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4 Written questions

2 Matching questions

  1. The pure monopolist's demand curve is relatively elastic:
    A) in the price range where total revenue is declining.
    B) at all points where the demand curve lies above the horizontal axis.
    C) in the price range where marginal revenue is negative.
    D) in the price range where marginal revenue is positive.
  2. *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.
  1. a c
  2. b d

5 Multiple choice questions

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

5 True/False questions

  1. * Which of the following statements is incorrect?
    A) A monopolist's 100 percent market share ensures economic profits.
    B) The monopolist's marginal revenue is less than price for any given output greater than 1.
    C) A monopolistic firm produces a product having no close substitutes.
    D) A pure monopolist's demand curve is the industry demand curve.
    b

          

  2. Which of the following is not a barrier to entry?
    A) patents B) X-inefficiency C) economies of scale D) ownership of essential resources
    a

          

  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.
    a

          

  4. Economic profit in the long run is:
    A) possible for both a pure monopoly and a pure competitor.
    B) possible for a pure monopoly, but not for a pure competitor.
    C) impossible for both a pure monopolist and a pure competitor.
    D) only possible when barriers to entry are nonexistent.
    b

          

  5. 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.
    d