Question 1

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit.The marginal revenue of the 21st unit of output is:

Accepted Answer

A)   $9.75.
B)   $204.75.
C)   $4.75.
D)   $.25.E) A) and D)
F) B) and C)

Question 2

The gains to monopolists from exercising market power:

Accepted Answer

A)   exceed the losses to consumers in monopoly markets,resulting in a net gain to society.
B)   equal the losses to consumers in monopoly markets,resulting in no net change for society.
C)   are less than the losses to consumers in monopoly markets,resulting in a net loss to society.
D)   create smaller deadweight losses than occur in purely competitive industries.E) A) and B)
F) A) and C)

Question 3

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.E) A) and B)
F) A) and C)

Question 4

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.E) A) and B)
F) A) and D)

Question 5

The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium:

Accepted Answer

A)   price equals minimum average total cost.
B)   marginal revenue equals marginal cost.
C)   marginal cost exceeds price.
D)   price exceeds marginal cost.E) None of the above
F) A) and C)

Question 6

For an imperfectly competitive firm:

Accepted Answer

A)   total revenue is a straight,upsloping line because a firm's sales are independent of product price.
B)   the marginal revenue curve lies above the demand curve because any reduction in price applies to all units sold.
C)   the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold.
D)   the marginal revenue curve lies below the demand curve because any reduction in price applies only to the extra unit sold.E) B) and D)
F) C) and D)

Question 7

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50,it will increase its profits by:

Accepted Answer

A)   reducing output and raising price.
B)   reducing both output and price.
C)   increasing both price and output.
D)   raising price while keeping output unchanged.E) A) and B)
F) A) and C)

Question 8

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9.We thus know that:

Accepted Answer

A)   demand is inelastic at this price.
B)   the firm is maximizing profits.
C)   total revenue is increasing.
D)   total revenue is at a maximum.E) B) and D)
F) All of the above

Question 9

Pure monopolists may obtain economic profits in the long run because:

Accepted Answer

A)   of advertising.
B)   marginal revenue is constant as sales increase.
C)   of barriers to entry.
D)   of rising average fixed costs.E) B) and C)
F) None of the above

Question 10

Pure monopoly refers to:

Accepted Answer

A)   any market in which the demand curve to the firm is downsloping.
B)   a standardized product being produced by many firms.
C)   a single firm producing a product for which there are no close substitutes.
D)   a large number of firms producing a differentiated product.E) A) and B)
F) A) and D)

Question 11

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 level of output will be:

Accepted Answer

A)   4 units.
B)   7 units.
C)   6 units.
D)   5 units. E) All of the above
F) B) and C)

Question 12

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.E) None of the above
F) B) and C)

Question 13

Which of the following is a characteristic of pure monopoly?

Accepted Answer

A)   Close substitute products.
B)   Barriers to entry.
C)   The absence of market power.
D)   "Price taking."E) B) and C)
F) A) and D)

Question 14

If profits are maximized (or losses minimized) ,which of the following conditions is common to both unregulated monopoly and pure competition?

Accepted Answer

A)   MC = P.
B)   MC = ATC.
C)   MR = MC.
D)   P = MR.E) None of the above
F) A) and B)

Question 15

(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.This pricing system occurs because:

Accepted Answer

A)   children have an elastic demand for game tickets but an inelastic demand for concession items.
B)   children have an inelastic demand for game tickets but an elastic demand for concession items.
C)   the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults.
D)   children can personally "consume" only a single game ticket but can personally consume more than one concession item.E) B) and C)
F) A) and D)

Question 16

Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit.The monopolist will produce and sell the sixth unit if its marginal cost is:

Accepted Answer

A)   $4 or less.
B)   $3.90 or less.
C)   $3.50 or less.
D)   $3.40 or less.E) A) and D)
F) None of the above

Question 17

A pure monopolist:

Accepted Answer

A)   will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
B)   will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output.
C)   will realize an economic loss if MC intersects the downsloping portion of MR.
D)   always realizes an economic profit.E) B) and C)
F) All of the above

Question 18

The higher prices charged by monopolists:

Accepted Answer

A)   are like a private tax that redistributes income from consumers to monopoly sellers.
B)   are socially optimal because they better reflect how much society values the good relative to the resources used to produce it.
C)   return to consumers through the public goods provided by monopolies.
D)   have no effect on the distribution of income.E) A) and C)
F) All of the above

Question 19

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit.The monopolist will produce and sell the fifth unit if its marginal cost is:

Accepted Answer

A)   $1 or less.
B)   $.75 or less.
C)   $1.75 or less.
D)   $2 or less.E) B) and D)
F) All of the above

Question 20

(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.E) B) and D)
F) All of the above

Exam 12: Pure Monopoly

The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium:

Correct Answer
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Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit.The monopolist will produce and sell the sixth unit if its marginal cost is:

Correct Answer
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The higher prices charged by monopolists:

Correct Answer
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Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit.The monopolist will produce and sell the fifth unit if its marginal cost is:

Correct Answer
verified

Which of the following is a characteristic of pure monopoly?

Correct Answer
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The gains to monopolists from exercising market power:

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

Correct Answer
verified

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50,it will increase its profits by:

Correct Answer
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For an imperfectly competitive firm:

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
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Correct Answer
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If profits are maximized (or losses minimized) ,which of the following conditions is common to both unregulated monopoly and pure competition?

Correct Answer
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Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit.The marginal revenue of the 21^st unit of output is:

Correct Answer
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The nondiscriminating pure monopolist's demand curve:

Correct Answer
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(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.This pricing system occurs because:

Correct Answer
verified

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9.We thus know that:

Correct Answer
verified

Pure monopolists may obtain economic profits in the long run because:

Correct Answer
verified

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

Correct Answer
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A pure monopolist:

Correct Answer
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Pure monopoly refers to:

Correct Answer
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Exam 12: Pure Monopoly

The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium:

Correct AnswerverifiedShow Answer

Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit.The monopolist will produce and sell the sixth unit if its marginal cost is:

Correct AnswerverifiedShow Answer

The higher prices charged by monopolists:

Correct AnswerverifiedShow Answer

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit.The monopolist will produce and sell the fifth unit if its marginal cost is:

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of pure monopoly?

Correct AnswerverifiedShow Answer

The gains to monopolists from exercising market power:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50,it will increase its profits by:

Correct AnswerverifiedShow Answer

For an imperfectly competitive firm:

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

Correct AnswerverifiedShow Answer

If profits are maximized (or losses minimized) ,which of the following conditions is common to both unregulated monopoly and pure competition?

Correct AnswerverifiedShow Answer

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit.The marginal revenue of the 21st unit of output is:

Correct AnswerverifiedShow Answer

The nondiscriminating pure monopolist's demand curve:

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.This pricing system occurs because:

Correct AnswerverifiedShow Answer

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9.We thus know that:

Correct AnswerverifiedShow Answer

Pure monopolists may obtain economic profits in the long run because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A pure monopolist:

Correct AnswerverifiedShow Answer

Pure monopoly refers to:

Correct AnswerverifiedShow Answer

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Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit.The marginal revenue of the 21^st unit of output is:

Correct Answer
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