Question 1

In the inelastic portion of a monopolist's demand curve, an increase in price will

Accepted Answer

A)  reduce output quantity, increase total revenue, and increase total cost.
B)  reduce output quantity, increase total revenue, and decrease total cost.
C)  raise output quantity, decrease total revenue, and increase total cost.
D)  reduce output quantity, decrease total revenue, and decrease total cost.E) A) and D)
F) All of the above

Question 2

With a natural monopoly, the fair-return price

Accepted Answer

A)  is allocatively efficient; the socially optimal price is allocatively inefficient.
B)  is allocatively inefficient; the socially optimal price is allocatively efficient.
C)  and the socially optimal price are both allocatively inefficient.
D)  and the socially optimal price are both allocatively efficient.E) A) and D)
F) B) and C)

Question 3

A nondiscriminating pure monopolist is generally viewed as

Accepted Answer

A)  productively efficient but allocatively inefficient.
B)  productively inefficient but allocatively efficient.
C)  both productively and allocatively inefficient.
D)  both productively and allocatively efficient.E) All of the above
F) B) and D)

Question 4

A dilemma of regulation is that

Accepted Answer

A)  the regulated price that achieves allocative efficiency is also likely to result in persistent economic profits.
B)  the regulated price that results in a "fair return" restricts output by more than would unregulated monopoly.
C)  regulated pricing always conflicts with the "due process" provision of the Constitution.
D)  the regulated price that achieves allocative efficiency is also likely to result in losses.E) B) and C)
F) C) and D)

Question 5

In which one of the following market models is X-inefficiency most likely to be the greatest?

Accepted Answer

A)  pure competition
B)  oligopoly
C)  monopolistic competition
D)  pure monopolyE) A) and C)
F) B) and D)

Question 6

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue

Accepted Answer

A)  may be either greater or less than $35.
B)  will also be $35.
C)  will be less than $35.
D)  will be greater than $35.E) A) and B)
F) None of the above

Question 7

The demand curve confronting a nondiscriminating pure monopolist is

Accepted Answer

A)  horizontal.
B)  the same as the industry's demand curve.
C)  more elastic than the demand curve confronting a competitive firm.
D)  derived by vertically summing the individual demand curves for the buyers.E) All of the above
F) A) and B)

Question 8

A pure monopolist

Accepted Answer

A)  will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
B)  will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output.
C)  will realize an economic loss if MC intersects the downsloping portion of MR.
D)  always realizes an economic profit.E) A) and B)
F) A) and C)

Question 9

In the short run a pure monopolist will charge the highest price the market will bear for its product.

Accepted Answer

A) True 
 B)False

Question 10

If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how much profit will the firm earn?

Accepted Answer

A)  $120.
B)  $250.
C)  $300.
D)  $420.E) None of the above
F) C) and D)

Question 11

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Accepted Answer

A) True 
 B)False

Question 12

A patent for a new product or a new business process is typically granted for a hundred years.

Accepted Answer

A) True 
 B)False

Question 13

The supply curve of a pure monopolist

Accepted Answer

A)  is that portion of its marginal cost curve that lies above average variable cost.
B)  is the same as that of a purely competitive industry.
C)  is its average variable cost curve.
D)  does not exist because prices are not "given" to a monopolist.E) None of the above
F) C) and D)

Question 14

Large minimum efficient scale of plant combined with limited market demand may lead to

Accepted Answer

A)  natural monopoly.
B)  patent monopoly.
C)  government franchise monopoly.
D)  shared monopoly.E) None of the above
F) C) and D)

Question 15

The profit-maximizing output of a pure monopoly is not socially optimal, because in equilibrium

Accepted Answer

A)  price equals minimum average total cost.
B)  marginal revenue equals marginal cost.
C)  marginal cost exceeds price.
D)  price exceeds marginal cost.E) A) and B)
F) B) and D)

Question 16

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9.We thus know that

Accepted Answer

A)  demand is inelastic at this price.
B)  the firm is maximizing profits.
C)  total revenue is increasing.
D)  total revenue is at a maximum.E) A) and D)
F) A) and B)

Question 17

"Price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product.

Accepted Answer

A) True 
 B)False

Question 18

The region of demand in which the monopolist will choose a price-output combination will be

Accepted Answer

A)  inelastic because, as price declines and output increases, total revenue will increase.
B)  inelastic because, as price declines and output increases, total revenue will decrease.
C)  elastic because, as price declines and output increases, total revenue will decrease.
D)  elastic because, as price declines and output increases, total revenue will increase.E) B) and C)
F) A) and D)

Question 19

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Accepted Answer

A) True 
 B)False

Question 20

Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously.

Accepted Answer

A) True 
 B)False

Exam 12: Pure Monopoly

In the inelastic portion of a monopolist's demand curve, an increase in price will

Correct AnswerverifiedShow Answer

A pure monopolist

Correct AnswerverifiedShow Answer

The profit-maximizing output of a pure monopoly is not socially optimal, because in equilibrium

Correct AnswerverifiedShow Answer

As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

Correct AnswerverifiedShow Answer

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9.We thus know that

Correct AnswerverifiedShow Answer

A dilemma of regulation is that

Correct AnswerverifiedShow Answer

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue

Correct AnswerverifiedShow Answer

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Correct AnswerverifiedShow Answer

Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously.

Correct AnswerverifiedShow Answer

In which one of the following market models is X-inefficiency most likely to be the greatest?

Correct AnswerverifiedShow Answer

"Price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product.

Correct AnswerverifiedShow Answer

The region of demand in which the monopolist will choose a price-output combination will be

Correct AnswerverifiedShow Answer

Large minimum efficient scale of plant combined with limited market demand may lead to

Correct AnswerverifiedShow Answer

A nondiscriminating pure monopolist is generally viewed as

Correct AnswerverifiedShow Answer

A patent for a new product or a new business process is typically granted for a hundred years.

Correct AnswerverifiedShow Answer

In the short run a pure monopolist will charge the highest price the market will bear for its product.

Correct AnswerverifiedShow Answer

If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how much profit will the firm earn?

Correct AnswerverifiedShow Answer

The supply curve of a pure monopolist

Correct AnswerverifiedShow Answer

The demand curve confronting a nondiscriminating pure monopolist is

Correct AnswerverifiedShow Answer

With a natural monopoly, the fair-return price

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified