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4 Written questions

3 Matching questions

  1. . A single-price pure monopoly is economically inefficient:
    A) only because it produces beyond the point of minimum average total cost.
    B) only because it produces short of the point of minimum average total cost.
    C) because it produces short of minimum average cost and price is greater than marginal cost.
    D) because it produces beyond minimum average total cost and marginal cost is greater than price.
  2. When the pure monopolist's demand curve is elastic, marginal revenue:
    A) may be either positive or negative. B) is zero. C) is negative. D) is positive.
  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.
  1. a d
  2. b c
  3. c a

5 Multiple choice questions

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

5 True/False 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.
    d

          

  2. Pure monopolists may obtain economic profits in the long run because:
    A) of advertising. C) of barriers to entry.
    B) marginal revenue is constant as sales increase. D) of rising average fixed costs.
    c

          

  3. Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus
    know that:
    A) demand is inelastic at this price. C) the firm is maximizing profits.
    B) total revenue is increasing. D) total revenue is at a maximum.
    b

          

  4. 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.
    d

          

  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.
    b

          

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