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Old 11-13-2010, 03:19 AM
sincerity sincerity is offline
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Join Date: Nov 2010
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Default Economics question...thanks?

*6.*** For a monopolist,
a.marginal revenue and price are constant as quantity increases
b.marginal revenue falls but price is constant as quantity increases
c.marginal revenue is constant but price falls as quantity increases
d.both marginal revenue and price fall as quantity increases, but price falls faster
e.both marginal revenue and price fall as quantity increases, but marginal revenue falls faster

**7.*** The total cost for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is

*8.*** A monopolist
a.can charge whatever price it wants
b.charges more than almost any consumer is willing to pay
c.is constrained by marginal cost in setting price
d.is constrained by demand in setting price
e.always earns an economic profit

* 9.*** Irving R. Associates is granted a patent for a new product for which there are no close substitutes. Which of the following must be true at the profit-maximizing quantity?
a.Price is equal to marginal cost.
b.Average revenue is equal to marginal cost.
c.Marginal revenue is positive.
d.Marginal revenue is less than marginal cost.
e.Price is greater than average revenue.

*10.*** A monopolist faces an upward-sloping marginal cost curve. Its profit-maximizing quantity will be
a.at the minimum point of the marginal cost curve
b.less than the (total) revenue-maximizing quantity
c.equal to the (total) revenue-maximizing quantity
d.in the unit elastic segment of the demand curve
e.in the inelastic segment of the demand curve

*11.*** In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will
a.lower price to expand revenue possibilities
b.restrict output to extract a higher price from customers
c.maintain the current price if profit is still positive
d.increase plant size to lower marginal cost
e.decrease plant size to lower marginal cost

*12.*** Suppose that at an output of 1,000 units, a monopolist has marginal cost of $40, marginal revenue of $30, average variable cost of $30, and average total cost of $50. In order to maximize profit or minimize loss in the short run, the firm should
a.shut down
b.continue to produce 1,000 units
c.produce fewer than 1,000 units but still operate
d.produce more than 1,000 units
e.increase its plant size to gain economies of scale

*13.*** A monopolist has no supply curve because
a.as demand changes, each output level can be consistent with more than one profit-maximizing price
b.monopolists tend to restrict output
c.monopolists have no marginal cost curve
d.monopolists can charge any price they want
e.as demand changes, the firm's profit-maximizing choice of output may change

14.*** For a nondiscriminating monopolist, which of the following statements is true?
a.Unlike a firm in perfect competition, a monopolist produces where MR > MC.
b.The monopolist's marginal revenue curve is the same as its demand curve.
c.The monopolist will always produce in the inelastic range of its demand curve.
d.The monopolist does not have a supply curve.
e.The monopolist produces where MR < MC.

15.*** Which of the following statements is true of a monopolist?
a.The firm charges the highest possible price.
b.The firm always earns a profit.
c.The firm might earn a profit in the long run.
d.The firm generates a larger consumer surplus than a perfectly competitive firm.
e.The firm is more production efficient than a perfectly competitive firm.

16.*** Compared to the productive efficiency of a perfectly competitive firm, a monopolist tends to be
a.very efficient because it charges a higher price
b.more efficient because it produces greater output
d.equally efficient, as it also produces where MR = MC
e.very efficient because it conserves resources by producing less output

17.*** Compared to a perfectly competitive market, a monopoly tends to produce
a.more output and charge a higher price
b.the same amount of output, but charge a higher price
c.less output and charge a higher price
d.less output and charge the same price
e.less output and charge a lower price

*18.*** If a perfectly competitive industry is monopolized, consumer surplus
a.can be expected to decrease
b.will usually remain constant
c.can be expected to increase
d.drops from a high value to zero
e.increases from zero to a high value
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