Question 1

Network effects and simultaneous consumption tend to foster the development of

Accepted Answer

A)  pure competition.
B)  monopoly power.
C)  net social benefits.
D)  allocative efficiency.

Question 2

Refer to the graph for a profit-maximizing monopolist. The firm will set its price equal to the distance:

Accepted Answer

A)  0 J.
B)  0 G
C)  0 K.
D)  0H.

Question 3

Monopolists are said to be allocatively inefficient because

Accepted Answer

A)  they produce where MR > MC.
B)  at the profit-maximizing output, price is greater than AVC.
C)  they produce only the type of product they desire and do not consider the consumer.
D)  at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost.

Question 4

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 maximized profits, then the total profit received would be

Accepted Answer

A)  $250.
B)  $400.
C)  $1,000.
D)  $900.

Question 5

What is the relationship between economies of scale and a natural monopoly?

Accepted Answer

A natural monopoly is an industry in whi...

Question 6

Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero) , the firm would maximize profits by

Accepted Answer

A)  selling the product at the highest possible price at which a positive quantity will be demanded.
B)  producing Q₁ units and charging a price of P₁.
C)  producing Q₃ units and charging a price of P₃.
D)  producing Q₂ units and charging a price of P₂.

Question 7

A monopoly results in productive inefficiency because at the profit-maximizing output level,

Accepted Answer

A)  P > MC.
B)  ATC is not at its minimum level.
C)  MC is not at its minimum level.
D)  P > AVC.

Question 8

The pure monopolist's demand curve is relatively elastic

Accepted Answer

A)  in the price range where total revenue is declining.
B)  at all points where the demand curve lies above the horizontal axis.
C)  in the price range where marginal revenue is negative.
D)  in the price range where marginal revenue is positive.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  Monopoly firms tend to be more internally efficient than competitive firms because they have a single goal of profit maximization.
B)  Monopoly firms are sheltered from competitive forces, and such an environment makes them subject to X-inefficiency.
C)  Monopoly firms are in industries with low barriers to entry that tend to lower the cost of producing products.
D)  Competitive firms tend to be more efficient than monopolist firms because they maximize per unit profits, not total profits.

Question 10

A profit-maximizing monopolist facing the situation shown in the graph should

Accepted Answer

A)  shut down in the short run.
B)  continue producing to minimize losses.
C)  continue producing to make economic profits.
D)  continue producing as long as price is greater than marginal cost.

Question 11

A pure monopolist should never produce in the

Accepted Answer

A)  elastic segment of its demand curve, because it can increase total revenue and reduce total cost by lowering price.
B)  inelastic segment of its demand curve, because it can increase total revenue and reduce total cost by increasing price.
C)  inelastic segment of its demand curve, because it can always increase total revenue by more than it increases total cost by reducing price.
D)  segment of its demand curve, where the price elasticity coefficient is greater than one.

Question 12

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 13

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 many units will the firm produce?

Accepted Answer

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

Question 14

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the

Accepted Answer

A)  perfectly elastic portion of its demand curve.
B)  perfectly inelastic portion of its demand curve.
C)  elastic portion of its demand curve.
D)  inelastic portion of its demand curve.

Question 15

In which one of the following market models is X-inefficiency least likely to be present?

Accepted Answer

A)  pure competition
B)  oligopoly
C)  monopolistic competition
D)  pure monopoly

Question 16

For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be

Accepted Answer

A)  > $8 and 
B)  
C)  = $8.
D)  > $16.

Question 17

Refer to the two diagrams for individual firms. In Figure 2 the firm's demand and marginal revenue curves are represented by

Accepted Answer

A)  lines B and C, respectively.
B)  lines A and C, respectively.
C)  lines A and B, respectively.
D)  line B.

Question 18

For a pure nondiscriminating 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 19

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist.  Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

Accepted Answer

A)  $12.
B)  $9.
C)  $6.
D)  $8.

Question 20

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.

Exam 12: Pure Monopoly

Refer to the two diagrams for individual firms. In Figure 2 the firm's demand and marginal revenue curves are represented by

Correct Answer
verified

For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be

Correct Answer
verified

Correct Answer
verified

Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero) , the firm would maximize profits by

Correct Answer
verified

A pure monopolist should never produce in the

Correct Answer
verified

Monopolists are said to be allocatively inefficient because

Correct Answer
verified

What is the relationship between economies of scale and a natural monopoly?

Correct Answer
verified
A natural monopoly is an industry in whi...
View Answer

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the

Correct Answer
verified

A monopoly results in productive inefficiency because at the profit-maximizing output level,

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist. Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

Correct Answer
verified

In which one of the following market models is X-inefficiency least likely to be present?

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

Network effects and simultaneous consumption tend to foster the development of

Correct Answer
verified

A profit-maximizing monopolist facing the situation shown in the graph should

Correct Answer
verified

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 many units will the firm produce?

Correct Answer
verified

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

Correct Answer
verified

The pure monopolist's demand curve is relatively elastic

Correct Answer
verified

Refer to the graph for a profit-maximizing monopolist. The firm will set its price equal to the distance:

Correct Answer
verified

Exam 12: Pure Monopoly

Refer to the two diagrams for individual firms. In Figure 2 the firm's demand and marginal revenue curves are represented by

Correct AnswerverifiedShow Answer

For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero) , the firm would maximize profits by

Correct AnswerverifiedShow Answer

A pure monopolist should never produce in the

Correct AnswerverifiedShow Answer

Monopolists are said to be allocatively inefficient because

Correct AnswerverifiedShow Answer

What is the relationship between economies of scale and a natural monopoly?

Correct AnswerverifiedA natural monopoly is an industry in whi...View AnswerShow Answer

Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the

Correct AnswerverifiedShow Answer

A monopoly results in productive inefficiency because at the profit-maximizing output level,

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist. Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

Correct AnswerverifiedShow Answer

In which one of the following market models is X-inefficiency least likely to be present?

Correct AnswerverifiedShow Answer

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

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

Network effects and simultaneous consumption tend to foster the development of

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist facing the situation shown in the graph should

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 many units will the firm produce?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The pure monopolist's demand curve is relatively elastic

Correct AnswerverifiedShow Answer

Refer to the graph for a profit-maximizing monopolist. The firm will set its price equal to the distance:

Correct AnswerverifiedShow Answer

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A natural monopoly is an industry in whi...
View Answer

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Correct Answer
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