4 Written questions
4 Matching questions
- Assuming no change in product demand, a pure monopolist:
A) can increase price and increase sales simultaneously because it dominates the market.
B) adds an amount to total revenue which is equal to the price of incremental sales.
C) should produce in the range where marginal revenue is negative.
D) must lower price to increase sales.
- In the short run a pure monopolist's profit:
A) will be maximized where price equals average total cost.
B) may be positive, zero, or negative.
C) are always positive.
D) will be zero.
- . 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.
- The nondiscriminating monopolist's demand curve:
A) is less elastic than a purely competitive firm's demand curve.
B) is perfectly elastic.
C) coincides with its marginal revenue curve.
D) is perfectly inelastic.
- a b
- b a
- c c
- d d
5 Multiple choice questions
5 True/False questions
A pure monopolist:
A) will realize an economic profit if price exceeds ATC at the equilibrium output.
B) will realize an economic profit if ATC exceeds MR at the equilibrium output.
C) will realize an economic loss if MC intersects the downsloping portion of MR.
D) always realizes an economic profit. → a
The profit-maximizing output of a pure monopoly is economically inefficient because in equilibrium:
A) price equals minimum average total cost. C) marginal cost exceeds price.
B) marginal revenue equals marginal cost. D) price exceeds marginal cost. → d
Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus
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
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. → c
A nondiscriminating pure monopolist's demand curve:
A) is perfectly inelastic. C) lies above its marginal revenue curve.
B) coincides with its marginal revenue curve. D) lies below its marginal revenue curve. → c