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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
    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. 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.
  3. Which of the following statements is correct?
    A) The pure monopolist will maximize profit by producing at that point on the demand curve where
    elasticity is zero.
    B) In seeking the profit-maximizing output the pure monopolist underallocates resources to its production.
    C) The pure monopolist maximizes profits by producing that output at which the differential between
    price and average cost is the greatest.
    D) Purely monopolistic sellers earn only normal profits in the long run
  1. a b
  2. b c
  3. c d

5 Multiple choice questions

  1. d
  2. d
  3. d
  4. d
  5. b

5 True/False questions

  1. ) 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.


  2. For a pure monopolist marginal revenue is less than price because:
    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.


  3. When total revenue is increasing:
    A) marginal revenue may be either positive or negative.
    B) the demand curve is relatively inelastic.
    C) marginal revenue is positive.
    D) marginal revenue is negative.


  4. 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.


  5. 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.


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