Micro ch. 12

Which of the following is not a barrier to entry? a. Patents b. X-ineffciency c. Economies of scale d. Ownership of essential resources

b. X-inefficiency

Allocative inefficiency due to unregulated monopoly is characterized by the condition: a. P=MC b. P=MR c. P>MC d. P>AVC

c. P>MC

X-inefficiency is said to occur when a firm's: a. Average costs of producing are greater than the minimum possible average costs. b.Marginal costs of producing are greater than the minimum possible total costs. c. Total costs of producing are greater than the minimum possible average costs. d.Short run costs of producing any output are greater than the long run costs

a. Average costs of producing are greater than the minimum possible average costs.

If a monopolist produces 100 units of output at a market price of $5 per unit with marginal revenue per unit equaling $4, we would expect that if the monopolist's good was provided under pure competition, quantity would be: a. Higher than 100 units, price lower than $5, and MR=price b. Lower than 100 units, price greater than $5, and MR=price c. Higher than 100 units, price greater than $5, and MR=price d. Lower than 100 units, price lower than $5, and MR=price

a. Higher than 100 units, price lower than $5, and MR=price

Suppose that a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He or she could maximize profits or minimize losses by: a. Decreasing price and increasing output b. Increasing price and decreasing output c. Decreasing price and leaving output unchanged d. Decreasing price and leaving price unchanged

b. Increasing price and decreasing output

A pure monopolist should never produce in the: a. Elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. b. Inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price. c. Inelastic segment of its demand curve because it can always increase total revenue by more than it increases total cost by reducing price. d. segment of its demand curve where the price elasticity coefficient is greater than one.

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

Other things equal, a price discriminating monopolist will: a. Realize a smaller economic profit than a nondiscriminating monopolist b. Produce a larger output than a nondiscriminating monopolist c. Produce the same output as a nondiscriminating monopolist d. Produce a smaller output than a nondiscriminating monopolist

b. Produce a larger output than a nondiscriminating monopolist

Price discrimination refers to: a. selling a given product for different prices at two different points in time. b. Any price above that which is equal to a minimum average total cost c. The selling of a given product at different prices that do not reflect cost differences. d. The difference between the prices a purely competitive seller and a purely monopolistic seller would charge

c. The selling of a given product at different prices that do not reflect cost differences.

In moving down the elastic segment of the monopolist's demand curve, total revenue is: a. Increasing, and marginal revenue is negative b. Decreasing, and marginal revenue is positive c. Decreasing, and marginal revenue is negative d. Increasing, and marginal revenue is positive

d. Increasing, and marginal revenue is positive

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: a. Marginal cost= demand b. Marginal revenue= demand c. Average total cost= demand d. Marginal cost= marginal revenue

d. Marginal cost= marginal revenue