3 Written questions
2 Matching questions
- Assuming no change in product demand, a pure monopolist:
A) can increase price and increase sales simultaneously because it dominates the market.
B) adds an amount to total revenue which 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.
- A nondiscriminating pure monopolist's demand curve:
A) is perfectly inelastic. C) lies above its marginal revenue curve.
B) coincides with its marginal revenue curve. D) lies below its marginal revenue curve.
- a d
- b c
5 Multiple choice questions
5 True/False questions
*For a pure monopolist the relationship between total revenue and marginal revenue is such that:
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. → c
. A single-price pure monopoly is economically inefficient:
A) only because it produces beyond the point of minimum average total cost.
B) only because it produces short of the point of minimum average total cost.
C) because it produces short of minimum average cost and price is greater than marginal cost.
D) because it produces beyond minimum average total cost and marginal cost is greater than price. → d
The MR = MC rule:
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. → d
Which of the following is not a precondition for price discrimination?
A) The commodity involved must be a durable good.
B) The good or service cannot be resold by original buyers.
C) The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of
D) The seller must possess some degree of monopoly power. → a
) Children are charged less than adults for admission to professional baseball games but are
charged the same prices as adults at the concession stands. Which of the following conditions of price
discrimination explain why this occurs?
A) The seller must have some monopoly power; that is, it must be able to set the product price.
B) The seller must be able to identify buyers by group characteristics such as age or income.
C) Groups must have different elasticities of demand for the product.
D) The items cannot be bought by people in the low-price group and transferred to members of the highprice group. → d