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| 1 | |
Which of the following are defining characteristics of pure monopoly? |
| | A) | the firm advertises to differentiate its product. |
| | B) | no close substitutes for the product exist and there is one seller. |
| | C) | the firm can easily enter into or exit from the industry and profits are guaranteed. |
| | D) | the firm holds a patent and is technologically progressive. |
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| 2 | |
The demand curve for a pure monopolist is |
| | A) | perfectly price elastic |
| | B) | perfectly price inelastic |
| | C) | downward sloping |
| | D) | upward sloping |
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| 3 | |
The analysis of monopoly indicates that the monopolist |
| | A) | will charge the highest price it can get |
| | B) | is only interested in normal profit |
| | C) | is guaranteed an economic profit |
| | D) | will seek to maximize total profits |
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| 4 | |
When the monopolist is maximizing total profits or minimizing losses, |
| | A) | total revenue is greater than total cost |
| | B) | average revenue is greater than average total cost |
| | C) | average revenue is greater than marginal cost |
| | D) | average total cost is less than marginal cost |
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| 5 | |
The supply curve for a pure monopolist |
| | A) | is the portion of the marginal cost curve that lies above the average variable cost curve |
| | B) | is perfectly price elastic at the market price |
| | C) | is upward sloping |
| | D) | does not exist |
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| 6 | |
At the equilibrium level of output, a monopolist does not produce the product as efficiently as possible because |
| | A) | the average total cost of producing it is not at a minimum |
| | B) | the marginal cost of producing the last unit is less than its price |
| | C) | it is earning a profit |
| | D) | total revenue is greater than marginal revenue |
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| 7 | |
One barrier to entry that can contribute to the establishment of a monopoly is |
| | A) | economies of scale |
| | B) | price-taking behaviour |
| | C) | technological progress |
| | D) | competition |
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| 8 | |
Monopolists' profits may be positive, negative, or zero |
| | A) | in the short run |
| | B) | in the long run |
| | C) | in both the short run and long run |
| | D) | where marginal cost equals marginal revenue and where average total cost is less than demand |
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| 9 | |
When compared with the purely competitive industry with identical costs of production, a monopolist will charge a |
| | A) | higher price and produce more output |
| | B) | lower price and produce more output |
| | C) | lower price and produce less output |
| | D) | higher price and produce less output |
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| 10 | |
Which is one of the conditions that must be realized before a seller finds that price discrimination is workable? |
| | A) | the demand for the product must be perfectly elastic. |
| | B) | the seller must be able to segment the market. |
| | C) | the buyer must be able to resell the product. |
| | D) | the product must be a service. |
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| 11 | |
At the present level of output a monopolist determines that its marginal cost is $18 (and on the rising portion of the curve), and its marginal revenue is $21. The monopolist will maximize profits or minimize losses by |
| | A) | increasing price while keeping output constant |
| | B) | decreasing price and increasing output |
| | C) | decreasing both price and output |
| | D) | increasing both price and output |
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| 12 | |
The socially optimal price is the price which results in |
| | A) | the producer earning a normal profit |
| | B) | the producer earning an economic profit |
| | C) | the producer breaking even |
| | D) | the most efficient allocation of an economy's resources |
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| 13 | |
This diagram is for a non-discriminating monopolist. At output M, the firm will
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| | A) | charge a price of C. |
| | B) | charge a price of B. |
| | C) | incur a loss of CAFH. |
| | D) | charge a price of A. |
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| 14 | |
Based on the data in the table below, how many units of output will the profit-maximizing monopolist produce?
| Output | Price | Total cost | | 1 | $1000 | $500 | | 2 | 600 | 520 | | 3 | 500 | 580 | | 4 | 400 | 700 | | 5 | 300 | 1000 | | 6 | 200 | 1500 |
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| | A) | 1 |
| | B) | 2 |
| | C) | 3 |
| | D) | 4 |
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| 15 | |
The loss of consumer and producer surplus due to an inefficient level of output is called |
| | A) | price discrimination |
| | B) | deadweight loss |
| | C) | x-inefficiency |
| | D) | regulated pricing |
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