Question 1

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.E) A) and B)
F) None of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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.E) B) and C)
F) C) and D)

Question 4

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.E) A) and C)
F) All of the above

Question 5

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.E) B) and D)
F) All of the above

Question 6

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.E) None of the above
F) A) and D)

Question 7

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.E) A) and B)
F) All of the above B

Question 8

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 servicesE) B) and C)
F) C) and D)

Question 9

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.E) None of the above
F) B) and C)

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

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.E) All of the above
F) B) and D)

Question 13

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.E) None of the above
F) B) and C)

Question 14

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

Accepted Answer

(1)The government can expressly prohibit...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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.E) None of the above
F) All of the above A

Question 17

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.E) B) and C)
F) None of the above B

Question 18

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 19

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.E) B) and C)
F) None of the above

Question 20

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.E) All of the above
F) A) and B)

Exam 12: Pure Monopoly

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Price discrimination is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

There is some evidence to suggest that X-inefficiency is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

Which is the best example of price discrimination?

Correct AnswerverifiedShow Answer

Pure monopoly refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is incorrect? Imperfectly competitive producers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified(1)The government can expressly prohibit...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The nondiscriminating monopolist's demand curve

Correct AnswerverifiedA

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

Correct AnswerverifiedB

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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B

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(1)The government can expressly prohibit...
View Answer

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A

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B

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