Question 1

Economic profit in the long run is:

Accepted Answer

A)   possible for both a pure monopoly and a pure competitor.
B)   possible for a pure monopoly but not for a pure competitor.
C)   impossible for both a pure monopolist and a pure competitor.
D)   only possible when barriers to entry are nonexistent.

Question 2

A dilemma of regulation is that:

Accepted Answer

A)   the regulated price that achieves allocative efficiency is also likely to result in persistent economic profits.
B)   the regulated price that results in a "fair return" restricts output by more than would unregulated monopoly.
C)   regulated pricing always conflicts with the "due process" provision of the Constitution.
D)   the regulated price that achieves allocative efficiency is also likely to result in losses.

Question 3

Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist:  PQd$10172533415\begin{array}{ccc}P & & Q_{d} \\hline\$10 & & 1 \7&&2\5 & & 3 \3 & & 4 \1 & & 5\end{array}P$107531​​Qd​12345​​  Refer to the table.Assume that this monopolist faces zero production costs.The profit-maximizing monopolist will set a price of:

Accepted Answer

A)   $10.
B)   $7.
C)   $5.
D)   $3.

Question 4

An important economic problem associated with pure monopoly is that,at the profit-maximizing outputs,resources are:

Accepted Answer

A)   overallocated because price exceeds marginal cost.
B)   overallocated because marginal cost exceeds price.
C)   underallocated because price exceeds marginal cost.
D)   underallocated because marginal cost exceeds price.

Question 5

(Last Word) : Network effects on the Internet:

Accepted Answer

A)   help firms like Google and Facebook dominate their respective markets.
B)   allow many firms to operate,making Internet markets highly competitive.
C)   cause economies of scale to be exhausted quickly.
D)   create a level playing field for all types of media,communication,and commerce on the Internet.

Question 6

The marginal revenue curve for a monopolist:

Accepted Answer

A)   is a straight,upsloping curve.
B)   rises at first,reaches a maximum,and then declines.
C)   becomes negative when output increases beyond some particular level.
D)   is a straight line,parallel to the horizontal axis.

Question 7

A nondiscriminating pure monopolist finds that it can sell its 50th unit of output for $50.We can surmise that the marginal:

Accepted Answer

A)   cost of the 50th unit is also $50.
B)   revenue of the 50th unit is also $50.
C)   revenue of the 50th unit is less than $50.
D)   revenue of the 50th unit is greater than $50.

Question 8

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

Accepted Answer

A)   a loss that could be reduced by producing more output.
B)   a 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

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each,but if it restricts its output to 9 per week it can sell these at $11,000 each.The marginal revenue of the tenth unit of sales per week is:

Accepted Answer

A)   -$1,000.
B)   $9,000.
C)   $10,000.
D)   $1,000.

Question 10

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 11

When a firm is on the inelastic segment of its demand curve,it can:

Accepted Answer

A)   increase total revenue by reducing price.
B)   decrease total costs by decreasing price.
C)   increase profits by increasing price.
D)   increase total revenue by more than the increase in total cost by increasing price.

Question 12

Other things equal,in which of the following cases would economic profit be the greatest?

Accepted Answer

A)   An unregulated monopolist that is able to engage in price discrimination.
B)   An unregulated,nondiscriminating monopolist.
C)   A regulated monopolist charging a price equal to average total cost.
D)   A regulated monopolist charging a price equal to marginal cost.

Question 13

Answer the question on the basis of the demand schedule shown below:   Quantity  Price  Demanded $77162534435\begin{array}{l}\begin{array} { c c c } &&	ext { Quantity }\	ext { Price } && 	ext { Demanded } \\hline\$ 77 & & 1 \6 & & 2 \5 & & 3 \4 & & 4 \3 & & 5\end{array}\end{array} Price $776543​​ Quantity  Demanded 12345​​​  Refer to the data.The marginal revenue obtained from selling the third unit of output is:

Accepted Answer

A)   $6.
B)   $1.
C)   $2.
D)   $5.

Question 14

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 15

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output,then:

Accepted Answer

A)   the firm will realize an economic profit.
B)   the firm will earn only a normal profit.
C)   allocative efficiency will be worsened.
D)   the firm must be subsidized or it will go bankrupt.

Question 16

At its profit-maximizing output,a pure nondiscriminating monopolist achieves:

Accepted Answer

A)   neither productive efficiency nor allocative efficiency.
B)   both productive efficiency and allocative efficiency.
C)   productive efficiency but not allocative efficiency.
D)   allocative efficiency but not productive efficiency.

Question 17

For a pure monopolist the relationship between total revenue and marginal revenue is such that:

Accepted Answer

A)   marginal revenue is positive when total revenue is at a maximum.
B)   total revenue is positive when marginal revenue is increasing,but total revenue becomes negative when marginal revenue is decreasing.
C)   marginal revenue is positive when total revenue is increasing,but marginal revenue becomes negative when total revenue is decreasing.
D)   marginal revenue is positive so long as total revenue is positive.

Question 18

Which of the following conditions is not required for price discrimination?

Accepted Answer

A)   Buyers with different elasticities must be physically separate from each other.
B)   The good or service cannot be profitably resold by original buyers.
C)   The seller must be able to segment the market,that is,to distinguish buyers with different elasticities of demand.
D)   The seller must possess some degree of monopoly power.

Question 19

The MR = MC rule:

Accepted Answer

A)   applies only to pure competition.
B)   applies only to pure monopoly.
C)   does not apply to pure monopoly because price exceeds marginal revenue.
D)   applies both to pure monopoly and pure competition.

Question 20

If a nondiscriminating pure monopolist decides to sell one more unit of output,the marginal revenue associated with that unit will be:

Accepted Answer

A)   equal to its price.
B)   the price at which that unit is sold less the price reductions that apply to all other units of output.
C)   the price at which that unit is sold plus the price increases that apply to all other units of output.
D)   indeterminate unless marginal cost data are known.

Exam 12: Pure Monopoly

A dilemma of regulation is that:

Correct Answer
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Which of the following is not a barrier to entry?

Correct Answer
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If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output,then:

Correct Answer
verified

An important economic problem associated with pure monopoly is that,at the profit-maximizing outputs,resources are:

Correct Answer
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(Last Word) : Network effects on the Internet:

Correct Answer
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The MR = MC rule:

Correct Answer
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At its profit-maximizing output,a pure nondiscriminating monopolist achieves:

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

Correct Answer
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When a firm is on the inelastic segment of its demand curve,it can:

Correct Answer
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Correct Answer
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Which of the following conditions is not required for price discrimination?

Correct Answer
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Economic profit in the long run is:

Correct Answer
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A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each,but if it restricts its output to 9 per week it can sell these at $11,000 each.The marginal revenue of the tenth unit of sales per week is:

Correct Answer
verified

If a nondiscriminating pure monopolist decides to sell one more unit of output,the marginal revenue associated with that unit will be:

Correct Answer
verified

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

Correct Answer
verified

The marginal revenue curve for a monopolist:

Correct Answer
verified

For a pure monopolist the relationship between total revenue and marginal revenue is such that:

Correct Answer
verified

Other things equal,in which of the following cases would economic profit be the greatest?

Correct Answer
verified

A nondiscriminating pure monopolist finds that it can sell its 50^th unit of output for $50.We can surmise that the marginal:

Correct Answer
verified

Exam 12: Pure Monopoly

A dilemma of regulation is that:

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to entry?

Correct AnswerverifiedShow Answer

If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output,then:

Correct AnswerverifiedShow Answer

An important economic problem associated with pure monopoly is that,at the profit-maximizing outputs,resources are:

Correct AnswerverifiedShow Answer

(Last Word) : Network effects on the Internet:

Correct AnswerverifiedShow Answer

The MR = MC rule:

Correct AnswerverifiedShow Answer

At its profit-maximizing output,a pure nondiscriminating monopolist achieves:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a firm is on the inelastic segment of its demand curve,it can:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following conditions is not required for price discrimination?

Correct AnswerverifiedShow Answer

Economic profit in the long run is:

Correct AnswerverifiedShow Answer

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each,but if it restricts its output to 9 per week it can sell these at $11,000 each.The marginal revenue of the tenth unit of sales per week is:

Correct AnswerverifiedShow Answer

If a nondiscriminating pure monopolist decides to sell one more unit of output,the marginal revenue associated with that unit will be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal revenue curve for a monopolist:

Correct AnswerverifiedShow Answer

For a pure monopolist the relationship between total revenue and marginal revenue is such that:

Correct AnswerverifiedShow Answer

Other things equal,in which of the following cases would economic profit be the greatest?

Correct AnswerverifiedShow Answer

A nondiscriminating pure monopolist finds that it can sell its 50th unit of output for $50.We can surmise that the marginal:

Correct AnswerverifiedShow Answer

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A nondiscriminating pure monopolist finds that it can sell its 50^th unit of output for $50.We can surmise that the marginal:

Correct Answer
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