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4 Written Questions

3 Matching Questions

  1. If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal
    revenue:
    A) may be either greater or less than $35. C) will be less than $35.
    B) will also be $35. D) will be greater than $35.
  2. At its profit-maximizing output, a pure nondiscriminating monopolist achieves:
    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.
  3. A purely monopolistic industry:
    A) has no entry barriers.
    B) has a downward sloping demand curve.
    C) produces a product or service for which there are many close substitutes.
    D) earns only a normal profit in the long run
  1. a c
  2. b d
  3. c a

5 Multiple Choice Questions

  1. d
  2. d
  3. a
  4. d
  5. a

5 True/False Questions

  1. A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price:
    A) equals marginal revenue. C) will always equal ATC.
    b

          

  2. In the short run a pure monopolist:
    A) always earns an economic profit.
    B) always earns a normal profit.
    C) always realizes a loss.
    D) may realize an economic profit, a normal profit, or a loss.
    b

          

  3. A pure monopolist's demand curve is:
    A) downsloping. B) upsloping. C) parallel to the vertical axis. D) parallel to the horizontal axis.
    a

          

  4. A profit-maximizing monopolist will set its price:
    A) as far above ATC as possible.
    B) along the elastic portion of its demand curve.
    C) where the marginal cost curve intersects the demand curve.
    D) as close as possible to the minimum point of ATC
    a

          

  5. 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

          

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