3 Written questions
3 Matching questions
- A nondiscriminating monopolist:
A) will never produce in the output range where marginal revenue is positive.
B) will never produce in the output range where demand is inelastic.
C) will never produce in the output range where demand is elastic.
D) may produce where demand is either elastic or inelastic, depending on the level of production costs.
- The short-run profit maximizing position of an unregulated pure monopolist is characterized by:
A) P = minimum ATC. B) P = MC. C) MR = MC. D) MC = ATC.
- 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
- a b
- b d
- c c
5 Multiple choice questions
5 True/False questions
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. → d
Which of the following is not a barrier to entry?
A) patents B) X-inefficiency C) economies of scale D) ownership of essential resources → b
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. → c
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. → c
In the short run, a monopolist's economic profits:
A) are always positive because the monopolist is a price-maker.
B) are usually negative because of government price regulation.
C) are always zero because consumers prefer to buy from competitive sellers.
D) may be positive or negative depending on market demand and cost. → b