Confronted with the Same Unit Cost Data a Monopolistic Producer Will Charge by zrn56685

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									1. (0.5 Points)
Pure monopoly means:
a.       any market in which the demand curve to the firm is downsloping.
b.       a standardized product being produced by many firms.
*c.      a single firm producing a product for which there are no close substitutes.
d.       a large number of firms producing a differentiated product.

2. (0.5 Points)
Which of the following is correct?
a.       Both purely competitive and monopolistic firms are "price takers."
b.       Both purely competitive and monopolistic firms are "price makers."
*c.      A purely competitive firm is a "price taker," while a monopolist is a "price maker."
d.       A purely competitive firm is a "price maker," while a monopolist is a "price taker."

3. (0.5 Points)
Barriers to entering an industry:
a.       are justified because they result in allocative efficiency.
b.       are justified because they result in productive efficiency.
*c.      are the basis for monopoly.
d.       apply only to purely monopolistic industries.

4. (0.5 Points)   Refer to the diagram in the handout. If price is reduced from P1 to P2, total revenue will:
a.       increase by A minus C.
*b.      increase by C minus A.
c.       decrease by A minus C.
d.       decrease by C minus A.

5. (0.5 Points)
Refer to the diagram in the handout. The quantity difference between areas A and C for the indicated price
reduction measures:
a.       marginal cost.
*b.      marginal revenue.
c.       monopoly price.
d.       a welfare or efficiency loss.

6. (0.5 Points)
Refer to the diagram in the handout. The diagram implies that whenever a firm's demand curve is
downsloping:
a.       price discrimination is not possible.
b.       monopolists will be more efficient than competitors.
c.       the demand and marginal revenue curves will coincide.
*d.      marginal revenue is less than price.

7. (0.5 Points)
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 twenty-first unit of output is:
a.       $9.75.
b.       $204.75.
*c.      $4.75.
d.       $.25.
8. (0.5 Points)
The MR = MC rule:
a.       applies only to pure competition.
b.       applies only to pure monopoly.
c.       does not apply to pure monopoly because price exceeds marginal revenue.
*d.      applies both to pure monopoly and pure competition.

9. (0.5 Points)
Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The
monopolist will produce and sell the sixth unit if its marginal cost is:
a.       $4 or less.
b.       $3.90 or less.
c.       $3.50 or less.
*d.      $3.40 or less.

10. (0.5 Points)            Refer to the data in the handout for a nondiscriminating monopolist. This firm
will maximize its profit by producing:
a.       3 units.
*b.      4 units.
c.       5 units.
d.       6 units.

11. (0.5 Points)
Refer to the data in the handout for a nondiscriminating monopolist. At its profit-maximizing output, this
firm will be operating in the:
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.

12. (0.5 Points)
Refer to the data in the handout for a nondiscriminating monopolist. At its profit-maximizing output, this
firm's price will exceed its marginal cost by ____ and its average total cost by ____.
a.        $20; $27.33
b.        $10; $10.40
c.        $24; $27.33
*d.       $30; $20.50

13. (0.5 Points)
Refer to the data in the handout for a nondiscriminating monopolist. At its profit-maximizing output, this
firm's total costs will be:
a.        $300.
b.        $248.
*c.       $198.
d.        $126.

14. (0.5 Points)
Refer to the data in the handout for a nondiscriminating monopolist.. At its profit-maximizing output, this
firm's total revenue will be:
a.        $300.
b.        $198.
c.        $180.
*d.       $280.
15. (0.5 Points)
Refer to the data in the handout for a nondiscriminating monopolist. At its profit-maximizing output, this
firm's total profit will be:
*a.       $82.
b.        zero.
c.        $54.
d.        $27.

16. (0.5 Points)
Refer to the diagram in the handout. To maximize profits or minimize losses this firm should produce:
a.       E units and charge price C.
*b.      E units and charge price A.
c.       M units and charge price N.
d.       L units and charge price LK.

17. (0.5 Points)
Refer to the diagram in the handout. At the profit-maximizing level of output, total revenue will be:
a.       NM times 0M.
*b.      0AJE.
c.       0EGC.
d.       0EHB.

18. (0.5 Points)
Refer to the diagram in the handout. At the profit-maximizing level of output, total cost will be:
a.       NM times 0M.
b.       0AJE.
c.       0CGC.
*d.      0BHE.

19. (0.5 Points)
Refer to the diagram in the handout. At the profit-maximizing level of output, the firm will realize:
*a.      an economic profit of ABHJ.
b.       an economic profit of ACGJ.
c.       a loss of GH per unit.
d.       a loss of JH per unit.

20. (0.5 Points)
Confronted with the same unit cost data, a monopolistic producer will charge:
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.

								
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