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4 Written questions

3 Matching questions

  1. When a firm is on the inelastic segment of its demand curve, it can:
    A) increase total revenue by reducing price.
    B) decrease total costs by decreasing price.
    C) increase profits by increasing price.
    D) increase total revenue by more than the increase in total cost by increasing price
  2. Price exceeds marginal revenue for the pure monopolist because the:
    A) law of diminishing returns is inapplicable.
    B) demand curve is downsloping.
    C) monopolist produces a smaller output than would a purely competitive firm.
    D) demand curve lies below the marginal revenue curve
  3. . The supply curve for a monopolist is:
    A) perfectly elastic.
    B) upsloping.
    C) that portion of the marginal cost curve lying above minimum average variable cost.
    D) nonexistent.
  1. a d
  2. b b
  3. c c

5 Multiple choice questions

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

5 True/False questions

  1. If a pure monopolist can engage in perfect price discrimination:
    A) the marginal revenue curve and the total revenue curve will now coincide.
    B) the marginal revenue curve will now shift to a position above the demand curve.
    C) the marginal revenue curve will now coincide with the demand curve.
    D) marginal revenue will become less at each level of output than it would be without price


  2. If the variable costs of a profit-maximizing pure monopolist decline, the firm should:
    A) produce more output and charge a higher price. C) reduce both output and price.
    B) produce more output and charge a lower price. D) raise both output and price.


  3. Which of the following is characteristic of a pure monopolist's demand curve?
    A) Average revenue is less than price.
    B) Its elasticity coefficient is 1 at all levels of output.
    C) Price and marginal revenue are equal at all levels of output.
    D) It is the same as the market demand curve.


  4. 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.


  5. 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
    D) The seller must possess some degree of monopoly power.