3 Written questions
3 Matching questions
- If a pure monopolist is producing at that output where P = ATC, then:
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.
- If the variable costs of a profit-maximizing pure monopolist decline, the firm should:
A) produce more output and charge a higher price. C) reduce both output and price.
B) produce more output and charge a lower price. D) raise both output and price.
- . The supply curve for a monopolist is:
A) perfectly elastic.
C) that portion of the marginal cost curve lying above minimum average variable cost.
- a d
- b a
- c b
5 Multiple choice questions
5 True/False questions
A pure monopolist's demand curve is:
A) downsloping. B) upsloping. C) parallel to the vertical axis. D) parallel to the horizontal axis. → a
Because the monopolist's demand curve is downsloping:
A) MR will equal price.
B) price must be lowered to sell more output.
C) the elasticity coefficient will increase as price is lowered.
D) its supply curve will also be downsloping. → b
For a nondiscriminating imperfectly competitive firm:
A) the marginal revenue curve lies above the demand curve.
B) the demand and marginal revenue curves coincide.
C) the demand curve intersects the horizontal axis where total revenue is at a maximum.
D) marginal revenue will become zero at that output where total revenue is at a maximum. → d
If a pure monopolist can engage in perfect price discrimination:
A) the marginal revenue curve and the total revenue curve will now coincide.
B) the marginal revenue curve will now shift to a position above the demand curve.
C) the marginal revenue curve will now coincide with the demand curve.
D) marginal revenue will become less at each level of output than it would be without price
discrimination. → c
Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus
A) demand is inelastic at this price. C) the firm is maximizing profits.
B) total revenue is increasing. D) total revenue is at a maximum. → b