Pure Monopoly
______ effects exist if the value of a value of a product to each user increases as the total number of users increase.
Network
_______ competitors can influence total supply through their own output decisions.
imperfect
Barriers to entry contribute to _______ status.
monopoly
Which of the following types of firms have achieved economies of scale through information technologies? A. Computer software B. Retail clothing C. Internet service D. Raw steel E. Wireless communication
Internet service Wireless communication Computer Software
At a pure monopolist's profit-maximising output, its _________ exceeds marginal cost, resulting in allocative inefficiency.
Price
________ and development leads to most patentable inventions and products.
Research
A(n) _________ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
monopoly
Network effects may drive a market toward ______ , because consumers tend to choose standard products that everyone else is using.
monopoly
A monopolist will never choose a price-quantity combination that causes a decrease in _________ revenue.
total
The monopolist seeks maximum _______ profit, not maximum unit profit.
total
Patents and patent laws aim to protect the inventor from _____.
rivals
When marginal revenue is ________ (positive/negative) total revenue is diminishing.
negative
When marginal revenue is ______, total revenue is increasing.
positive
Marginal revenue (MR) for the monopolist compared to that of a pure competitor: A. is constant and equal to product price. B. declines and is lower than product price. C. fluctuates and is higher than product price D. is constant and higher than product price
B. declines and is lower than product price.
Consider the demand and marginal revenue information shown in the graph. A pure monopolist will come closest to maximising total revenue when it produces *approximately* at which of the following quantities? A. 10 B. 6 C. 8 D. 9
C. 8
With a fixed downward sloping demand curve, the pure monopolist can only increase sales by charging a ______ price. A. fixed B. lower C. variable D. higher
B. lower
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ________ so that other firms cannot compete. A. average variable costs B. barriers to entry C. marginal costs D. prices
D. prices
A firm positions itself in the best profit-maximising (or loss minimising) level of production if that amount of output reflects the point at which the last unit's marginal revenue is equal to its marginal cost because: A. each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs. B. total revenue is greatest at amounts prior to the MR=MC amount. C. each unit of output after the MR=MC amount will earn less revenue that its costs. D. total revenue is greatest by producing after the quantity determined by the MR=MC rule.
Each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs Each unit of output after the MR=MC amount will earn less revenue than its costs
Entry is completely blocked to competitors in case of pure ________.
Monopoly
The highest barriers to entry can be found with pure ______. The lowest barriers to entry can be found with pure ______.
monopoly; competition
In the long run, only ______ for a pure competitor are possible , wherareas a monopoly earns _______.
normal profits; economic profits
A ______ is the exclusive right of an inventor to use, or allow another to use, her or his invention.
patent
The pharmaceutical industry is an example of an industry that has achieved a self-sustaining monopoly power through ____ on drugs.
patents
An unregulated pure monopolist will maximize profits by producing that output at which Multiple Choice A. MR = MC. B. P = MC. C. P = ATC. D. MC = AC.
A. MR = MC. Correct
Barriers to entry Multiple Choice A. are typically the result of wrongdoing on the part of a firm. B. can result from government regulation. C. usually result in pure competition. D. exist in economic theory but not in the real world.
B. can result from government regulation. Correct
Dentsply, a dominant American maker of false teeth, unlawfully prevented independent distributors of false teeth from carrying competing brands. This action is an example of ____________. A. small business thinking B. the power of private ownership C. a created entry barrier D. natural monopoly behavior
C. a created entry barrier
Under which of the following situations would a monopolist increase profits by lowering price (and increasing output)? Multiple Choice A. if it discovered that it was producing where its MC curve intersects its demand curve. B. if it discovered that it was producing where MC = MR. C. if it discovered that it was producing where MC < MR. D. under none of these circumstances because a monopolist would never lower price.
C. if it discovered that it was producing where MC < MR Correct
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run? A. There are no new entrants to decrease supply, drive
D. There are no new entrants to increase supply, drive down price, and eliminate profit.
A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing Multiple Choice A. a loss that could be reduced by producing more output. B. an economic profit that could be increased by producing less output. C. a loss that could be reduced by producing less output. D. an economic profit that could be increased by producing more output.
D. an economic profit that could be increased by producing more output. Correct
Natural gas and electricity are both examples of which type of monopoly? A. differentiated B. pure C. competitive D. standardised
D. standardised
As an example of ______, the Federal Commission licenses only so many radio and television station in each geographic area.
barriers to entry
Simultaneous _________ is a product's ability to satisfy a large number of consumers at the same time.
consumption
Monopoly yields neither _______ efficiency nor allocative efficiency.
productive
Which of the following describes what "no close substitutes" means as it relates to consumers and a pure monopoly?
A consumer must either buy the monopolised product or do without it.
If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a Multiple Choice A. monopoly firm in St Louis. B. monopoly firm in Major League Baseball. C. purely competitive firm in St Louis. D. purely competitive firm in Major League Baseball.
A. monopoly firm in St Louis. Correct
Refer to the graph, which shows a total revenue curve for a monopolist. If total revenue falls as output expands, marginal revenue is Multiple Choice A. negative. B. zero. C. positive. D. greater than demand at that output level.
A. negative. Correct
How common are examples of less pure forms of monopoly? A. very common B. nonexistent C. rare D. not very common
A. very common
A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sales quantity increases by Multiple Choice A. 4 units per day. B. 2 units per day. Correct C. 3 units per day. D. 1 unit per day.
B. 2 units per day. Correct
Natural monopolies result from Multiple Choice A. pricing strategies. B. patents and copyrights. C. control over an essential natural resource. D. extensive economies of scale in production.
D. extensive economies of scale in production. Correct
Government licensing is a legal ______ to entry.
barrier
For a pure monopolist, total revenue _______ at a diminishing rate.
increases
The profit-maximising monopolist will always want to avoid the ________ segment of its demand curve.
inelastic
Which of the following are reasons for a monopoly's loss of economic profit? A. Change in tastes reducing demand. B. Upward-shifting cost curves caused by escalating prices. C. Decreases in fixed costs D. Cost curves shifting downward due to rising prices.
A. Change in tastes reducing demand. B. Upward-shifting cost curves caused by escalating prices.
What are the two legal barriers to entry created by the government? A. licenses B. Marginal cost C. Unions D. Patents
A. licenses D. Patents
Monopolists may create an entry barrier when confronted with a new entrant to the industry by _______. (screenshot in ipad) A. B. C. D.
A. reducing product price B. D. incurring advertising costs
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close _______. A. substitutes B. price takers C. complements D. complements E. patents
A. substitutes
What aspect of the market defines the crucial difference between a pure monopolist and a purely competitive seller? A. the demand curve B. the supply cure C. price D. output
A. the demand curve
Which of the following describes why marginal revenue is less than price in an imperfect market? A. Because marginal revenue is greater than marginal cost which is less than price. B. Because the lower price of the extra unit of output only applies to all prior units of output. C. Because the lower price of the extra unit of output only applies to subsequent units of output. D. Because total revenue is greater than price.
B. Because the lower price of the extra unit of output only applies to all prior units of output.
What is the term for factors that prohibit firms from entering an industry? A. lack of entry B. barriers to entry C. reduction of entry D. barriers to business
B. barriers to entry
What is the shape of the product demand curve for a pure monopolist? A. horizontal B. downward sloping C. upward sloping D. vertical
B. downward sloping
One major barrier to entry under pure monopoly arises from Multiple Choice A. diseconomies of scale. B. ownership of essential resources. C. the availability of close substitutes for a product. D. the price taking ability of the firm.
B. ownership of essential resources. Correct
_________ of essential property is a barrier to entry into an industry. A. Mergers B. Sale C. Control D. Deterioration
C. Control
"Single seller" refers to: A. a group of producers selling a variety of goods and services. B. a price-taker producer of a specific good or service. C. a sole producer of a specific good or service. D. a sole proprietor.
C. a sole producer of a specific good or service.
At the profit-maximising (loss-minimising) output for a monopoly, if average revenue is less than average total costs, then the monopoly is experiencing: A. an economic profit B. a normal profit C. an economic loss
C. an economic loss
Refer to the diagram. At the profit-maximizing level of output, the firm will realise Multiple Choice A. an economic profit of ACGJ. B. a loss of JH per unit. C. an economic profit of ABHJ. D. a loss of GH per unit.
C. an economic profit of ABHJ. Correct
Monopolists that have _______ products engage mainly in advertising their product's attributes. A. homogeneous B. standardised C. differentiated
C. differentiated
The firm and _____ are synonymous in pure monopoly. A. supply B. productive efficiency C. the industry D. allocative efficiency
C. the industry
When a firm produces a specific output level at a higher level at a higher cost than the necessary cost for that level of output, it is called: A. economies of scale B. rent-seeking expenditures C. x-inefficiency D. simultaneous consumption
C. x-inefficiency
With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a _______ price. A. variable B. higher C. fixed D. lower
D. lower
What is the term used to describe a single firm with the bulk of sales in a specific market? A. regulated monopoly B. pure monopoly C. large corporation D, near-monopoly
D. near-monopoly
A monopolist must obtain a minimum of a(n) ______ profit in the long run, or it will go out of business.
normal
What is the difference in demand between a purely competitive seller and a monopolist? A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not. B. Demand for the monopolist is perfectly elastic, and demand for the purely competitive seller is not.
A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not.
Which of the following are assumptions made in the model of pure monopoly? A. The firm is a single-price monopolist; it charges the same price for all units of output. B. No unit of government regulates the firm. C. The government regulates the firm. D. The firm is a multi-price monopolist; it charges different prices for all units of output. E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
A. The firm is a single-price monopolist; it charges the same price for all units of output. B. No unit of government regulates the firm. E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which ______. A. MR > MC B. MR = MC C. P = ATC D. P = MC E. P = MR = MC
B. MR = MC
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially levies a "private tax" on consumers. The owners of the monopoly benefit from these transactions at the expense of the consumer. This is an example of a monopoly contributing to: A. spillovers B. income equality C. income inequality D. externalities
C. income inequality
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine: A. the loss-maximising output B. the profit-minimising output C. the profit-maximising output D. the loss-minimising output E. the minimum efficient scale
C. the profit-maximising output D. the loss-minimising output
Economic, technological, legal, pricing and advertising strategies are all types of ______. A. production strategies B. non-price competition C. economies of scale D. barriers to entry
D. barriers to entry
What leads to most patentable inventions and products? A. new technology B. marketing C. financial expertise D. research and development
D. research and development
Government creates ________ barriers to entry.
legal
_______ utilities are government owned or regulated.
public
Pure monopolists may have products that are ______ or differentiated.
standardised
A pure monopolist has no ___________ curve
supply
Which of the following are examples of a geographic monopolies? A. A small town with one railroad B. A small town with one restaurant C. A small town served by one airline D. A small town with more than one restaurant
A. A small town with one railroad B. A small town with one restaurant C. A small town served by one airline
Why do costs differ between a purely competitive firm and a pure monopoly? A. Allowing technological advances B. Access to different natural resources C. A factor called "X-inefficiency" D. Economies of scale E. Monopoly-preserving expenditures F. Different skill levels of labor
A. Allowing technological advances C. A factor called "X-inefficiency" D. Economies of scale E. Monopoly-preserving expenditures
Which of the following is a good example of network effects? A. People with similar software can share pictures. B. Employees mingle in the break room at work. C. Microsoft delivers a program by disk to millions of consumers. D. The Internet allows people to send and receive emails.
A. People with similar software can share pictures. D. The Internet allows people to send and receive emails.
Imperfect competitors can influence product price by changing what? A. Quantity supplied B. labor inputs C. marketing D. research and development
A. Quantity supplied
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the _____ _______ cost curve.
Average Total
Total Output Price MR ATC MC 1 $100 $100 $100.00 $30 2 $90 $80 $63.00 $26 3 $80 $60 $52.67 $32 4 $70 $40 $49.50 $40 5 $60 $20 $49.60 $50 6 $50 $0 $50.00 $52 7 $40 -20 $52.29 $66 8 $30 -40 $55.75 $80 9 $20 -60 $60.67 $100 10 $10 -80 $67.60 $130 Refer to the data. At its profit-maximizing output, this firm's total revenue will be Multiple Choice A. $180. B. $198. C. $300. D. $280.
D. $280. Correct
Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by Multiple Choice A. decreasing price and leaving output unchanged. B. increasing price and decreasing output. C. decreasing output and leaving prices unchanged. D. decreasing price and increasing output.
D. decreasing price and increasing output. Correct
A firm's manager is given the following information: To sell 4 units of output, a price of $132 must be charged; this level of output reflects marginal revenue of $102 and marginal costs of $60. If the firm wants to sell 5 units of output, a price of $122 must be charged; this reflects marginal revenue of $82 and marginal costs of $70. To sell 6 units of output, a price of $112 must be charged; at this level of output, marginal revenue will be $62 and marginal costs $80. What should the manager do? A. Produce 6 units of output and charge $112. B. Produce an amount less than 4 units. C. Produce an amount greater than 6 units. D. Produce 4 units of output and charge $132. E. Produce 5 units of output and charge $122.
E. Produce 5 units of output and charge $122
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are still ______________.
declining
Firms with downward-sloping product _____ curves are called price ______.
demand; makers
Total _____ profit is found by multiplying per-unit profit by the profit-maximising output.
economic
A firm's long-run average total costs decline over a wide range of output due to __________ of scale
economies
In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to Multiple Choice A. marginal revenue. B. average cost. C. average variable cost. D. average total cost.
A. marginal revenue. Correct
Economies of scale refer to __________ average total costs with added firm size. A. constant B. marginal C. declining D. rising
C. declining
A price _____ will use its power over product quantity and price whenever it is advantageous to do so.
maker
It is difficult for a major league sports team to start up, because existing professional teams have contracts with the best players and long-term leases on stadiums. Which of the following does this illustrate? A. low barriers to entry B. obstacle to potential rivals C. ownership of a key resource D. a perfectly competitive market E. blocked entry
B. obstacle to potential rivals
A pure monopolist Multiple Choice A. always realizes an economic profit. B. will realize an economic profit if ATC exceeds MR at C. the profit-maximizing/loss-minimizing level of output. D. will realize an economic loss if MC intersects the down-sloping portion of MR. E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. Correct
When faced with continuing losses , what do the owners of a monopoly do?
They move their resources to alternative industries in the long run.
The _______ regulates some natural monopolies to guard against excessively high prices to consumers.
government
In a pure monopoly, the demand curve for the firm is also the demand curve for the ___________.
industry
At the profit-maximizing level of output for a monopolist, Multiple Choice A. price is greater than marginal cost. B. total revenue is greater than total cost. C. average total cost equals marginal cost. D. price is greater than average revenue.
A. price is greater than marginal cost. Correct
Efficiency loss is also known as _____ loss. A. wage B. utility C. deadweight
C. deadweight
The government broke up Standard Oil in 1911 due to its breach of _____ laws.
antitrust
A monopolist does not have a supply curve because: A. B. C. D.
b) it does not equate price with marginal cost c) there is no single, unique price associated with each level of output.
The change in total revenue is called ________ revenue.
marginal
First Data Corporation accounts for 80% of the market for money order transfers. This is an example of a __________ -monopoly
near-monopoly
At a pure monopolist's profit-maximising output, its _____ exceeds marginal cost, resulting in allocative efficiency.
price
For the pure monopolist, there is no relationship between __________ and quantity supplied and therefore no supply curve.
price
In pure competition, _____ efficiency is achieved because free entry and exit forces firms to operate where average total cost is at minimum.
productive
When _______ efficiency and allocative efficiency are not achieved in a market, it is known as efficiency loss.
productive
_______ - _________ expenditures add nothing to the firm's output, but increases the firm's costs.
rent-seeking
For a monopolist, marginal ______________ is lower than _________ (average revenue) for every unit of output except the first.
revenue; price
Monopolists that have _________ products engage mainly in public relations advertising, while those with _______ products advertised their products' attributes.
standardised; differentiated
What allows a natural monopoly to produce efficiency? A. Extensive economies of scale. B. Diseconomies of scale. C. A declining long-run average total cost curve. D. An increasing long-run average total cost curve.
A. Extensive economies of scale. C. A declining long-run average total cost curve.
Which of the following is a reason for a monopolist to block entry in a market? A. To restrict potential competitors from entering the market. B. To ensure availability of multiple substitutes of its products. C. To achieve efficiency in the production D. To attain socially optimum output.
A. To restrict potential competitors from entering the market.
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then the firm: A. may be broken into two or more competing firms. B. may be forced into filing for bankruptcy. C. may be required to testify before Congress. D. may be expressly prohibited from engaging in business activities.
A. may be broken into two or more competing firms. D. may be expressly prohibited from engaging in business activities.
Declines in the long-run average total costs occur due to which of the following: A. network effects B. simultaneous consumption C. spreading of product development costs D. learning by doing E. greater use of specialised inputs F. higher resource costs
A. network effects B. simultaneous consumption C. spreading of product development costs D. learning by doing E. greater use of specialised input
Imperfect competitors include which if the following? A. oligopolists B. monopolistic competitors C. pure monopolists D. pure competitors
A. oligopolists B. monopolistic competitors C. pure monopolists
The spread of difference that results when product price exceeds average total cost determines: A. per-unit economic profit B. total revenue C. per-unit total revenue D. per-unit normal profit
A. per-unit economic profit
Which of the following can cause x-inefficiency? A. poorly motivated work force B. highly effective supervision C. hiring the most qualified workers D. an interest in lowering costs E. desire for easier work life F. hiring incompetent relatives.
A. poorly motivated work force E. desire for easier work life F. hiring incompetent relatives.
Drawing a vertical line from the profit-maximising output on the horizontal axis to the demand curve represents the _______. A. price B. output C. total costs D. marginal revenue
A. price
Which of the following are reasons that a monopolist is considered a price maker? A. the monopolist exerts control over the price. B. the monopolist controls demand. C. the monopolist controls the total quantity supplied. D. the monopolist controls marketing.
A. the monopolist exerts control over the price. C. the monopolist controls the total quantity supplied.
Refer to the diagrams. With the industry structures represented by diagram Multiple Choice A. (A), price exceeds marginal cost, resulting in allocative inefficiency. B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist. C. (B), equilibrium price and quantity will be e and h, respectively. D. (B), price equals marginal cost, resulting in allocative efficiency.
B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist. Correct
Which of the following are reasons monopoly is not widespread in the United States? A. The government has successfully ended all monopolies. B. Barriers to entry are seldom completely successful. C. They are not profitable. D. Patents eventually expire.
B. Barriers to entry are seldom completely successful. D. Patents eventually expire.
Which of the following steps are necessary to determine the profit-maximising or loss-minimising level of output, profit-maximising or loss minimising price, and economic profit or loss in pure monopoly? A. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR>MC. B. Employ the profit-maximising or loss minimising rule of MR=MC. C. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR=MC. D. Employ the profit-maximising or loss minimising rule of MR>MC. E. Employ the profit-maximising or loss minimising rule of MC>MR.
B. Employ the profit-maximising or loss minimising rule of MR=MC. C. Identify the profit- maximising or loss minimising price and output by finding the price/output combination at MR=MC
Which of the following is characteristic of a pure monopolist's demand curve? Multiple Choice A. Its elasticity coefficient is 1 at all levels of output. B. It is the same as the market demand curve. C. Average revenue is less than price. D. Price and marginal revenue are equal at all levels of output.
B. It is the same as the market demand curve. Correct
Which of the following can be a cause of extensive economies of scale? A. Labor B. Modern technology C. New production inputs D. Creative destruction
B. Modern technology
Which of the following entry barriers created by monopolists? A. Impositions of tariffs and quotas B. Price reductions C. Collaboration with government D. Increased advertising
B. Price reductions D. Increased advertising
For a pure monopolist, the relationship between total revenue and marginal revenue is such that Multiple Choice A. total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing. B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. C. marginal revenue is positive so long as total revenue is positive. D. marginal revenue is positive when total revenue is at a maximum.
B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. Correct
Refer to the diagrams. Firm A is a Multiple Choice A. pure monopoly, and Firm B is a pure competitor. B. pure competitor, and Firm B is a pure monopoly. C. pure monopoly, as is Firm B. D. pure competitor, as is Firm B.
B. pure competitor, and Firm B is a pure monopoly. Correct
Considering the industry structures of pure (perfect) competition and pure monopoly, a firm will experience a more inelastic demand curve in which form of industry? A. pure (perfect) competition B. pure monopoly
B. pure monopoly
Which of the following are the main characteristics of a pure monopoly? A. Ease of entry for other firms. B. Availability of multiple substitutes of its products C. Blocked entry for other firms D. Absolute control over the price E. Presence of at least two sellers F. Presence of a single seller G. Unavailability of close substitutes of its products
C. Blocked entry for other firms D. Absolute control over the price F. Presence of a single seller G. Unavailability of close substitutes of its products
Which of the following reasons explains why a professional sports team can be considered a monopoly? A. They draw a crowd according to preference that is usually dictated by geographic proximity. B. They are one of many suppliers of specific services in a large geographic area. C. They are the sole suppliers of specific services in a large geographic area.
C. They are the sole suppliers of specific services in a large geographic area.
The profit-maximising monopolist avoids the inelastic segment of its demand curve because: A. it would mean lowering price and decreasing output, which leads to higher total revenue. B. it would mean raising price and increasing output, which leads to less total revenue. C. it would mean lowering price and increasing output, which leads to less total revenue. D. it would mean charging a regulated price and increasing output, which leads to less total revenue.
C. it would mean lowering price and increasing output, which leads to less total revenue.
There is some evidence to suggest that X-inefficiency is Multiple Choice A. more likely to occur in competitive firms than in monopolistic firms. B. absent whenever two or more producers are competing with one another. C. more likely to occur in monopolistic firms than in competitive firms. D. not encountered in either competitive or monopolistic firms.
C. more likely to occur in monopolistic firms than in competitive firms. Correct
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's Multiple Choice A. price, output, and average total cost would all be higher. B. price, output, and average total cost would all be lower. C. price and average total cost would be higher, but output would be lower. D. price and output would be lower, but average total cost would be higher.
C. price and average total cost would be higher, but output would be lower. Correct
Identify the correct statement: A. A monopolist is a price taker in an industry B. A monopolist cannot change its product price by changing the quantity supplied of the product. C. A monopolist produces an optimal combination of goods in the market. D. A monopolist can change its product price by changing the quantity supplied of the product.
D. A monopolist can change its product price by changing the quantity supplied of the product.
Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct? Multiple Choice A. The price elasticity of demand is greater at W than at V. B. The demand curve has unit price elasticity at W. C. The price elasticity of demand is less at U than at V. D. The area 0QVS is greater than the area 0RWT.
D. The area 0QVS is greater than the area 0RWT. Correct
Marginal revenue (MR) for the monopolist compared to that of a pure competitor: A. is constant and equal to product price. B. fluctuates and is higher than product price. C. is constant and higher than product price. D. declines and is lower than product price.
D. declines and is lower than product price.
Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC3, then the firm is Multiple Choice A. producing the profit-maximizing output but is failing to minimise production costs. B. incurring X-inefficiency but is realizing all existing economies of scale. C. incurring X-inefficiency and is failing to realize all existing economies of scale. D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale. Correct
Marginal costs of a producer may be very small due to its product's ability to satisfy a large number of consumers at the same time. This characteristic of a product is called Multiple Choice A. rent-seeking. B. consumer sovereignty. C. economies of scale. D. simultaneous consumption.
D. simultaneous consumption. Correct
Patents provide the inventor with a monopoly position for what length of time? A. one year B. for the life of the inventor C. indefinitely D. twenty years
D. twenty years
Which of the following is more likely for a pure monopolist than for a pure competitor? A. economic loss B. lower costs C. accounting profit D. normal profit E. economic profit
E. economic profit
When the demand for a good price is elastic, an increase in its price will __________ total revenue.
decrease
The monopolist wants a price-quantity combination to fall in the ______ section of its demand curve, where a lower price means _______ total revenue.
elastic; greater
