Question 1

What is x-inefficiency? Why is it likely to occur in monopoly?

Accepted Answer

X-inefficiency occurs when a firm produc...

Question 2

Refer to the graph for a monopolist in short-run equilibrium. The monopolist will charge a price equal to the distance:

Accepted Answer

A)  0 A.
B)  0 B.
C)  0 C.
D)  not labeled on the graph.

Question 3

In the accompanying diagram, if price is reduced from P ₁ to P ₂, total revenue will

Accepted Answer

A)  increase by A −C.
B)  increase by C −A.
C)  decrease by A −C.
D)  decrease by C −A.

Question 4

Price discrimination refers to

Accepted Answer

A)  selling a given product for different prices at two different points in time.
B)  any price above that which is equal to a minimum average total cost.
C)  the selling of a given product to different customers at different prices that do not reflect cost differences.
D)  the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.

Question 5

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 6

Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If this firm is able to price discriminate between children and adults, its profit-maximizing level of output will be

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 7

Refer to the graph, which shows a total revenue curve for a monopolist. The profit-maximizing firm will produce in that output level where total revenue is

Accepted Answer

A)  rising.
B)  falling.
C)  rising and falling.
D)  zero.

Question 8

Answer the question on the basis of the accompanying demand schedule.  The marginal revenue obtained from selling the third unit of output is

Accepted Answer

A)  $6.
B)  $1.
C)  $3.
D)  $5.

Question 9

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 10

A firm will earn economic profits whenever

Accepted Answer

A)  marginal revenue exceeds marginal costs.
B)  marginal revenue exceeds variable costs.
C)  average revenue exceeds average total costs.
D)  average revenue exceeds average variable costs.

Question 11

One feature of pure monopoly is that the firm is

Accepted Answer

A)  a producer of products with close substitutes.
B)  one of several producers of a product.
C)  a price taker.
D)  a price maker.

Question 12

Based on the accompanying table, this nondiscriminating pure monopolist should set its price at

Accepted Answer

A)  $300.
B)  $250.
C)  $200.
D)  $150.

Question 13

Answer the question on the basis of the provided demand and cost data for a pure monopolist.  The profit-maximizing level of output will be

Accepted Answer

A)  4 units.
B)  7 units.
C)  6 units.
D)  5 units.

Question 14

If a pure monopolist is producing at that output where P = ATC, then

Accepted Answer

A)  its economic profits will be zero.
B)  it will be realizing losses.
C)  it will be producing less than the profit-maximizing level of output.
D)  it will be realizing an economic profit.

Question 15

The firm described in the accompanying diagram is selling in

Accepted Answer

A)  a market in which there are an extremely large number of other firms producing the same product.
B)  an imperfectly competitive market.
C)  a market in which demand is elastic at all prices.
D)  a purely competitive market.

Question 16

Alex owns a luxury automobile and regularly purchases high-end fashion items online. Kara drives an old sedan and does most online shopping on eBay and Amazon. Suppose both Alex and Kara search the same online retailer for a nice watch to give on Father's Day. Based on Big Data and personalized pricing, we would expect

Accepted Answer

A)  Alex to see a higher price than Kara for the same watch.
B)  Alex and Kara to see the same price for a given watch.
C)  Alex to see a lower price than Kara for the same watch.
D)  that either Alex or Kara might see a higher price for the same watch, as algorithms randomly determine what price each consumer sees.

Question 17

If the industry depicted in this graph were a pure monopoly, the product price would be

Accepted Answer

A)  lower than $8.
B)  $8.
C)  $14.
D)  $16.

Question 18

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Accepted Answer

A) True 
 B)False

Question 19

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing price for the monopolist will be

Accepted Answer

A)  $3.50.
B)  $3.75.
C)  $3.25.
D)  $4.00.

Question 20

Given a linear demand curve, at which combination of price and marginal revenue ( P, MR) is the price elasticity of demand less than 1?

Accepted Answer

A)  P = 15, MR = -4
B)  P = 20, MR = 0
C)  P = 28, MR = 13
D)  P = 22, MR = 9

Exam 12: Pure Monopoly

What is x-inefficiency? Why is it likely to occur in monopoly?

Correct Answer
verified
X-inefficiency occurs when a firm produc...
View Answer

Answer the question on the basis of the accompanying demand schedule. The marginal revenue obtained from selling the third unit of output is

Correct Answer
verified

A firm will earn economic profits whenever

Correct Answer
verified

If the industry depicted in this graph were a pure monopoly, the product price would be

Correct Answer
verified

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing price for the monopolist will be

Correct Answer
verified

Refer to the graph, which shows a total revenue curve for a monopolist. The profit-maximizing firm will produce in that output level where total revenue is

Correct Answer
verified

Price discrimination refers to

Correct Answer
verified

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Correct Answer
verified

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

Correct Answer
verified

Given a linear demand curve, at which combination of price and marginal revenue ( P, MR) is the price elasticity of demand less than 1?

Correct Answer
verified

Refer to the graph for a monopolist in short-run equilibrium. The monopolist will charge a price equal to the distance:

Correct Answer
verified

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing level of output will be

Correct Answer
verified

The practice of price discrimination is associated with pure monopoly because

Correct Answer
verified

One feature of pure monopoly is that the firm is

Correct Answer
verified

The firm described in the accompanying diagram is selling in

Correct Answer
verified

Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If this firm is able to price discriminate between children and adults, its profit-maximizing level of output will be

Correct Answer
verified

Based on the accompanying table, this nondiscriminating pure monopolist should set its price at

Correct Answer
verified

In the accompanying diagram, if price is reduced from P ₁ to P ₂, total revenue will

Correct Answer
verified

Correct Answer
verified

If a pure monopolist is producing at that output where P = ATC, then

Correct Answer
verified

Exam 12: Pure Monopoly

What is x-inefficiency? Why is it likely to occur in monopoly?

Correct AnswerverifiedX-inefficiency occurs when a firm produc...View AnswerShow Answer

Answer the question on the basis of the accompanying demand schedule. The marginal revenue obtained from selling the third unit of output is

Correct AnswerverifiedShow Answer

A firm will earn economic profits whenever

Correct AnswerverifiedShow Answer

If the industry depicted in this graph were a pure monopoly, the product price would be

Correct AnswerverifiedShow Answer

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing price for the monopolist will be

Correct AnswerverifiedShow Answer

Refer to the graph, which shows a total revenue curve for a monopolist. The profit-maximizing firm will produce in that output level where total revenue is

Correct AnswerverifiedShow Answer

Price discrimination refers to

Correct AnswerverifiedShow Answer

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Given a linear demand curve, at which combination of price and marginal revenue ( P, MR) is the price elasticity of demand less than 1?

Correct AnswerverifiedShow Answer

Refer to the graph for a monopolist in short-run equilibrium. The monopolist will charge a price equal to the distance:

Correct AnswerverifiedShow Answer

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing level of output will be

Correct AnswerverifiedShow Answer

The practice of price discrimination is associated with pure monopoly because

Correct AnswerverifiedShow Answer

One feature of pure monopoly is that the firm is

Correct AnswerverifiedShow Answer

The firm described in the accompanying diagram is selling in

Correct AnswerverifiedShow Answer

Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If this firm is able to price discriminate between children and adults, its profit-maximizing level of output will be

Correct AnswerverifiedShow Answer

Based on the accompanying table, this nondiscriminating pure monopolist should set its price at

Correct AnswerverifiedShow Answer

In the accompanying diagram, if price is reduced from P ₁ to P ₂, total revenue will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a pure monopolist is producing at that output where P = ATC, then

Correct AnswerverifiedShow Answer

Correct Answer
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X-inefficiency occurs when a firm produc...
View Answer

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