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| 1 | |
At a monopolist's current output, ATC = $10, P = $11, MC = $8 and MR = $7. This firm is realizing: |
| | A) | an economic profit that could be increased by producing more output. |
| | B) | an economic profit that could be increased by producing less output. |
| | C) | an economic loss that could be reduced by producing more output. |
| | D) | an economic loss than could be reduced by producing less output. |
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| 2 | |
Use the following diagram to answer the next question.
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Refer to the diagram. At output q2: |
| | A) | marginal revenue exceeds marginal cost by the greatest amount. |
| | B) | demand is inelastic. |
| | C) | profit is maximized. |
| | D) | marginal revenue is zero. |
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| 3 | |
In long run equilibrium, both competitive firms and a monopolistic firms that maximize profits: |
| | A) | earn zero economic profits. |
| | B) | set price equal to marginal revenue. |
| | C) | produce at minimum average total cost. |
| | D) | produce the output at which marginal revenue equals marginal cost. |
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| 4 | |
Use the following diagram to answer the next question:
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Refer to the diagram. This nondiscriminating monopolist will produce: |
| | A) | M units at price A and make a profit. |
| | B) | N units at price B and earn zero profits. |
| | C) | M units at price C and incur a loss. |
| | D) | Q units at price J and earn zero profits. |
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| 5 | |
Use the following diagram to answer the next question:
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Refer to the diagram. If this firm produces its profit-maximizing output, its potential profit is: |
| | A) | zero. |
| | B) | area AFHC. |
| | C) | area AFGB. |
| | D) | area BGHC. |
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| 6 | |
Suppose a monopolist could segment its market into two distinct submarkets and prevent resale between them. Its profits would increase if it charged a higher price to the group whose: |
| | A) | demand is more elastic. |
| | B) | demand is more inelastic. |
| | C) | demand is greater. |
| | D) | cost is lower. |
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| 7 | |
Answer the next question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist.
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Refer to the data. The marginal revenue of the fourth unit of output is: |
| | A) | $10. |
| | B) | $8. |
| | C) | $4. |
| | D) | $2. |
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| 8 | |
Use the following diagram to answer the next question.
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Refer to the diagram. A regulatory commission that wished to establish a socially optimum output level for this firm would set price at: |
| | A) | P2 and the firm would break even. |
| | B) | P3 and the firm would earn a profit. |
| | C) | P1 but the firm would incur a loss. |
| | D) | P2 but the firm would incur a loss. |
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| 9 | |
Use the following diagram of a pure monopolist to answer the next question.
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Refer to the diagram. Which of the following is a correct statement? |
| | A) | Maximum profits are obtained by selling at price $a |
| | B) | Maximum profits are obtained by producing output g |
| | C) | The firm's per-unit profits are $c – $a |
| | D) | Demand is elastic at price $c |
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| 10 | |
The allocative inefficiency of nondiscriminating monopoly arises from the fact that: |
| | A) | price exceeds marginal cost. |
| | B) | output falls short of the output at which average cost is minimized. |
| | C) | output exceeds that at which average cost is minimized. |
| | D) | price exceeds minimum average cost. |
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