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Commerce and BusinessbackBusinessbackPrinciples of EconomicsbackEconomicsbackPractice Set 2495back

Monopoly,cartels,and Price Discrimination

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Question 1
Free
Multiple Choice

One similarity between a monopolist and a perfectly competitive firm is that both

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A

are large relative to their markets.

B

may have similarly shaped cost curves.

C

choose the price at which to sell their product.

D

can make economic profits in the long run.

E

need to know the shape of the market demand curve.

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Question 2
Free
Multiple Choice

The marginal revenue curve facing a single-price monopolist

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A

is the same as the average revenue curve facing the monopolist.

B

is the same as the demand curve facing the monopolist.

C

shows the change in the profit for the firm.

D

lies below the average revenue curve.

E

at first falls to a minimum and then rises as output is increased.

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Question 3
Free
Multiple Choice

The demand curve facing a single-price monopolist slopes downward because

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A

its average revenue equals its marginal revenue.

B

its demand curve is the market demand curve,which is generally downward sloping.

C

demand is perfectly inelastic.

D

it sells typically to only one consumer.

E

its supply curve is upward sloping.

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Question 4
Free
Multiple Choice

A monopoly is distinguished from a firm operating under any other market structure in the following way: the monopoly

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A

charges a price higher than its average revenue.

B

can choose its output level.

C

can choose its level of cost.

D

does not produce at a profit-maximizing level of output.

E

faces a demand curve which is identical to the market demand curve.

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Question 5
Free
Multiple Choice

A monopolistic firm faces a downward-sloping demand curve because

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A

there are a large number of firms in the industry,all selling the same product.

B

the demand for its product is always inelastic.

C

the market price is affected by the amount sold by a monopolistic firm.

D

marginal revenue is negative throughout the feasible range of output.

E

the monopolistic firm can exploit economies of scale.

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Question 6
Multiple Choice

The average revenue curve for a single-price monopolist

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A
is a horizontal line,equal to the price of its product.
B
lies below its demand curve.
C
coincides with its demand curve.
D
slopes upward to the right.
E
does not exist.
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Question 7
Multiple Choice

For a single-price monopolist,marginal revenue falls faster than price (as output rises)because

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A
in order to sell additional units,the price must be lowered on all units.
B
profits are maximized when marginal cost equals marginal revenue.
C
the firm has no supply curve.
D
the cost of producing extra units of output increases as production is increased.
E
none of the above - marginal revenue does not fall faster than price.
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Question 8
Multiple Choice

Marginal revenue is less than price for a single-price monopolist because the

Choose correct answer/s
A
firm's output decisions do not affect the selling price.
B
firm must lower its price for all units if it wants to sell more of the product.
C
monopolist charges a price higher than the unit production cost.
D
monopolist must worry about how its price setting will lead to entry by other firms.
E
monopolist has achieved economies of scale.
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Question 9
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1.For a single-price monopolist,the marginal revenue associated with increasing sales from 5 to 6 units is

Choose correct answer/s
A
-4.
B
-2.
C
0.
D
2.
E
4.
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Question 10
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1.For a single-price monopolist,the marginal revenue associated with increasing sales from 6 to 7 units is

Choose correct answer/s
A
-4.
B
-2.
C
0.
D
2.
E
4.
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Question 11
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1.For a single-price monopolist producing and selling 9 units,the marginal revenue earned by selling the 9th unit is

Choose correct answer/s
A
-4.
B
-2.
C
0.
D
2.
E
4.
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Question 12
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1,which displays the demand schedule for a single-price monopolist.At what level of output is marginal revenue equal to 0?

Choose correct answer/s
A
between 6 and 7 units
B
between 7 and 8 units
C
between 8 and 9 units
D
between 9 and 10 units
E
between 10 and 11 units
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Question 13
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1,which displays the demand schedule for a single-price monopolist.At what level of output is total revenue maximized for this firm?

Choose correct answer/s
A
between 6 and 7 units
B
between 7 and 8 units
C
between 8 and 9 units
D
between 9 and 10 units
E
between 10 and 11 units
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Question 14
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1,which displays the demand schedule for a single-price monopolist.Which of the following statements about price elasticity of demand is true?

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A
demand is unit-elastic at a price of $4
B
demand is elastic at a price of $8
C
demand is elastic at a price of $5
D
demand is inelastic at a price of $8
E
demand is elastic at a price of $3
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Question 15
Multiple Choice

image TABLE 10-1
-Refer to Table 10-1,which displays the demand schedule for a single-price monopolist.At what level of demand is the price elasticity of demand equal to 1?

Choose correct answer/s
A
between 6 and 7 units
B
between 7 and 8 units
C
between 8 and 9 units
D
between 9 and 10 units
E
between 10 and 11 units
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Question 16
Multiple Choice

The figure below shows the demand schedule and demand curve for a product produced by a single-price monopolist. image FIGURE 10-1
-Refer to Figure 10-1.Suppose this single-price monopolist is initially selling 5 units at $8 each and then reduces the price of the product to $6.By making this change,the firm is giving up revenue of ________ on the original number of units sold and gaining revenue of ________ on the additional units sold.Its marginal revenue is therefore ________ .(All figures are dollars.)

Choose correct answer/s
A
38; 40; 2
B
8; 6; 2
C
10; 12; 2
D
14; 14; 0
E
5; 7; -2
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Question 17
Multiple Choice

The figure below shows the demand schedule and demand curve for a product produced by a single-price monopolist. image FIGURE 10-1
-Refer to Figure 10-1.Suppose this single-price monopolist is initially selling 9 units at $4 each and then reduces the price of the product to $3.By making this change,the firm is giving up revenue of ________ on the original number of units sold and gaining revenue of ________ on the additional units sold.Its marginal revenue is therefore ________ .(All figures are dollars)

Choose correct answer/s
A
40; 27; -13
B
30; 36; 6
C
34; 28; -6
D
9; 3; -6
E
3; 9; 6
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Question 18
Multiple Choice

The figure below shows the demand schedule and demand curve for a product produced by a single-price monopolist. image FIGURE 10-1
-Refer to Figure 10-1.What is the level of output at which marginal revenue first becomes negative?

Choose correct answer/s
A
5th unit
B
6th unit
C
7th unit
D
8th unit
E
9th unit
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Question 19
Multiple Choice

If a single-price monopolist sets price where the price elasticity of demand exactly equals 1,its

Choose correct answer/s
A
total profits are at a maximum.
B
marginal revenue is always positive.
C
total revenue is rising,although marginal revenue is falling.
D
total revenue is falling.
E
total revenue is at its maximum.
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Question 20
Multiple Choice

Consider a profit-maximizing single-price monopolist that faces a linear demand curve.The firm sets price where the price elasticity of demand is

Choose correct answer/s
A
zero.
B
less than one.
C
one.
D
greater than one.
E
infinite.
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