6.1 quiz

A nondiscriminating profit-maximizing monopolist: a) will never produce in the output range where demand is inelastic. b) will never produce in the output range where marginal revenue is positive. c) may produce where demand is either elastic or inelastic, depending on the level of production costs. d) will never produce in the output range where demand is elastic.

a

Answer the question on the basis of the following demand and cost data for a pure monopolist: The profit-maximizing monopolist will realize a: a) profit of $16. b) profit of $7.50. c) profit of $8.50. d) loss of $14.

a

Pure monopoly refers to: a) a single firm producing a product for which there are no close substitutes. b) a standardized product being produced by many firms. c) a large number of firms producing a differentiated product. d) any market in which the demand curve to the firm is downsloping.

a

Refer to the above diagram for a pure monopolist. Monopoly price will be: a) c. b) e. c) a. d) b.

a

Refer to the above diagram. Demand is relatively elastic: a) in the P2P4 price range. b) in the P2P1 price range. c) only at price P2. d) in the 0P1 price range.

a

Which of the following is characteristic of a pure monopolist's demand curve? a) It is the same as the market demand curve. b) Its elasticity coefficient is 1 at all levels of output. c) Price and marginal revenue are equal at all levels of output. d) Average revenue is less than price.

a

The marginal revenue curve for a monopolist: a) is a straight, upsloping curve. b) becomes negative when output increases beyond some particular level. c) rises at first, reaches a maximum, and then declines. d) is a straight line, parallel to the horizontal axis.

b

Which of the following is correct? a) A purely competitive firm is a "price maker," while a monopolist is a "price taker." b) A purely competitive firm is a "price taker," while a monopolist is a "price maker." c) Both purely competitive and monopolistic firms are "price makers." d) Both purely competitive and monopolistic firms are "price takers."

b

f profits are maximized (or losses minimized), which of the following conditions is common to both unregulated monopoly and to pure competition? a) P = MR b) MR = MC c) MC = ATC d) MC = P

b

An unregulated pure monopolist will maximize profits by producing that output at which: a) P = MC. b) MC = AC. c) MR = MC. d) P = ATC.

c

If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue: a) will also be $35. b) may be either greater or less than $35. c) will be less than $35. d) will be greater than $35.

c

Refer to the above diagrams. The demand for Firm A's product is: a) inelastic for prices above $1 and inelastic for prices below $1. b) elastic for prices above $1 and inelastic for prices below $1. c) perfectly elastic over all ranges of output. d) perfectly inelastic over all ranges of output.

c

The profit-maximizing level of output will be: a) 6 units. b) 7 units. c) 5 units. d) 4 units.

c

When a pure monopolist is producing its profit-maximizing output, price will: a) equal MR. b) equal MC. c) equal neither MC nor MR. d) be less than MR.

c

Which of the following best approximates a pure monopoly? a) the soft drink market b) the Kansas City wheat market c) the only bank in a small town d) the foreign exchange market

c

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing: a) a loss that could be reduced by producing less output. b) a loss that could be reduced by producing more output. c) an economic profit that could be increased by producing less output. d) an economic profit that could be increased by producing more output.

d

Pure monopolists may obtain economic profits in the long run because: a) marginal revenue is constant as sales increase. b) of rising average fixed costs. c) of advertising. d) of barriers to entry.

d

Refer to the above diagrams. Firm A is a: a) pure monopoly, as is Firm B. b) pure competitor, as is Firm B. c) pure monopoly and Firm B is a pure competitor. d) pure competitor and Firm B is a pure monopoly.

d

Which of the above diagrams correctly portray the demand (D) and marginal revenue (MR) curves of a purely competitive seller? a) D b) A c) B d) C

d