microecon ch 12

Refer to the above graph showing the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity:

0 to Q3

One feature of pure monopoly is that the firm is:

A price maker

A monopoly results in productive inefficiency because at the profit-maximizing output level:

ATC is not at its minimum level

X-inefficiency is said to occur when a monopolist's

Average cost is greater than the minimum possible average cost at a given output level

A firm will earn economic profits whenever:

Average revenue exceeds average total costs

Which of the above shows the correct relationship between demand and marginal revenue?

B

A non-discriminating pure monopolist is generally viewed as:

Both productively and allocatively inefficient

Barriers to entry

Can result from government regulation

The economic incentive for price discrimination is based upon

Differences among buyers' elasticities of demand

Under pure monopoly, a profit-maximizing firm will produce

In the elastic range of its demand curve

With a natural monopoly, the fair return price:

Is allocatively inefficient; the socially optimal price is allocatively efficient

A non-discriminating monopolist will find that marginal revenue

Is less than average revenue or price

An argument for making regulated monopolies adopt marginal cost pricing is that this would:

Make the marginal cost equal to society's valuation of the marginal benefit

Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:

Marginal cost = marginal revenue

The non-discriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why:

Marginal revenue is less than average revenue

In the short run equilibrium, a monopolist's profits:

May be positive, negative, or zero

When the value of a product to each user, including existing users, increases due to an increase in the total number of users, we refer to this as:

Network effects

Allocative inefficiency happens in a monopoly because at the profit-maximizing output level

P > MC

Refer to the above graph showing the revenue curves for a monopolist. If it wants to sell quantity Q1, it must charge a price

P1

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

Patent

Refer to the above graph showing the revenue curves for a monopolist. Total revenue will be greatest at what output level?

Q3

Refer to the above graph showing the revenue curves for a monopolist. At what output level is demand inelastic?

Q4

Which phrase would be most characteristic of pure monopoly

Sole seller

With non-rivalrous consumption such as in the case of online music and movies, as more consumers buy the product:

The average cost of the output declines because the marginal cost is very small

Which is true of a price discriminating pure monopolist?

The average price will be higher than in the nondiscriminating case