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4 Written questions

3 Matching 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.
  2. Which of the following is correct?
    A) Both purely competitive and monopolistic firms are "price takers."
    B) Both purely competitive and monopolistic firms are "price makers."
    C) A purely competitive firm is a "price taker," while a monopolist is a "price maker."
    D) A purely competitive firm is a "price maker," while a monopolist is a "price taker."
  3. The nondiscriminating pure monopolist's demand curve:
    A) is the industry demand curve.
    B) shows a direct or positive relationship between price and quantity demanded.
    C) tends to be inelastic at high prices and elastic at low prices.
    D) is identical to its marginal revenue curve.
  1. a d
  2. b c
  3. c b

5 Multiple choice questions

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

5 True/False questions

  1. 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

          

  2. In the short run a pure monopolist's profit:
    A) will be maximized where price equals average total cost.
    B) may be positive, zero, or negative.
    C) are always positive.
    D) will be zero.
    b

          

  3. 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
    demand.
    D) The seller must possess some degree of monopoly power.
    c

          

  4. The vertical distance between the horizontal axis and any point on a perfectly discriminating monopolist's
    demand curve measures:
    A) the quantity demanded. C) product price and marginal revenue.
    B) total revenue. D) average revenue and average total cost.
    b

          

  5. 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.
    c

          

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