Question 1

How does simultaneous consumption affect economies of scale?

Accepted Answer

A product's ability to satisfy a large n...

Question 2

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 3

If the profit-maximizing pure monopolist whose information is in the accompanying table 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)  $420
D)  $300

Question 4

A nondiscriminating pure monopolist is generally viewed as

Accepted Answer

A)  productively efficient but allocatively inefficient.
B)  productively inefficient but allocatively efficient.
C)  both productively and allocatively inefficient.
D)  both productively and allocatively efficient.

Question 5

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist perfectly price-discriminated and sold each unit of the product at the maximum price the buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total revenue would be

Accepted Answer

A)  $600.
B)  $900.
C)  $1,000.
D)  $1,400.

Question 6

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Accepted Answer

A)  more elastic in market X than in market Y.
B)  less elastic in market X than in market Y.
C)  less elastic in market Y than in market X.
D)  the same in both markets X and Y.

Question 7

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 8

A pure monopolist is producing an output such that ATC = $9, P = $11, MC = $5, MR = $6, and AVC = $4.50. This firm is realizing

Accepted Answer

A)  an economic loss that could be reduced by producing more output.
B)  an economic loss that could be reduced by producing less output.
C)  an economic profit that could be increased by producing more output.
D)  an economic profit that could be increased by producing less output.

Question 9

Refer to the diagram for a pure monopolist. If a regulatory commission seeks to achieve the socially optimal allocation of resources to this line of production, it will set a price of

Accepted Answer

A)  P₁.
B)  P₃.
C)  P₂.
D)  P₄.

Question 10

Which of the following statements is true of price discrimination?

Accepted Answer

A)  Successful price discrimination will provide the firm with lower total profits than if it did not discriminate.
B)  Successful price discrimination will provide the firm with more profit than if it did not discriminate.
C)  Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.
D)  Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers.

Question 11

Refer to the diagrams. Diagram (A) represents

Accepted Answer

A)  equilibrium price and quantity in a purely competitive industry.
B)  the pure monopoly model.
C)  an industry in which there is productive efficiency but not allocative efficiency.
D)  a single firm operating in a purely competitive industry.

Question 12

One argument for having the government regulate natural monopolies is that without regulation,

Accepted Answer

A)  these monopolies usually produce things that are potentially harmful to our health.
B)  these monopolies produce at a level where marginal benefit is greater than marginal cost.
C)  these monopolies produce at a level where marginal benefit is less than marginal cost.
D)  the industry would become competitive and there would be too many firms in the market to achieve efficiency.

Question 13

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Accepted Answer

A)  children's demand for food is elastic and adults' demand for food is inelastic.
B)  adults' demand for food is elastic and children's demand for food is inelastic.
C)  there can be exchange of the product from children, who'd buy it at a lower price, to adults.
D)  there can be exchange of the product from adults, who'd buy it at a higher price, to children.

Question 14

Refer to the data. At its profit-maximizing output, this firm's total revenue will be

Accepted Answer

A)  $300.
B)  $198.
C)  $180.
D)  $280.

Question 15

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

Accepted Answer

A)  $150.
B)  $100.
C)  $200.
D)  $50.

Question 16

Refer to the two diagrams for individual firms. In Figure 2, line B represents the firm's

Accepted Answer

A)  demand curve only.
B)  marginal cost curve only.
C)  marginal revenue curve only.
D)  total revenue curve only.

Question 17

A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sales quantity increases by

Accepted Answer

A)  4 units per day.
B)  3 units per day.
C)  2 units per day.
D)  1 unit per day.

Question 18

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, MR = $3, and AVC = $2.50. This firm is realizing

Accepted Answer

A)  an economic loss that could be reduced by producing more output.
B)  an economic loss that could be reduced by producing less output.
C)  an economic profit that could be increased by producing more output.
D)  an economic profit that could be increased by producing less output.

Question 19

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.

Question 20

A nondiscriminating monopolist will find that marginal revenue

Accepted Answer

A)  exceeds average revenue or price.
B)  is identical to price.
C)  is sometimes greater and sometimes less than price.
D)  is less than average revenue or price.

Exam 12: Pure Monopoly

One argument for having the government regulate natural monopolies is that without regulation,

Correct AnswerverifiedShow Answer

Refer to the diagrams. Diagram (A) represents

Correct AnswerverifiedShow Answer

If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how much profit will the firm earn?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A pure monopolist is producing an output such that ATC = $9, P = $11, MC = $5, MR = $6, and AVC = $4.50. This firm is realizing

Correct AnswerverifiedShow Answer

A nondiscriminating monopolist will find that marginal revenue

Correct AnswerverifiedShow Answer

Refer to the two diagrams for individual firms. In Figure 2, line B represents the firm's

Correct AnswerverifiedShow Answer

A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sales quantity increases by

Correct AnswerverifiedShow Answer

A nondiscriminating pure monopolist is generally viewed as

Correct AnswerverifiedShow Answer

Assuming no change in product demand, a pure monopolist

Correct AnswerverifiedShow Answer

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, MR = $3, and AVC = $2.50. This firm is realizing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the data. At its profit-maximizing output, this firm's total revenue will be

Correct AnswerverifiedShow Answer

A purely monopolistic firm

Correct AnswerverifiedShow Answer

Which of the following statements is true of price discrimination?

Correct AnswerverifiedShow Answer

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist perfectly price-discriminated and sold each unit of the product at the maximum price the buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total revenue would be

Correct AnswerverifiedShow Answer

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Correct AnswerverifiedShow Answer

Refer to the diagram for a pure monopolist. If a regulatory commission seeks to achieve the socially optimal allocation of resources to this line of production, it will set a price of

Correct AnswerverifiedShow Answer

How does simultaneous consumption affect economies of scale?

Correct AnswerverifiedA product's ability to satisfy a large n...View AnswerShow Answer

If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A product's ability to satisfy a large n...
View Answer

Correct Answer
verified