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# Chapter 9 Econ test

question
A monopolist's demand curve is:
Downward sloping
question
Refer to the diagram. If price is reduced from P1 to P2, total revenue will:
Increase by C minus A
question
Refer to the diagrams. The demand for Firm A's product is:
Perfectly elastic over all ranges of output.
question
When a monopolist is producing its profit-maximizing output, price will:
Equal neither MC nor MR
question
The MC=MR rule applies to what market structure:
Applies both to monopoly and perfect competition
question
Refer to the diagram. For firm B, the elasticity at any price less than \$4 is
Less than 1 in absolute value
question
X-efficiency refers to a situation in which a firm:
Fails to achieve the minimum average total cost attainable at each level of output
question
True or false: Extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using.
True
question
A monopolist's demand curve lies
Above its marginal revenue curve
question
Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should:
Charge a higher price
question
A monopolist should never produce in the:
Inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price
question
Refer to the diagram for a monopolist. Monopoly price will be:
C
question
Whenever a firm's demand curve is downward sloping:
Marginal revenue is less than price
question
A monopolist will never produce in what range?
Will never produce in the output range where demand is inelastic
question
If a regulatory commission wants to establish a socially optimal price for a natural monopoly, it should select a price:
At which the marginal cost curve intersects the demand curve
question
The short-run profit maximizing position of an unregulated pure monopolist is characterized by:
MR = MC
question
Suppose a monopolist is charging a price of \$12 and the associated marginal revenue is \$9. We thus know that:
Total revenue is increasing
question
The monopolist's demand curve is:
Identical to the industry demand curve
question
Suppose that a 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:
\$4.75
question
If a monopolist is producing more than the MR =MC output:
It will be in the interest of the firm, but not necessarily of society to reduce output
question
Refer to the diagrams. With the industry structure represented by the diagram:
In A there will be only a zero economic profit in the long run, while in B a positive economic profit can persist
question
If this firm is monopolistic, the profit-maximizing price and quantity will be
P3 and Q3
1 of 22
question
A monopolist's demand curve is:
Downward sloping
question
Refer to the diagram. If price is reduced from P1 to P2, total revenue will:
Increase by C minus A
question
Refer to the diagrams. The demand for Firm A's product is:
Perfectly elastic over all ranges of output.
question
When a monopolist is producing its profit-maximizing output, price will:
Equal neither MC nor MR
question
The MC=MR rule applies to what market structure:
Applies both to monopoly and perfect competition
question
Refer to the diagram. For firm B, the elasticity at any price less than \$4 is
Less than 1 in absolute value
question
X-efficiency refers to a situation in which a firm:
Fails to achieve the minimum average total cost attainable at each level of output
question
True or false: Extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using.
True
question
A monopolist's demand curve lies
Above its marginal revenue curve
question
Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should:
Charge a higher price
question
A monopolist should never produce in the:
Inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price
question
Refer to the diagram for a monopolist. Monopoly price will be:
C
question
Whenever a firm's demand curve is downward sloping:
Marginal revenue is less than price
question
A monopolist will never produce in what range?
Will never produce in the output range where demand is inelastic
question
If a regulatory commission wants to establish a socially optimal price for a natural monopoly, it should select a price:
At which the marginal cost curve intersects the demand curve
question
The short-run profit maximizing position of an unregulated pure monopolist is characterized by:
MR = MC
question
Suppose a monopolist is charging a price of \$12 and the associated marginal revenue is \$9. We thus know that:
Total revenue is increasing
question
The monopolist's demand curve is:
Identical to the industry demand curve
question
Suppose that a 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:
\$4.75
question
If a monopolist is producing more than the MR =MC output:
It will be in the interest of the firm, but not necessarily of society to reduce output
question
Refer to the diagrams. With the industry structure represented by the diagram:
In A there will be only a zero economic profit in the long run, while in B a positive economic profit can persist
question
If this firm is monopolistic, the profit-maximizing price and quantity will be
P3 and Q3

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