4 Written questions
3 Matching questions
- In the short run, a monopolist's economic profits:
A) are always positive because the monopolist is a price-maker.
B) are usually negative because of government price regulation.
C) are always zero because consumers prefer to buy from competitive sellers.
D) may be positive or negative depending on market demand and cost.
- A pure monopolist should never produce in the:
A) elastic segment of its demand curve because it can increase total revenue and reduce total cost by
B) inelastic segment of its demand curve because it can increase total revenue and reduce total cost by
C) inelastic segment of its demand curve because it can always increase total revenue by more than it
increases total cost by reducing price.
D) segment of its demand curve where the price elasticity coefficient is greater than one
- When total revenue is increasing:
A) marginal revenue may be either positive or negative.
B) the demand curve is relatively inelastic.
C) marginal revenue is positive.
D) marginal revenue is negative.
- a d
- b b
- c c
5 Multiple choice questions
5 True/False questions
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. → d
Price exceeds marginal revenue for the pure monopolist because the:
A) law of diminishing returns is inapplicable.
B) demand curve is downsloping.
C) monopolist produces a smaller output than would a purely competitive firm.
D) demand curve lies below the marginal revenue curve → c
Children are charged less than adults for admission to professional baseball games but are
charged the same prices as adults at the concession stands. This pricing system occurs because:
A) children have an elastic demand for game ticket but an inelastic demand for concession items.
B) children have an inelastic demand for game tickets but an elastic demand for concession items.
C) the seller can prevent children from buying game tickets for adults but cannot prevent children from
buying concession items for adults.
D) children can personally "consume" only a single game ticket, but can personally consume more than
one concession item. → d
Purely competitive firms and pure monopolists are similar in that:
A) the demand curves of both are perfectly elastic. C) both are price makers.
B) significant entry barriers are common to both. D) both maximize profit where MR = MC. → d
In the short run a pure monopolist:
A) always earns an economic profit.
B) always earns a normal profit.
C) always realizes a loss.
D) may realize an economic profit, a normal profit, or a loss. → d