Question 1

Natural monopolies result from

Accepted Answer

A)  patents and copyrights.
B)  pricing strategies.
C)  extensive economies of scale in production.
D)  control over an essential natural resource.E) A) and D)
F) C) and D)

Question 2

Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Accepted Answer

A) True 
 B)False

Question 3

One of the economic effects of monopoly is an income transfer from consumers to the firm.

Accepted Answer

A) True 
 B)False

Question 4

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Accepted Answer

A)  increase total revenue, increase total cost, and decrease profit.
B)  decrease total revenue, increase total cost, and decrease profit.
C)  increase total revenue, decrease total cost, and decrease profit.
D)  decrease total revenue, total cost, and profit.E) A) and D)
F) B) and C)

Question 5

The problem with socially optimal pricing regulation of a natural monopoly is that

Accepted Answer

A)  P 
B)  P 
C)  P 
D)  P < MR.E) A) and B)
F) A) and C)

Question 6

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Accepted Answer

A)  the marginal revenue curve and the total revenue curve will now coincide.
B)  the marginal revenue curve will now shift to a position above the demand curve.
C)  the firm will face multiple marginal revenue curves.
D)  marginal revenue will become less at each level of output than it would be without price discrimination.E) All of the above
F) B) and D)

Question 7

Which of the following statements is true of price discrimination?

Accepted Answer

A)  Successful price discrimination will provide the firm with lower total profits than if it did not discriminate.
B)  Successful price discrimination will provide the firm with more profit than if it did not discriminate.
C)  Successful price discrimination will generally result in a lower level of output than would be the case under a single-price monopoly.
D)  Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers.E) C) and D)
F) All of the above

Question 8

A market where there are many firms, but one firm dominates and has the bulk (85 percent)  of sales in the market, is called a

Accepted Answer

A)  natural monopoly.
B)  monopolistically competitive market.
C)  pure monopoly.
D)  near-monopoly.E) C) and D)
F) A) and D)

Question 9

When a pure monopolist is producing its profit-maximizing output, price will

Accepted Answer

A)  be less than MR.
B)  equal neither MC nor MR.
C)  equal MR.
D)  equal MC.E) A) and D)
F) A) and C)

Question 10

In the short-run equilibrium, a monopolist's profits

Accepted Answer

A)  may be positive, negative, or zero.
B)  are positive because of the monopolist's market power.
C)  are positive if the product's elasticity of demand is less than 1.
D)  are positive if the product's elasticity of demand is greater than 1.E) B) and D)
F) B) and C)

Question 11

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
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 for a non discriminating monopolist.At its profit-maximizing output, this firm will be operating in the

Accepted Answer

A)  perfectly elastic portion of its demand curve.
B)  perfectly inelastic portion of its demand curve.
C)  elastic portion of its demand curve.
D)  inelastic portion of its demand curve.E) A) and C)
F) B) and C)

Question 12

(Last Word) : The ability of personalized pricing by online retailers to price discriminate

Accepted Answer

A)  is enhanced by Big Data's ability to accurately determine a buyer's reservation price.
B)  is only effective at the group level.
C)  means that buyers with more elastic demand face systematically higher prices.
D)  is limited by buyers' willingness and ability to easily search out lower prices at other online sites.E) A) and D)
F) All of the above

Question 13

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
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

Accepted Answer

A)  $300.
B)  $198.
C)  $180.
D)  $280.E) All of the above
F) A) and D)

Question 14

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Accepted Answer

A) True 
 B)False

Question 15

A price-discriminating monopolist will follow a system where

Accepted Answer

A)  buyers with inelastic demand are charged higher prices than buyers with elastic demand.
B)  buyers with inelastic demand are charged lower prices than buyers with elastic demand.
C)  all buyers are charged the same price regardless of their elasticity of demand.
D)  the price of the product is held the same even if the demand changes.E) A) and D)
F) None of the above

Question 16

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

Accepted Answer

A)  decreasing price and increasing output.
B)  increasing price and decreasing output.
C)  decreasing price and leaving output unchanged.
D)  decreasing output and leaving prices unchanged.E) A) and D)
F) All of the above

Question 17

Confronted with the same unit cost data, a monopolistic producer will charge

Accepted Answer

A)  the same price and produce the same output as a competitive firm.
B)  a higher price and produce a larger output than a competitive firm.
C)  a higher price and produce a smaller output than a competitive firm.
D)  a lower price and produce a smaller output than a competitive firm.E) B) and D)
F) C) and D)

Question 18

Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
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 for a non discriminating monopolist.This firm will maximize its profit by producing

Accepted Answer

A)  3 units.
B)  4 units.
C)  5 units.
D)  6 units.E) A) and B)
F) B) and D)

Question 19

If a monopolist were to produce in the inelastic segment of its demand curve,

Accepted Answer

A)  total revenue would be at a maximum.
B)  marginal revenue would be positive.
C)  the firm would not be maximizing profits.
D)  it would necessarily incur a loss.E) B) and C)
F) A) and B)

Question 20

Which of the following conditions is not required for price discrimination?

Accepted Answer

A)  Buyers with different elasticities must be physically separate from each other.
B)  The good or service cannot be profitably resold by original buyers.
C)  The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand.
D)  The seller must possess some degree of monopoly power.E) None of the above
F) All of the above

Exam 12: Pure Monopoly

Natural monopolies result from

Correct Answer
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A price-discriminating monopolist will follow a system where

Correct Answer
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A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Correct Answer
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Which of the following statements is true of price discrimination?

Correct Answer
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In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct Answer
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Correct Answer
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The problem with socially optimal pricing regulation of a natural monopoly is that

Correct Answer
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(Last Word) : The ability of personalized pricing by online retailers to price discriminate

Correct Answer
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Confronted with the same unit cost data, a monopolistic producer will charge

Correct Answer
verified

Correct Answer
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When a pure monopolist is producing its profit-maximizing output, price will

Correct Answer
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One of the economic effects of monopoly is an income transfer from consumers to the firm.

Correct Answer
verified

Correct Answer
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A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

Correct Answer
verified

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

Correct Answer
verified

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Correct Answer
verified

If a monopolist were to produce in the inelastic segment of its demand curve,

Correct Answer
verified

Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Correct Answer
verified

Which of the following conditions is not required for price discrimination?

Correct Answer
verified

In the short-run equilibrium, a monopolist's profits

Correct Answer
verified

Exam 12: Pure Monopoly

Natural monopolies result from

Correct AnswerverifiedShow Answer

A price-discriminating monopolist will follow a system where

Correct AnswerverifiedShow Answer

A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will

Correct AnswerverifiedShow Answer

Which of the following statements is true of price discrimination?

Correct AnswerverifiedShow Answer

In a natural monopoly case, the socially optimal pricing policy rule will often result in negative economic profits for the firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The problem with socially optimal pricing regulation of a natural monopoly is that

Correct AnswerverifiedShow Answer

(Last Word) : The ability of personalized pricing by online retailers to price discriminate

Correct AnswerverifiedShow Answer

Confronted with the same unit cost data, a monopolistic producer will charge

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a pure monopolist is producing its profit-maximizing output, price will

Correct AnswerverifiedShow Answer

One of the economic effects of monopoly is an income transfer from consumers to the firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A market where there are many firms, but one firm dominates and has the bulk (85 percent) of sales in the market, is called a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a pure monopolist can price discriminate by separating buyers into two or more groups,

Correct AnswerverifiedShow Answer

If a monopolist were to produce in the inelastic segment of its demand curve,

Correct AnswerverifiedShow Answer

Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Correct AnswerverifiedShow Answer

Which of the following conditions is not required for price discrimination?

Correct AnswerverifiedShow Answer

In the short-run equilibrium, a monopolist's profits

Correct AnswerverifiedShow Answer

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