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4 Written questions

3 Matching questions

  1. 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.
  2. 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.
  3. A single-price monopoly is economically undesirable because, at the profit maximizing output:
    A) marginal revenue exceeds product price at all profitable levels of production.
    B) monopolists always price their products on the basis of the ability of consumers to pay rather than on
    costs of production.
    C) MC > P.
    D) society values additional units of the monopolized product more highly than it does the alternative
    products those resources could otherwise produce
  1. a c
  2. b b
  3. c d

5 Multiple choice questions

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

5 True/False questions

  1. If a monopolist engages in perfect price discrimination, it will:
    A) realize a smaller profit.
    B) charge a higher price where individual demand is inelastic and a lower price where individual demand
    is elastic.
    C) produce a smaller output than when it did not discriminate.
    D) charge a competitive price to all its customers.
    b

          

  2. 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.
    b

          

  3. The marginal revenue curve for a monopolist:
    A) is a straight, upward sloping curve.
    B) rises at first, reaches a maximum, and then declines.
    C) becomes negative when output increases beyond some particular level.
    D) is a straight line, parallel to the horizontal axis.
    d

          

  4. For a nondiscriminating imperfectly competitive firm:
    A) the marginal revenue curve lies above the demand curve.
    B) the demand and marginal revenue curves coincide.
    C) the demand curve intersects the horizontal axis where total revenue is at a maximum.
    D) marginal revenue will become zero at that output where total revenue is at a maximum.
    c

          

  5. A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is
    realizing:
    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