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| 1 | |
A particular firm would most likely be classified a monopoly if: |
| | A) | it produces a good for which market demand was highly elastic |
| | B) | it has very little control over the price |
| | C) | entry into the industry is blocked |
| | D) | it produces a good for which there are many close substitutes |
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| 2 | |
The allocative inefficiency of nondiscriminating monopoly arises from the fact that: |
| | A) | price exceeds marginal cost |
| | B) | output falls short of the output at which average cost is minimized |
| | C) | output exceeds that at which average cost is minimized |
| | D) | price exceeds minimum average cost |
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| 3 | |
In order to sell more output, the monopolist: |
| | A) | should advertise more extensively. |
| | B) | must lower its costs of production. |
| | C) | has to lower the product's price. |
| | D) | should produce more. |
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| 4 | |
A profit-maximizing, nondiscriminating monopolist will set its price: |
| | A) | equal to minimum average total cost |
| | B) | so as to maximize profit per unit |
| | C) | on the inelastic portion of its demand curve |
| | D) | so as to equate marginal revenue and marginal cost |
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| 5 | |
Answer the next question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist.
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Refer to the data. The marginal revenue of the fourth unit of output is: |
| | A) | $10 |
| | B) | $8 |
| | C) | $4 |
| | D) | $2 |
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| 6 | |
Which combination of price, marginal cost, and marginal revenue is consistent with a pure monopolist maximizing profits? |
| | A) | P = $30, MR = $10, MC = $10 |
| | B) | P = $8, MR = $5, MC = $8 |
| | C) | P = $15, MR = -$2, MC = $2 |
| | D) | P = $40, MR = $20, MC = $10 |
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| 7 | |
Use the following diagram to answer the next question.
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Refer to the diagram. If this monopolist could engage in perfect price discrimination, it would produce: |
| | A) | Q3 units, selling the last one at price P3 |
| | B) | Q1 units, selling the last one at price P1 |
| | C) | Q2 units, selling the last one at price P3 |
| | D) | Q2 units, selling the last one at price P2 |
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| 8 | |
Use the following diagram to answer the next question:
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Refer to the diagram. If this firm produces its profit-maximizing output, its potential profit is: |
| | A) | zero |
| | B) | area AFHC |
| | C) | area AFGB |
| | D) | area BGHC |
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| 9 | |
Use the following diagram to answer the next question:
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Refer to the diagram. This nondiscriminating monopolist will produce: |
| | A) | M units at price A and make a profit |
| | B) | N units at price B and earn zero profits |
| | C) | M units at price C and incur a loss |
| | D) | Q units at price J and earn zero profits |
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| 10 | |
Use the following diagram to answer the next question.
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Refer to the diagram. Suppose this industry is initially competitive, but that all the firms merge to become a pure monopoly. The result of the mergers is that output: |
| | A) | falls from Q2 to Q3 and price rises from P2 to P3 |
| | B) | remains the same but price rises from P1 to P3 |
| | C) | falls from Q1 to Q3 and price rises from P1 to P3 |
| | D) | falls from Q2 to Q3 but price remains the same |
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