3 Written questions
3 Matching questions
- 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.
- At its profit-maximizing output, a pure nondiscriminating monopolist achieves:
A) neither productive efficiency nor allocative efficiency.
B) both productive efficiency and allocative efficiency.
C) productive efficiency but not allocative efficiency.
D) allocative efficiency but not productive efficiency.
- Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run
equilibrium that the pure monopolist's:
A) price, output, and average total cost would all be higher.
B) price and average total cost would be higher, but output would be lower.
C) price, output, and average total cost would all be lower.
D) price and output would be lower, but average total cost would be higher.
- a d
- b a
- c b
5 Multiple choice questions
5 True/False questions
Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The
monopolist will produce and sell the sixth unit if its marginal cost is:
A) $4 or less. B) $3.90 or less. C) $3.50 or less.. D) $3.40 or less. → b
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. → a
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. → c
. For an imperfectly competitive firm:
A) total revenue is a straight, upsloping line because a firm's sales are independent of product price.
B) the marginal revenue curve lies above the demand curve because any reduction in price applies to all
C) the marginal revenue curve lies below the demand curve because any reduction in price applies to all
D) the marginal revenue curve lies below the demand curve because any reduction in price applies only to
the extra unit sold. → d
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