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Exam 12: Pure Monopoly

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Question 111

Multiple Choice

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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

E) None of the above
F) All of the above

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Question 112

Multiple Choice

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Refer to the diagrams. Firm A is a

A) pure competitor, and Firm B is a pure monopoly.
B) pure competitor, as is Firm B.
C) pure monopoly, and Firm B is a pure competitor.
D) pure monopoly, as is Firm B.

E) A) and C)
F) A) and B)

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Question 113

Multiple Choice

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Refer to the provided graph for an industry. If the industry was initially a monopoly, but the monopolist was broken up into a large number of small, purely competitive firms and production cost-curves remained unchanged, then market price and industry output would be

If profits are maximized (or losses minimized) , which of the following conditions is common to both unregulated monopoly and pure competition?

"Price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product.

Refer to the diagram for a nondiscriminating monopolist. At output Q production will be unprofitable.

Suppose that a pure monopolist can sell 9 units of output at $12 per unit and 10 units at $11.50 per unit. For the monopolist to profitably produce and sell the tenth unit of output, its marginal cost must be anywhere at or below

Barriers to entering an industry

Under which of the following conditions would a profit-maximizing monopolist necessarily raise price?

Refer to the graph, which shows a total revenue curve for a monopolist. If total revenue falls as output expands, marginal revenue is

If a nondiscriminating pure monopolist decides to sell one more unit of output, the marginal revenue associated with that unit will be

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

Pure monopolists may obtain economic profits in the long run because

Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the 21st unit of output is

In an unregulated monopoly at equilibrium, the output level is higher than the economically efficient level.

The table shows the relationship between output, total costs, and total revenue for a pure monopoly. Within which of the following ranges of output will the firm earn maximum economic profits?

In what ways do the demand schedules for a purely competitive firm and a pure monopolist differ? What significance does this have for the price-output behavior of each?

Which phrase would be most characteristic of pure monopoly?

The graphs represent the demand for use of a local golf course for which there is no significant competition. (It has a local monopoly.) P denotes the price of a round of golf, and Q is the quantity of rounds "sold" each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, this profit-maximizing golf course should

Refer to the graph, which shows a total revenue curve for a monopolist. The firm's marginal revenue curve must be