Quiz #10
Which of the following is correct?
A purely competitive firm is a "price taker" while a monopolist is a "price maker"
Pure monopoly refers to
A single firm producing a product for which there are no close substitutes
If a regulatory commission wants to provide a natural monopoly with fair return, it should establish a price that is equal to
Average total cost
Which of the above diagrams correctly portrays a nondiscriminating pure monopolist's demand and marginal revenue curves?
B
Pure monopolist may obtain economic profit in the long run because
Barriers to entry
Refer to the above diagram for pure monopolist. Monopoly price will be
C
Which of the above diagrams portrays demand and marginal revenue curves of a purely competitive seller?
C
Refer to the above diagram, To maximize profits of minimize losses this firm should produce
E units charging price C
Refer to the above diagram for pure monopolist. Monopoly output will be
F
An unregulated pure monopolist will maximize profits by producing that output at which
MR=MC
As its profit maximizing output, a pure non discriminating monopolist achieves
Neither productive or allocative efficiency
Economic profit in the long run is:
Possible for a pure monopoly, but not for a pure competitor
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in the long run equilibrium that the pure monopolist's -
Price would be higher, but output would be lower
Which of the following best approximates a pure monopoly
The only bank in a small town
A dilemma of regulation is that
The regulated price that achieves allocative efficiency is also likely to result in losses
Price discrimination refers to:
The selling of a given product at different prices that do not reflect cost differences
What do economies of scale, the ownership of essential raw materials, and patents have in common?
They are all barriers to entry
The MR=MC rule applies
To both pure monopoly and pure competition
If a regulatory commission wants to provide a natural monopoly it should establish a price that is equal to
Where the marginal cost intersects demand curve
Which of the following is not a barrier to entry?
X-efficiency