Pure Monopoly Quiz Econ 102
Which of the following statements is a major criticism of a pure monopoly as a source of allocative inefficiency?
A pure monopoly fails to expand output to the level where the price of an additional unit is just equal to its marginal cost
Which of the following is a barrier to entry?
Infrastructure costs
Use the following graph showing the demand and marginal revenue curves faced by a pure monopoly to answer the next question. If the pure monopoly wants to sell quantity Q1, it should charge
P 1
Use the following graph to answer the next question. If the government regulated the pure monopoly and made it set a normal profit price, what price and quantity of output levels would we observe in the short run? rev: 05_15_2018
P3 and Q2
The data below relates to a pure monopoly and the product it produces. Price Quantity Total Cost 22 0 20 20 1 24 18 2 27 16 3 34 14 4 40 12 5 49 10 6 59 What is the profit-maximizing output and price for this firm?
P=$14, Q=4
Which of the following best approximates a pure monopoly?
The only bank in a small town
Pure monopoly refers to_____.
a single firm producing a product for which there are no close substitutes
Use the following graph to answer the next question. At its short-run equilibrium, this pure monopoly generates ____.
an economic profit
The economic incentive for third-degree price discrimination is based upon _____.
differences among buyers' elasticities of demand
The demand curve faced by a pure monopoly is _____.
downward sloping
Natural monopolies result from ____.
extensive economies of scale in production
Use the following graph for a pure monopoly operating in the short run to answer the next question. At the profit-maximizing level of output, this firm ___. rev: 05_15_2018
generates a loss per unit equal to DE
Use the following graphs to answer the next question. Which of the above shows the correct relationship between demand and marginal revenue for a pure monopoly?
graph 2
Suppose that a pure monopoly calculates that at its present output level, marginal revenue is $1 and marginal cost is $2. The monopoly could maximize profits or minimize losses by ____.
increasing price and decreasing output
The problem with adopting a normal profit pricing policy for a natural monopoly is that _____.
it is not allocatively efficient
In many large U.S. cities, taxicab companies operate as near monopolies because of_____.
licenses
With a natural monopoly, the normal profit price is _________________ and the competitive price is _________________.
not allocatively efficient; allocatively efficient
A pure monopoly may generate economic profits because _____.
of barriers to entry
Pure monopolies are said to be allocatively inefficient because ____.
price is greater than marginal cost
Which phrase would be most characteristic of pure monopoly?
single seller