Kansas City wheat market.
C)   The only bank in a small town.
D)   The soft drink market.

Question 11

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Accepted Answer

A)   different prices to compensate for differences in the characteristics of the product.
B)   the same price if per unit cost is constant for each unit of the product.
C)   that price that equals the buyer's marginal cost.
D)   the maximum price each would be willing to pay.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

Comparing a pure monopoly and a purely competitive firm with identical costs,we would find in long-run equilibrium that the pure monopolist's:

Accepted Answer

A)   price,output,and average total cost would all be higher.
B)   price and average total cost would be higher,but output would be lower.
C)   price,output,and average total cost would all be lower.
D)   price and output would be lower,but average total cost would be higher.

Question 15

Confronted with the same unit cost data,a monopolistic producer will charge:

Accepted Answer

A)   the same price and produce the same output as a competitive firm.
B)   a higher price and produce a larger output than a competitive firm.
C)   a higher price and produce a smaller output than a competitive firm.
D)   a lower price and produce a smaller output than a competitive firm.

Question 16

What do economies of scale,the ownership of essential raw materials,and patents have in common?

Accepted Answer

A)   They must all be present before price discrimination can be practiced.
B)   They are all barriers to entry.
C)   They all help explain why a monopolist's demand and marginal revenue curves coincide.
D)   They all help explain why the long-run average cost curve is U-shaped.

Question 17

For a pure 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 18

Other things equal,a price discriminating monopolist will:

Accepted Answer

A)   realize a smaller economic profit than a nondiscriminating monopolist.
B)   produce a larger output than a nondiscriminating monopolist.
C)   produce the same output as a nondiscriminating monopolist.
D)   produce a smaller output than a nondiscriminating monopolist.

Question 19

Answer the question on the basis of the following information for a pure monopolist:   Output  Total Cost 0$25012602290335044805700 Product  Price $500300250200150100\begin{array}{ccc}\begin{array}{ccc}\	ext { Output } & & 	ext { Total Cost } \\hline0 & & \$ 250 \1 & & 260 \2 & & 290 \3 & & 350 \4 & & 480 \5 & & 700\end{array}\begin{array}{l}	ext { Product }\\begin{array}{c}	ext { Price } \\hline \$ 500 \300 \250 \200 \150 \100\end{array}\end{array}\end{array} Output 012345​​ Total Cost $250260290350480700​​ Product  Price $500300250200150100​​​​  If the given profit-maximizing monopolist is able to price discriminate,charging each customer the price associated with each given level of output,how much profit will the firm earn?

Accepted Answer

A)   $120.
B)   $250.
C)   $300.
D)   $420.

Question 20

Assuming no change in product demand,a pure monopolist:

Accepted Answer

A)   can increase price and increase sales simultaneously because it dominates the market.
B)   adds an amount to total revenue that is equal to the price of incremental sales.
C)   should produce in the range where marginal revenue is negative.
D)   must lower price to increase sales.

Exam 12: Pure Monopoly

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

Correct Answer
verified

Confronted with the same unit cost data,a monopolistic producer will charge:

Correct Answer
verified

A natural monopoly occurs when:

Correct Answer
verified

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Correct Answer
verified

Correct Answer
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What do economies of scale,the ownership of essential raw materials,and patents have in common?

Correct Answer
verified

Natural monopoly may result where products produce substantial network effects and can be simultaneously consumed by a large number of consumers.

Correct Answer
verified

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

Correct Answer
verified

If a monopolist engages in price discrimination,it will:

Correct Answer
verified

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

Correct Answer
verified

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price:

Correct Answer
verified

Other things equal,a price discriminating monopolist will:

Correct Answer
verified

Which of the following best approximates a pure monopoly?

Correct Answer
verified

Barriers to entering an industry:

Correct Answer
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For a pure monopolist,marginal revenue is less than price because:

Correct Answer
verified

Correct Answer
verified

Comparing a pure monopoly and a purely competitive firm with identical costs,we would find in long-run equilibrium that the pure monopolist's:

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

Assuming no change in product demand,a pure monopolist:

Correct Answer
verified

Correct Answer
verified

Exam 12: Pure Monopoly

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

Correct AnswerverifiedShow Answer

Confronted with the same unit cost data,a monopolistic producer will charge:

Correct AnswerverifiedShow Answer

A natural monopoly occurs when:

Correct AnswerverifiedShow Answer

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What do economies of scale,the ownership of essential raw materials,and patents have in common?

Correct AnswerverifiedShow Answer

Natural monopoly may result where products produce substantial network effects and can be simultaneously consumed by a large number of consumers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a monopolist engages in price discrimination,it will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price:

Correct AnswerverifiedShow Answer

Other things equal,a price discriminating monopolist will:

Correct AnswerverifiedShow Answer

Which of the following best approximates a pure monopoly?

Correct AnswerverifiedShow Answer

Barriers to entering an industry:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Comparing a pure monopoly and a purely competitive firm with identical costs,we would find in long-run equilibrium that the pure monopolist's:

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

Assuming no change in product demand,a pure monopolist:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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