Question 1

The demand curve confronting a nondiscriminating pure monopolist is

Accepted Answer

A)  horizontal.
B)  the same as the industry's demand curve.
C)  more elastic than the demand curve confronting a competitive firm.
D)  derived by vertically summing the individual demand curves for the buyers.

Question 2

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

Accepted Answer

A)  Demand is elastic at a price of P₁.
B)  Demand is inelastic at a price of P₂.
C)  The price elasticity of demand is constant over the entire demand curve.
D)  Demand is unitary-elastic over the entire demand curve.

Question 3

The table shows the demand schedule facing Nina, a monopolist selling baskets. If Nina had no production costs, what price would she charge to maximize profits?

Accepted Answer

A)  $20
B)  $16
C)  $10
D)  $12

Question 4

Refer to the diagram for a nondiscriminating monopolist. Demand is elastic

Accepted Answer

A)  in the q₁ q₃ output range.
B)  only for outputs greater than q₄.
C)  for all levels of output less than q₂.
D)  for all levels of output greater than q₂.

Question 5

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.

Question 6

Suppose that a pure monopolist can sell 7 units of output at $9 per unit and 8 units at $8.50 per unit. For the monopolist to profitably produce and sell the eighth unit of output, its marginal cost must be anywhere at or below

Accepted Answer

A)  $9.
B)  $8.50.
C)  $6.50.
D)  $5.00.

Question 7

Pure monopolists always earn economic profits.

Accepted Answer

A) True 
 B)False

Question 8

If a monopoly is faced with competition from foreign multinational corporations or from potential new entrants, then it would probably

Accepted Answer

A)  raise price and reduce output.
B)  reduce price and raise output.
C)  start operating at the inelastic portion of its demand curve.
D)  increase production so that MR > MC.

Question 9

The region of demand in which the monopolist will choose a price-output combination will be

Accepted Answer

A)  inelastic because, as price declines and output increases, total revenue will increase.
B)  inelastic because, as price declines and output increases, total revenue will decrease.
C)  elastic because, as price declines and output increases, total revenue will decrease.
D)  elastic because, as price declines and output increases, total revenue will increase.

Question 10

If a monopolist were to produce in the inelastic segment of its demand curve,

Accepted Answer

A)  total revenue would be at a maximum.
B)  marginal revenue would be positive.
C)  the firm would not be maximizing profits.
D)  it would necessarily incur a loss.

Question 11

Barriers to entry

Accepted Answer

A)  usually result in pure competition.
B)  can result from government regulation.
C)  exist in economic theory but not in the real world.
D)  are typically the result of wrongdoing on the part of a firm.

Question 12

Which of the following is not a barrier to entry?

Accepted Answer

A)  patents
B)  X-inefficiency
C)  economies of scale
D)  ownership of essential resources

Question 13

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.

Question 14

Which of the following statements is correct?

Accepted Answer

A)  In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest.
B)  In the short run, the pure monopolist will charge the highest price it can get for its product.
C)  Because of its ability to set its own price, the pure monopolist can increase price and increase its volume of sales simultaneously.
D)  Pure monopolists do not always realize positive profits, sometimes they suffer losses.

Question 15

In the short run a pure monopolist will charge the highest price the market will bear for its product.

Accepted Answer

A) True 
 B)False

Question 16

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)  $9.
B)  $1.
C)  $6.
D)  $8.

Question 17

Refer to the graph, which shows the revenue curves for a monopolist. At what output level is demand inelastic?

Accepted Answer

A)  Q₁
B)  Q₂
C)  Q₃
D)  Q₄

Question 18

One feature of pure monopoly is that the demand curve

Accepted Answer

A)  is vertical.
B)  is horizontal.
C)  slopes upward.
D)  slopes downward.

Question 19

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 20

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue

Accepted Answer

A)  may be either greater or less than $35.
B)  will also be $35.
C)  will be less than $35.
D)  will be greater than $35.

Exam 12: Pure Monopoly

Pure monopolists always earn economic profits.

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The region of demand in which the monopolist will choose a price-output combination will be

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In the short run a pure monopolist will charge the highest price the market will bear for its product.

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If a monopoly is faced with competition from foreign multinational corporations or from potential new entrants, then it would probably

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Which of the following is not a barrier to entry?

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Refer to the graph, which shows the revenue curves for a monopolist. At what output level is demand inelastic?

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Barriers to entry

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The nondiscriminating pure monopolist's demand curve

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

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If a monopolist were to produce in the inelastic segment of its demand curve,

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

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Suppose that a pure monopolist can sell 7 units of output at $9 per unit and 8 units at $8.50 per unit. For the monopolist to profitably produce and sell the eighth unit of output, its marginal cost must be anywhere at or below

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Which of the following statements is correct?

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Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

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The demand curve confronting a nondiscriminating pure monopolist is

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One feature of pure monopoly is that the demand curve

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If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue

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Refer to the diagram for a nondiscriminating monopolist. Demand is elastic

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The table shows the demand schedule facing Nina, a monopolist selling baskets. If Nina had no production costs, what price would she charge to maximize profits?

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

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