Download The monopolist`s firm demand curve is:

The monopolist’s firm demand curve is:
a.
identical to the industry demand curve.
b.
identical to the marginal revenue curve.
c.
below the marginal revenue curve.
d.
a horizontal line at the market price.
e.
a U-shaped curve.
2. For a monopolist:
a.
price equals average total cost.
b.
price is above marginal revenue(except the 1st unit).
c.
marginal revenue equals zero.
d.
marginal cost equals zero.
e.
average total cost equals marginal cost.
3. At the point where the marginal revenue equals zero for a monopolist facing a straight-line demand curve,
total revenue is:
a.
greater than 1.
b.
maximum.
c.
less than 1.
d.
equal to zero.
4. At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand
curve is:
a.
perfectly elastic.
b.
elastic, but not perfectly elastic.
c.
unit elastic.
d.
inelastic.
5. Both a perfectly competitive firm and a monopolist:
a.
always earn an economic profit.
b.
maximize profit by setting marginal cost equal to marginal revenue.
c.
maximize profit by setting marginal cost equal to average total cost.
d.
are price takers.
6. Which of the following is true for a monopolist?
a.
The firm has a perfectly elastic demand curve.
b.
The firm has a perfectly inelastic demand curve.
c.
The demand curve is above the marginal revenue curve.
d.
The marginal revenue curve is above the demand curve.
e.
All of the above.
7. If marginal costs increase, a monopolist will:
a.
decrease price and increase output.
b.
decrease both price and output.
c.
increase price and decrease output.
d.
increase both price and output.
e.
keep both price and output at the same level.
8. A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it
must expect to receive a price:
a.
equal to $250.
b.
greater than $250.
c.
less than $250.
d.
equal to $340.
e.
the price is impossible to calculate with the information given.
9. A monopolist will operate in the short run if which of the following is above average variable cost?
a.
Marginal cost.
b.
Marginal revenue.
c.
Price.
d.
All of the above.
10. Which of the following is a necessary condition for price discrimination?
a.
The seller must be able to divide the markets according to the different price elasticities of
demand.
b.
It must be difficult for one buyer to resell to another buyer.
c.
Both a and b.
d.
Neither a nor b.
11. A price-discriminating monopoly charges the lowest price to the group that:
a.
has the most elastic demand.
b.
purchases the largest quantity.
c.
engages in the most arbitrage.
d.
is
least
responsive
to
price
changes.
1.
12. In contrast to a perfectly competitive firm, a monopolist operates in the long run at a quantity of output at
which:
a.
P=MC.
b.
MR=MC.
c.
P=ATC.
d.
P>MR.
13. Which barrier to entry results in the creation of a natural monopoly?
a.
Legal barriers like government franchises.
b.
Economies of scale.
c.
Ownership of a vital resource.
d.
Patents and copyrights.
Multiple Choice Answers
1. A
2. B
3. B
4. B
5. B
6. C
7. C
8. C
9. C
10. C
11. A
12. D
13. B
14. Ron's Hamburger Joint is the only restaurant in town. The above figure represents Ron's cost, the market
demand, and marginal revenue curves. Ron operates as a single-price monopoly.
a.
How many hamburgers does Ron produce?
b.
What price does Ron charge for a hamburger?
c.
What is Ron's total revenue?
d.
What is his total cost?
e.
What is Ron's economic profit?
15. The above figure represents a perfectly competitive industry that is taken over by a single firm and operated as a
monopoly.
a.
What was the competitive price and quantity?
b.
What is the monopoly price and quantity?
c.
What area represents consumer surplus under perfect competition?
d.
What area represents consumer surplus under monopoly?
e.
What area represents the deadweight loss of monopoly?