Question 1

Which of the following is not a possible source of natural monopoly?

Accepted Answer

A)   large-scale network effects
B)   simultaneous consumption
C)   greater use of specialized inputs
D)   rent-seeking behaviorE) A) and D)
F) A) and C)

Question 2

For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Accepted Answer

A)   marginal revenue is positive when total revenue is at a maximum.
B)   total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing.
C)   marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing.
D)   marginal revenue is positive so long as total revenue is positive.E) A) and B)
F) All of the above

Question 3

A monopoly is most likely to emerge and be sustained when

Accepted Answer

A)   output demand is relatively elastic.
B)   firms have U-shaped average-total-cost curves.
C)   fixed capital costs are small relative to total costs.
D)   economies of scale are large relative to market demand.E) A) and C)
F) All of the above

Question 4

"Big data" collection by online firms about buyers and their behaviors allows the firms to practice

Accepted Answer

A)   fair-return pricing.
B)   socially optimal pricing.
C)   price discrimination.
D)   price regulation.E) C) and D)
F) A) and C)

Question 5

If a pure monopolist is operating in a range of output where demand is elastic,

Accepted Answer

A)   it cannot possibly be maximizing profits.
B)   marginal revenue will be positive but declining.
C)   marginal revenue will be positive and rising.
D)   total revenue will be declining.E) A) and B)
F) A) and C)

Question 6

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Accepted Answer

A) True 
 B)False

Question 7

Barriers to entering an industry

Accepted Answer

A)   encourage allocative efficiency.
B)   encourage productive efficiency.
C)   are the basis for monopoly.
D)   apply only to purely monopolistic industries.E) All of the above
F) C) and D)

Question 8

Answer the question on the basis of the provided demand and cost data for a pure monopolist.   \quad \quad \quad \quad      Cost Data 	ext { Cost Data } Cost Data        \quad \quad \quad     Demand Data 	ext { Demand Data } Demand Data   
  Price  Quartity  Dernarded  Output  Total Cost 55.5033$5.015.84446.014.50556.503.85667.503.35779.012.908811.812.509914.81\begin{array} { | c | c | c | c| } \hline 	ext { Price } & \begin{array} { c } 	ext { Quartity } \	ext { Dernarded }\end{array} & 	ext { Output } & 	ext { Total Cost } \\hline 55.50 & 3 & 3 & \$ 5.01 \\hline 5.84 & 4 & 4 & 6.01 \\hline 4.50 & 5 & 5 & 6.50 \\hline 3.85 & 6 & 6 & 7.50 \\hline 3.35 & 7 & 7 & 9.01 \\hline 2.90 & 8 & 8 & 11.81 \\hline 2.50 & 9 & 9 & 14.81 \\hline\end{array} Price 55.505.844.503.853.352.902.50​ Quartity  Dernarded ​3456789​ Output 3456789​ Total Cost $5.016.016.507.509.0111.8114.81​​  The profit-maximizing monopolist will realize a

Accepted Answer

A)   profit of $8.50.
B)   profit of $7.50.
C)   profit of $16.
D)   loss of $14. E) A) and D)
F) A) and C)

Question 9

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

Accepted Answer

A)   retain its current price-quantity combination.
B)   increase both price and quantity sold.
C)   charge a lower price.
D)   charge a higher price.E) A) and D)
F) B) and D)

Question 10

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Accepted Answer

A)   the existence of good heating substitutes.
B)   economies of scale in electric heat generation.
C)   prices for electric heat being set at the socially optimal level.
D)   strict government regulation of the price charged for electric heat.E) C) and D)
F) A) and D)

Question 11

If a pure monopolist is producing at that output where P = ATC, then

Accepted Answer

A)   its economic profits will be zero.
B)   it will be realizing losses.
C)   it will be producing less than the profit-maximizing level of output.
D)   it will be realizing an economic profit.E) All of the above
F) A) and D)

Question 12

Which is true of a price-discriminating pure monopolist?

Accepted Answer

A)   P > MR for the last unit sold.
B)   Profit will be higher than in the nondiscriminating case.
C)   The average price will be higher than in the nondiscriminating case.
D)   Allocative inefficiency will be greater than in the nondiscriminating case.E) A) and B)
F) A) and C)

Question 13

Which would definitely not be an example of price discrimination?

Accepted Answer

A)   A movie theater charges children less than adults for a movie ticket.
B)   Universities charge higher tuition for out-of-state residents than for in-state students.
C)   A doctor charges for services according to the income of individual patients.
D)   An electric power company charges less for electricity used during off-peak hours, when production costs are lower.E) None of the above
F) A) and B)

Question 14

The government may create barriers to entry that serve to foster monopoly power of firms.

Accepted Answer

A) True 
 B)False

Question 15

At the profit-maximizing level of output for a monopolist,

Accepted Answer

A)   price is greater than marginal cost.
B)   price is greater than average revenue.
C)   average total cost equals marginal cost.
D)   total revenue is greater than total cost.E) A) and D)
F) A) and C)

Question 16

Answer the question on the basis of the accompanying demand schedule.   Price Quantity Demanded $7162534435\begin{array} { | c | c| } \hline 	ext { Price } & 	ext {Quantity Demanded } \\hline \$ 7 & 1 \\hline 6 & 2 \\hline 5 & 3 \\hline 4 & 4 \\hline 3 & 5 \\hline\end{array} Price $76543​Quantity Demanded 12345​​  The marginal revenue obtained from selling the third unit of output is

Accepted Answer

A)   $6.
B)   $1.
C)   $3.
D)   $5. E) B) and D)
F) A) and C)

Question 17

The monopolist's demand curve is more elastic than the industry demand curve.

Accepted Answer

A) True 
 B)False

Question 18

Monopolists are said to be allocatively inefficient because

Accepted Answer

A)   they produce where MR > MC.
B)   at the profit-maximizing output, price is greater than AVC.
C)   they produce only the type of product they desire and do not consider the consumer.
D)   at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost.E) None of the above
F) A) and B)

Question 19

X-inefficiency refers to a situation in which a firm

Accepted Answer

A)   is not as technologically progressive as it might be.
B)   encounters diseconomies of scale.
C)   fails to realize all existing economies of scale.
D)   fails to achieve the minimum average total costs attainable at each level of output.E) B) and C)
F) None of the above

Question 20

One feature of pure monopoly is that the demand curve

Accepted Answer

A)   is vertical.
B)   is horizontal.
C)   slopes upward.
D)   slopes downward.E) A) and B)
F) All of the above

Exam 12: Pure Monopoly

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Correct Answer
verified

X-inefficiency refers to a situation in which a firm

Correct Answer
verified

A monopoly is most likely to emerge and be sustained when

Correct Answer
verified

Which is true of a price-discriminating pure monopolist?

Correct Answer
verified

If a pure monopolist is producing at that output where P = ATC, then

Correct Answer
verified

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Correct Answer
verified

Barriers to entering an industry

Correct Answer
verified

The government may create barriers to entry that serve to foster monopoly power of firms.

Correct Answer
verified

Which would definitely not be an example of price discrimination?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

One feature of pure monopoly is that the demand curve

Correct Answer
verified

For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Correct Answer
verified

Which of the following is not a possible source of natural monopoly?

Correct Answer
verified

The monopolist's demand curve is more elastic than the industry demand curve.

Correct Answer
verified

At the profit-maximizing level of output for a monopolist,

Correct Answer
verified

"Big data" collection by online firms about buyers and their behaviors allows the firms to practice

Correct Answer
verified

Monopolists are said to be allocatively inefficient because

Correct Answer
verified

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

Correct Answer
verified

If a pure monopolist is operating in a range of output where demand is elastic,

Correct Answer
verified

Exam 12: Pure Monopoly

Price discrimination is not viable if consumers can resell the products they purchase to other consumers.

Correct AnswerverifiedShow Answer

X-inefficiency refers to a situation in which a firm

Correct AnswerverifiedShow Answer

A monopoly is most likely to emerge and be sustained when

Correct AnswerverifiedShow Answer

Which is true of a price-discriminating pure monopolist?

Correct AnswerverifiedShow Answer

If a pure monopolist is producing at that output where P = ATC, then

Correct AnswerverifiedShow Answer

Electric companies generally practice price discrimination and charge higher prices for electricity used for illumination and lower prices for electricity used for heat. These lower prices for electric heating result primarily from

Correct AnswerverifiedShow Answer

Barriers to entering an industry

Correct AnswerverifiedShow Answer

The government may create barriers to entry that serve to foster monopoly power of firms.

Correct AnswerverifiedShow Answer

Which would definitely not be an example of price discrimination?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One feature of pure monopoly is that the demand curve

Correct AnswerverifiedShow Answer

For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Correct AnswerverifiedShow Answer

Which of the following is not a possible source of natural monopoly?

Correct AnswerverifiedShow Answer

The monopolist's demand curve is more elastic than the industry demand curve.

Correct AnswerverifiedShow Answer

At the profit-maximizing level of output for a monopolist,

Correct AnswerverifiedShow Answer

"Big data" collection by online firms about buyers and their behaviors allows the firms to practice

Correct AnswerverifiedShow Answer

Monopolists are said to be allocatively inefficient because

Correct AnswerverifiedShow Answer

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

Correct AnswerverifiedShow Answer

If a pure monopolist is operating in a range of output where demand is elastic,

Correct AnswerverifiedShow Answer

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