4 Written questions
3 Matching questions
- * 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.
- If a monopolist engages in price discrimination, we can expect:
A) profits to increase and output to fall.
B) both profits and output to increase.
C) both profits and output to decrease.
D) the demand curve to lie below the marginal revenue curve.
- A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is
A) a loss that could be reduced by producing more output.
B) a loss that could be reduced by producing less output.
C) an economic profit that could be increased by producing more output.
D) an economic profit that could be increased by producing less output.
- a c
- b b
- c a
5 Multiple choice questions
5 True/False questions
Purely competitive firms and pure monopolists are similar in that:
A) the demand curves of both are perfectly elastic. C) both are price makers.
B) significant entry barriers are common to both. D) both maximize profit where MR = MC. → d
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 → d
Price exceeds marginal revenue for the pure monopolist because the:
A) law of diminishing returns is inapplicable.
B) demand curve is downsloping.
C) monopolist produces a smaller output than would a purely competitive firm.
D) demand curve lies below the marginal revenue curve → b
Children are charged less than adults for admission to professional baseball games but are
charged the same prices as adults at the concession stands. This pricing system occurs because:
A) children have an elastic demand for game ticket but an inelastic demand for concession items.
B) children have an inelastic demand for game tickets but an elastic demand for concession items.
C) the seller can prevent children from buying game tickets for adults but cannot prevent children from
buying concession items for adults.
D) children can personally "consume" only a single game ticket, but can personally consume more than
one concession item. → c
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. → d