Question

4.Which statement isincorrect?

a.A pure monopolist’s demand curve is the market demand curve.

b.A monopoly produces a product for which there are no close substitutes.

c.Marginal revenue is less than price for a monopolist that cannot price discriminate.

d.A monopolist’s market position ensures positive economic profits.

5.For a firm with monopoly power that cannot engage in price discrimination:

a.the marginal revenue curve lies below the demand curve because any reduction in price

applies only to the last unit sold.

b.the marginal revenue curve lies below the demand curve because the firm must lower

price on all units in order to sell a higher level of output.

c.the marginal revenue curve lies above the demand curve because the monopoly firm

can charge any price it wishes.

d.total revenue is a linear function of output because sales are independent of product

price.

6.At the profit-maximizing level of output for a monopolist that cannot price discriminate,

the price charged will:

a.equal to MC.

b.equal to MR.

c.exceed both MR and MC.

d.be less than both MR and MC

9.The monopolist is:
a.earning zero economic profit.
b.earning positive economic profit equal $2,400.
c.earning positive economic profit equal to $640.
d.incurring economic losses equal to $1,760.

10.Which of the following is not an example of a barrier to entry?
a.MB = MC and P = MC = minimum ATC.
b.Deadweight Loss = 0.
c.consumer and producer surplus are maximized.
d.all of the above.
11.A monopolist maximizes short-run profit by producing the level of output where:
a.MR = 0.
b.MR = MC.
c.MR = P.
d.P = MC.

Answer 1

Question 4

Positive economic profits accrue when total revenue exceeds total cost or price is greater than ATC at the level of output produced.

Monopolist's market position enables it to determine price. However, such market position does not help the monopolist in determining cost of its product.

So, a monopolist's market position does not ensures positive economic profits.

Hence, the correct answer is the option (d).

Question 5

A monopoly firm that do not price discriminate generally faces a downward sloping demand curve. This shape of demand curve ensures that the marginal revenue curve lies below the demand curve because the firm must lower price on all units in order to sell a higher level of output.

Hence, the correct answer is the option (b).