Question 1

The nondiscriminating monopolist's demand curve

Accepted Answer

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) 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

Question 2

Refer to the demand and cost data for a pure monopolist given in the table. An unregulated, nondiscriminating monopolist would maximize profits at a price and quantity of

Accepted Answer

A) $175 and 5 units. 
B) $225 and 3 units. 
C) $200 and 4 units. 
D) $250 and 2 units. 
A) $175 and 5 units. 
B) $225 and 3 units. 
C) $200 and 4 units. 
D) $250 and 2 units. B

Question 3

Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing

Accepted Answer

A) 3 units. 
B) 4 units. 
C) 5 units. 
D) 6 units. 
A) 3 units. 
B) 4 units. 
C) 5 units. 
D) 6 units. B

Question 4

Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to

Accepted Answer

A) tax the monopolist P₃ P₁ per unit to prevent the monopolist from realizing an economic profit. 
B) subsidize the monopolist or the monopolist will go bankrupt in the long run. 
C) subsidize the monopolist P₁ P₄ per unit to allow the monopolist to break even. 
D) tax the monopolist P₁ P₂ per unit to prevent the monopolist from realizing an economic profit. 
A) tax the monopolist P₃ P₁ per unit to prevent the monopolist from realizing an economic profit. 
B) subsidize the monopolist or the monopolist will go bankrupt in the long run. 
C) subsidize the monopolist P₁ P₄ per unit to allow the monopolist to break even. 
D) tax the monopolist P₁ P₂ per unit to prevent the monopolist from realizing an economic profit.

Question 5

Which of the following is incorrect? Imperfectly competitive producers

Accepted Answer

A) face downsloping demand curves. 
B) do not compete with one another. 
C) can alter their output by changing price. 
D) find that, when they reduce price, their total revenue increases by less than the new price. 
A) face downsloping demand curves. 
B) do not compete with one another. 
C) can alter their output by changing price. 
D) find that, when they reduce price, their total revenue increases by less than the new price.

Question 6

Suppose that a monopolist calculates that at its present output level, marginal revenue is $1.00 and marginal cost is $2.00. It could maximize profits or minimize losses by

Accepted Answer

A) decreasing price and increasing output. 
B) increasing price and decreasing output. 
C) decreasing price and leaving output unchanged. 
D) decreasing output and leaving price unchanged. 
A) decreasing price and increasing output. 
B) increasing price and decreasing output. 
C) decreasing price and leaving output unchanged. 
D) decreasing output and leaving price unchanged.

Question 7

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist were forced to produce the socially optimal output through the imposition of a ceiling price, the ceiling price would have to be set at

Accepted Answer

A) $250. 
B) $200. 
C) $150. 
D) $100. 
A) $250. 
B) $200. 
C) $150. 
D) $100.

Question 8

Price discrimination is illegal in the United States under all circumstances due to antitrust regulations.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) $2.50. 
B) $2.00. 
C) $2.25. 
D) $1.75. 
A) $2.50. 
B) $2.00. 
C) $2.25. 
D) $1.75.

Question 10

Refer to the diagram for a nondiscriminating monopolist. The profit-maximizing price for this firm is J.

Accepted Answer

A) True 
 B)False

Question 11

Which is the best example of price discrimination?

Accepted Answer

A) an airline company charging lower fares per pound for air freight than for passengers 
B) a telephone company charging lower rates to weekend users than weekday users 
C) a supermarket charging lower prices in its city stores than its out-of-the-way rural store 
D) a private doctor charging higher fees to patients receiving special services than patients receiving regular services 
A) an airline company charging lower fares per pound for air freight than for passengers 
B) a telephone company charging lower rates to weekend users than weekday users 
C) a supermarket charging lower prices in its city stores than its out-of-the-way rural store 
D) a private doctor charging higher fees to patients receiving special services than patients receiving regular services

Question 12

In the accompanying diagram, the quantitative difference between areas A and C for reducing the price from P ₁ to P ₂ measures

Accepted Answer

A) marginal cost. 
B) marginal revenue. 
C) monopoly price. 
D) a welfare or efficiency loss. 
A) marginal cost. 
B) marginal revenue. 
C) monopoly price. 
D) a welfare or efficiency loss.

Question 13

Refer to the diagram for a nondiscriminating monopolist. From society's point of view, it would be desirable to have the monopolist produce a larger output than M.

Accepted Answer

A) True 
 B)False

Question 14

Price discrimination is

Accepted Answer

A) always legal. 
B) always illegal. 
C) only illegal if it hurts consumers more than nondiscrimination. 
D) only illegal if used to lessen or eliminate competition. 
A) always legal. 
B) always illegal. 
C) only illegal if it hurts consumers more than nondiscrimination. 
D) only illegal if used to lessen or eliminate competition.

Question 15

In most cases, a monopolist practicing price discrimination will end up earning less economic profits than a nondiscriminating monopolist.

Accepted Answer

A) True 
 B)False

Question 16

Pure monopoly refers to

Accepted Answer

A) any market in which the demand curve for the firm is downsloping. 
B) a standardized product being produced by many firms. 
C) a single firm producing a product for which there are no close substitutes. 
D) a large number of firms producing a differentiated product. 
A) any market in which the demand curve for the firm is downsloping. 
B) a standardized product being produced by many firms. 
C) a single firm producing a product for which there are no close substitutes. 
D) a large number of firms producing a differentiated product.

Question 17

There is some evidence to suggest that X-inefficiency is

Accepted Answer

A) absent whenever two or more producers are competing with one another. 
B) not encountered in either competitive or monopolistic firms. 
C) more likely to occur in monopolistic firms than in competitive firms. 
D) more likely to occur in competitive firms than in monopolistic firms. 
A) absent whenever two or more producers are competing with one another. 
B) not encountered in either competitive or monopolistic firms. 
C) more likely to occur in monopolistic firms than in competitive firms. 
D) more likely to occur in competitive firms than in monopolistic firms.

Question 18

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist perfectly price-discriminated and sold each unit of the product at the maximum price the buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total revenue would be

Accepted Answer

A) $700. 
B) $640. 
C) $540. 
D) $190. 
A) $700. 
B) $640. 
C) $540. 
D) $190.

Question 19

What are three policy options for dealing with pure monopolies that are entrenched and inefficient?

Accepted Answer

(1)The government can expressly prohibit

Question 20

A monopolist is free to charge whatever price it wishes, to sell a certain level of output.

Accepted Answer

A) True 
 B)False

Exam 12: Pure Monopoly

The nondiscriminating monopolist's demand curve

Refer to the demand and cost data for a pure monopolist given in the table. An unregulated, nondiscriminating monopolist would maximize profits at a price and quantity of

Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing

Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to

Which of the following is incorrect? Imperfectly competitive producers

Suppose that a monopolist calculates that at its present output level, marginal revenue is $1.00 and marginal cost is $2.00. It could maximize profits or minimize losses by

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist were forced to produce the socially optimal output through the imposition of a ceiling price, the ceiling price would have to be set at

Price discrimination is illegal in the United States under all circumstances due to antitrust regulations.

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

Refer to the diagram for a nondiscriminating monopolist. The profit-maximizing price for this firm is J.

Which is the best example of price discrimination?

In the accompanying diagram, the quantitative difference between areas A and C for reducing the price from P ₁ to P ₂ measures

Refer to the diagram for a nondiscriminating monopolist. From society's point of view, it would be desirable to have the monopolist produce a larger output than M.

Price discrimination is

In most cases, a monopolist practicing price discrimination will end up earning less economic profits than a nondiscriminating monopolist.

Pure monopoly refers to

There is some evidence to suggest that X-inefficiency is

Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist perfectly price-discriminated and sold each unit of the product at the maximum price the buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total revenue would be

What are three policy options for dealing with pure monopolies that are entrenched and inefficient?

A monopolist is free to charge whatever price it wishes, to sell a certain level of output.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters