Question 1

Which of the following best approximates a pure monopoly?

Accepted Answer

A)   the foreign exchange market
B)   the Kansas City wheat market
C)   the only grocery store in a small isolated town
D)   the soft drink marketE) A) and B)
F) A) and C)

Question 2

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Accepted Answer

A)   children's demand for food is elastic and adults' demand for food is inelastic.
B)   adults' demand for food is elastic and children's demand for food is inelastic.
C)   there can be exchange of the product from children, whoâ€™d buy it at a lower price, to adults.
D)   there can be exchange of the product from adults, whoâ€™d buy it at a higher price, to children.E) C) and D)
F) B) and C)

Question 3

The supply curve for a monopolist is

Accepted Answer

A)   perfectly elastic.
B)   upsloping.
C)   that portion of the marginal cost curve lying above minimum average variable cost.
D)   nonexistent.E) A) and B)
F) A) and C)

Question 4

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) None of the above
F) C) and D)

Question 5

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Accepted Answer

A) True 
 B)False

Question 6

In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.

Accepted Answer

A) True 
 B)False

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) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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) B) and D)
F) None of the above

Question 10

Possible reasons for X-inefficiency include the following, except

Accepted Answer

A)   managers having other goals besides maximizing profits.
B)   workers being poorly motivated or poorly supervised.
C)   costs of materials rising due to tight supply conditions.
D)   the firm being lethargic due to the absence of competition.E) B) and C)
F) B) and D)

Question 11

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 B)
F) C) and D)

Question 12

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 13

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a non discriminating monopolist  PQd$10172533415\begin{array}{|c|c|}\hline \mathrm{P} & \mathrm{Qd} \\hline \$ 10 & 1 \\hline 7 & 2 \\hline 5 & 3 \\hline 3 & 4 \\hline 1 & 5 \\hline\end{array}P$107531​Qd12345​​  Assume that this monopolist faces zero production costs. The profit-maximizing monopolist will set a price of

Accepted Answer

A)   $10.
B)   $7.
C)   $5.
D)   $3. E) A) and B)
F) A) and C)

Question 14

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist.  PQd$10172533415\begin{array}{|c|c|}\hline \mathrm{P} & \mathrm{Qd} \\hline \$ 10 & 1 \\hline 7 & 2 \\hline 5 & 3 \\hline 3 & 4 \\hline 1 & 5 \\hline\end{array}P$107531​Qd12345​​  The monopolist will select its profit-maximizing level of output somewhere within the

Accepted Answer

A)   3-5 unit range of output.
B)   1-3 unit range of output.
C)   1-4 unit range of output.
D)   2-4 unit range of output. E) None of the above
F) B) and D)

Question 15

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) B) and D)

Question 16

A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the price must be cut to $7.00. The marginal revenue of the 21st toy is

Accepted Answer

A)   âˆ'$10.
B)   âˆ'$13.
C)   +$7.
D)   +$21.E) A) and D)
F) B) and C)

Question 17

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) All of the above
F) A) and D)

Question 18

Which of the following is a barrier to entry?

Accepted Answer

A)   patents and licenses
B)   buyers' incomes
C)   close substitutes
D)   diminishing marginal returnsE) A) and B)
F) B) and C)

Question 19

In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

Accepted Answer

A) True 
 B)False

Question 20

Pure monopolists always earn economic profits.

Accepted Answer

A) True 
 B)False

Exam 12: Pure Monopoly

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Correct Answer
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The supply curve for a monopolist is

Correct Answer
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Pure monopolists always earn economic profits.

Correct Answer
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In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.

Correct Answer
verified

Which of the following best approximates a pure monopoly?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

There is some evidence to suggest that X-inefficiency is

Correct Answer
verified

In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

Correct Answer
verified

Which is the best example of price discrimination?

Correct Answer
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Possible reasons for X-inefficiency include the following, except

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

Correct Answer
verified

A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the price must be cut to $7.00. The marginal revenue of the 21st toy is

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

Correct Answer
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A nondiscriminating pure monopolist is generally viewed as

Correct Answer
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Which of the following is a barrier to entry?

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

Correct Answer
verified

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Correct Answer
verified

Exam 12: Pure Monopoly

Even though many ballparks practice price discrimination between adults and children in selling tickets, such discrimination is not applied at the concession stands because

Correct AnswerverifiedShow Answer

The supply curve for a monopolist is

Correct AnswerverifiedShow Answer

Pure monopolists always earn economic profits.

Correct AnswerverifiedShow Answer

In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.

Correct AnswerverifiedShow Answer

Which of the following best approximates a pure monopoly?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

There is some evidence to suggest that X-inefficiency is

Correct AnswerverifiedShow Answer

In a natural monopoly case, the socially optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.

Correct AnswerverifiedShow Answer

Which is the best example of price discrimination?

Correct AnswerverifiedShow Answer

Possible reasons for X-inefficiency include the following, except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A monopolist can sell 20 toys per day for $8.00 each. To sell 21 toys per day, the price must be cut to $7.00. The marginal revenue of the 21st toy is

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

A nondiscriminating pure monopolist is generally viewed as

Correct AnswerverifiedShow Answer

Which of the following is a barrier to entry?

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

At the inelastic portion of a monopolist's demand curve, the marginal revenue of each extra unit of output is positive.

Correct AnswerverifiedShow Answer

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