Question 1

Pure monopolists

Accepted Answer

A)  maximize MR.
B)  are price takers.
C)  operate where P > MC.
D)  face demand curves that are perfectly inelastic.E) A) and D)
F) B) and D)

Question 2

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Accepted Answer

A)  the existence of good heating substitutes.
B)  economies of scale in electric heat generation.
C)  prices for electric heat being set at the socially optimal level.
D)  strict government regulation of the price charged for electric heat.E) A) and B)
F) A) and C)

Question 3

Which of the following conditions is not required for price discrimination?

Accepted Answer

A)  Buyers with different elasticities must be physically separate from each other.
B)  The good or service cannot be profitably resold by original buyers.
C)  The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand.
D)  The seller must possess some degree of monopoly power.E) All of the above
F) C) and D)

Question 4

If the industry depicted in this graph were served by a pure monopoly, the price and output quantity would be

Accepted Answer

A)  P₃ and Q₁.
B)  P₁ and Q₃.
C)  P₂ and Q₂.
D)  P₁ and Q₁.E) All of the above
F) B) and C)

Question 5

The data relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

Accepted Answer

A)  P = $48; Q = 6
B)  P = $56; Q = 5
C)  P = $64; Q = 4
D)  P = $72; Q = 3E) All of the above
F) None of the above

Question 6

Refer to the graphs of D and MR for a monopolist. We know that to maximize profits the firm will set a price

Accepted Answer

A)  above P₁.
B)  below P₂.
C)  above P₂.
D)  below P₃.E) C) and D)
F) B) and C)

Question 7

Confronted with the same unit cost data, a monopolistic producer will charge

Accepted Answer

A)  the same price and produce the same output as a competitive firm.
B)  a higher price and produce a larger output than a competitive firm.
C)  a higher price and produce a smaller output than a competitive firm.
D)  a lower price and produce a smaller output than a competitive firm.E) All of the above
F) None of the above

Question 8

Refer to the graph, which shows the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity

Accepted Answer

A)  0 to Q₄.
B)  Q₂ to Q₄.
C)  0 to Q₃.
D)  Q₃ to Q₄.E) A) and B)
F) All of the above

Question 9

Answer the question on the basis of the provided demand and cost data for a pure monopolist.  The profit-maximizing monopolist will realize a

Accepted Answer

A)  profit of $8.50.
B)  profit of $7.50.
C)  profit of $16.
D)  loss of $14.E) B) and D)
F) None of the above

Question 10

With nonrivalrous consumption, such as in the case of online music and movies, as more consumers buy the product,

Accepted Answer

A)  the average cost of the output declines because the marginal cost is very small.
B)  marginal cost is low, but the average cost of the output will be rising.
C)  the average cost of the output will be rising because marginal cost is quite high.
D)  marginal cost is quite high, but the average cost of the output will be declining.E) A) and C)
F) A) and B)

Question 11

In the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum.

Accepted Answer

A) True 
 B)False

Question 12

For an imperfectly competitive firm,

Accepted Answer

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 units sold.
C)  the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold.
D)  the marginal revenue curve lies below the demand curve because any reduction in price applies only to the extra unit sold.E) A) and D)
F) None of the above

Question 13

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing quantity of output for the monopolist will be

Accepted Answer

A)  5.
B)  4.
C)  6.
D)  3.E) A) and D)
F) None of the above

Question 14

Do you agree or disagree with the statement that: "A monopolist always charges the highest possible price." Explain.

Accepted Answer

I disagree with that statement. Monopoly...

Question 15

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)

Accepted Answer

A)  different prices to compensate for differences in the characteristics of the product.
B)  the same price if per unit cost is constant for each unit of the product.
C)  that price that equals the buyer's marginal cost.
D)  the maximum price each would be willing to pay.E) C) and D)
F) None of the above

Question 16

Refer to the diagrams. In diagram (B) the profit-maximizing quantity is

Accepted Answer

A)  g, and the profit-maximizing price is e.
B)  h, and the profit-maximizing price is e.
C)  g, and the profit-maximizing price is f.
D)  g, and the profit-maximizing price is d.E) C) and D)
F) All of the above

Question 17

Refer to the graph, which shows a total revenue curve for a monopolist. When the total revenue curve reaches a maximum, marginal revenue is

Accepted Answer

A)  positive.
B)  negative.
C)  zero.
D)  greater than price at that level of output.E) All of the above
F) C) and D)

Question 18

Refer to the graph for a pure monopoly. If the government regulated the monopoly and made it produce the level of output that would achieve allocative efficiency, what price and quantity levels would we observe in the short run?

Accepted Answer

A)  P₁ and Q₁
B)  P₂ and Q₃
C)  P₃ and Q₂
D)  P₄ and Q₁E) B) and C)
F) None of the above

Question 19

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price

Accepted Answer

A)  equals marginal revenue.
B)  will vertically intersect demand where MR = MC.
C)  will always equal ATC.
D)  always exceeds ATC.E) A) and D)
F) A) and B)

Question 20

What are the consequences of price discrimination for a business? What are the consequences for the consumer?

Accepted Answer

Price discrimination results in higher p...

Exam 12: Pure Monopoly

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)

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Which of the following conditions is not required for price discrimination?

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Do you agree or disagree with the statement that: "A monopolist always charges the highest possible price." Explain.

Correct AnswerverifiedI disagree with that statement. Monopoly...View AnswerShow Answer

Answer the question on the basis of the provided demand and cost data for a pure monopolist. The profit-maximizing monopolist will realize a

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The data relate to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

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Confronted with the same unit cost data, a monopolistic producer will charge

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Pure monopolists

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A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price

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Refer to the diagrams. In diagram (B) the profit-maximizing quantity is

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Refer to the graph for a pure monopoly. If the government regulated the monopoly and made it produce the level of output that would achieve allocative efficiency, what price and quantity levels would we observe in the short run?

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If the industry depicted in this graph were served by a pure monopoly, the price and output quantity would be

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With nonrivalrous consumption, such as in the case of online music and movies, as more consumers buy the product,

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Refer to the graph, which shows a total revenue curve for a monopolist. When the total revenue curve reaches a maximum, marginal revenue is

Correct AnswerverifiedShow Answer

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Correct AnswerverifiedShow Answer

Refer to the graphs of D and MR for a monopolist. We know that to maximize profits the firm will set a price

Correct AnswerverifiedShow Answer

In the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum.

Correct AnswerverifiedShow Answer

For an imperfectly competitive firm,

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Refer to the graph, which shows the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity

Correct AnswerverifiedShow Answer

What are the consequences of price discrimination for a business? What are the consequences for the consumer?

Correct AnswerverifiedPrice discrimination results in higher p...View AnswerShow Answer

Answer the question on the basis of the demand and cost data for a pure monopolist. The profit-maximizing quantity of output for the monopolist will be

Correct AnswerverifiedShow Answer

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I disagree with that statement. Monopoly...
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Price discrimination results in higher p...
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