Chapter 9 Econ test

question

A monopolist's demand curve is:

answer

Downward sloping

question

Refer to the diagram. If price is reduced from P1 to P2, total revenue will:

answer

Increase by C minus A

question

Refer to the diagrams. The demand for Firm A's product is:

answer

Perfectly elastic over all ranges of output.

question

When a monopolist is producing its profit-maximizing output, price will:

answer

Equal neither MC nor MR

question

The MC=MR rule applies to what market structure:

answer

Applies both to monopoly and perfect competition

question

Refer to the diagram. For firm B, the elasticity at any price less than $4 is

answer

Less than 1 in absolute value

question

X-efficiency refers to a situation in which a firm:

answer

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.

answer

True

question

A monopolist's demand curve lies

answer

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:

answer

Charge a higher price

question

A monopolist should never produce in the:

answer

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:

answer

question

Whenever a firm's demand curve is downward sloping:

answer

Marginal revenue is less than price

question

A monopolist will never produce in what range?

answer

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:

answer

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:

answer

MR = MC

question

Suppose a monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that:

answer

Total revenue is increasing

question

The monopolist's demand curve is:

answer

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:

answer

$4.75

question

If a monopolist is producing more than the MR =MC output:

answer

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:

answer

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

answer

P3 and Q3

1 of 22

question

A monopolist's demand curve is:

answer

Downward sloping

question

Refer to the diagram. If price is reduced from P1 to P2, total revenue will:

answer

Increase by C minus A

question

Refer to the diagrams. The demand for Firm A's product is:

answer

Perfectly elastic over all ranges of output.

question

When a monopolist is producing its profit-maximizing output, price will:

answer

Equal neither MC nor MR

question

The MC=MR rule applies to what market structure:

answer

Applies both to monopoly and perfect competition

question

Refer to the diagram. For firm B, the elasticity at any price less than $4 is

answer

Less than 1 in absolute value

question

X-efficiency refers to a situation in which a firm:

answer

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.

answer

True

question

A monopolist's demand curve lies

answer

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:

answer

Charge a higher price

question

A monopolist should never produce in the:

answer

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:

answer

question

Whenever a firm's demand curve is downward sloping:

answer

Marginal revenue is less than price

question

A monopolist will never produce in what range?

answer

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:

answer

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:

answer

MR = MC

question

Suppose a monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that:

answer

Total revenue is increasing

question

The monopolist's demand curve is:

answer

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:

answer

$4.75

question

If a monopolist is producing more than the MR =MC output:

answer

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:

answer

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

answer

P3 and Q3

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Chapter 9 Econ test

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