Econ chapter 12

Price exceeds marginal revenue for the pure monopolist because the

demand curve is downsloping

The pure monopolist's demand curve is

identical with the industry demand curve

The pure monopolist's demand curve is relatively elastic

in the price range where marginal revenue is positive

The demand curve faced by a pure monopolist

is less elastic than that faced by a single purely competitive firm

In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal

marginal revenue

In the short run a pure monopolist's profit

may be positive, zero, or negative

Large minimum efficient scale of plant combined with limited market demand may lead to

natural monopoly

Pure monopolists may obtain economic profits in the long run because

of barriers to entry

A pure monopolist is

a one-firm industry

Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal cost is:

$3.40 or less. But how and why.........

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the twenty-first unit of output is

$4.75 But how and why......

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

an economic profit that could be increased by producing more output.

The MR = MC rule

applies both to pure monopoly and pure competition

A pure monopolist should never produce in the

inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price.

The nondiscriminating monopolist's demand curve

is less elastic than a purely competitive firm's demand curve

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

its economic profits will be zero

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

marginal revenue will be positive but declining.

For a nondiscriminating imperfectly competitive firm

marginal revenue will become zero at that output where total revenue is at a maximum

Which of the following is a characteristic of pure monopoly

of barriers to entry

its economic profits will be zero

will realize an economic profit if price exceeds ATC at the equilibrium output