AP Microeconomics - Quiz 6.1

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

MR = MC

A pure monopolist: a) will realize an economic loss if MC intersects the downsloping portion of MR. b) always realizes an economic profit. c) will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. d) will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output.

will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output

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

A purely competitive firm is a "price taker," while a monopolist is a "price maker."

Refer to the above diagram. This firm is selling in: a) a purely competitive market. b) an imperfectly competitive market. c) a market in which there are an extremely large number of other firms producing the same product. d) a market in which demand is elastic at all prices.

an imperfectly competitive market

Refer to the above diagram. Demand is relatively inelastic: a) at price P3. b) in the P2P4 price range. c) at any price below P2. d) in the P2P3 price range.

at any price below P2

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

c

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: a) increase both price and quantity sold. b) charge a higher price. c) retain its current price-quantity combination. d) charge a lower price.

charge a higher price

Under which of the following situations would a monopolist increase profits by lowering price (and increasing output): a) if it discovered that it was producing where MC = MR b) if it discovered that it was producing where its MC curve intersects its demand curve c) if it discovered that it was producing where MC < MR d) under none of these circumstances because a monopolist would never lower price

if it discovered that it was producing where MC < MR

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

in the P2P4 price range

The nondiscriminating monopolist's demand curve: a) coincides with its marginal revenue curve. b) is less elastic than a purely competitive firm's demand curve. c) is perfectly inelastic. d) is perfectly elastic.

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

In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to: a) marginal revenue. b) average variable cost. c) average cost. d) average total cost.

marginal revenue

A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price: a) will always equal ATC. b) may be greater or less than ATC. c) always exceeds ATC. d) equals marginal revenue.

may be greater or less than ATC

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

perfectly elastic over all ranges of output

Economic profit in the long run is: a) impossible for both a pure monopolist and a pure competitor. b) only possible when barriers to entry are nonexistent. c) possible for a pure monopoly, but not for a pure competitor. d) possible for both a pure monopoly and a pure competitor.

possible for a pure monopoly, but not for a pure competitor

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) loss of $14. b) profit of $16. c) profit of $8.50. d) profit of $7.50.

profit of $16

A nondiscriminating pure monopolist finds that it can sell its fiftieth unit of output for $50. We can surmise that the marginal: a) revenue of the fiftieth unit is less than $50. b) revenue of the fiftieth unit is greater than $50. c) cost of the fiftieth unit is also $50. d) revenue of the fiftieth unit is also $50.

pure competitor and Firm B is a pure monopoly

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

pure competitor and Firm B is a pure monopoly

A nondiscriminating pure monopolist finds that it can sell its fiftieth unit of output for $50. We can surmise that the marginal: a) revenue of the fiftieth unit is less than $50. b) revenue of the fiftieth unit is greater than $50. c) cost of the fiftieth unit is also $50. d) revenue of the fiftieth unit is also $50.

revenue of the fiftieth unit is less than $50

If a monopolist were to produce in the inelastic segment of its demand curve: a) the firm would not be maximizing profits. b) it would necessarily incur a loss. c) marginal revenue would be positive. d) total revenue would be at a maximum.

the firm would not be maximizing profits

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

will be less than $35