Question

5.    Pure monopolists
    a.    confront demand curves that are perfectly inelastic
    b.    maximize MR
    c.    sell where P > MC
    d.    are price takers

6.    The demand curve faced by a monopolist is
    a.    perfectly elastic  
    b.    negatively sloped
    c.    perfectly inelastic
    d.    positively sloped


7.    If a monopoly’s marginal revenue is positive at a particular level of output,
    a.    product price must be negative
    b.    demand is elastic in that range
    c.    demand is inelastic in that range
    d.    the monopoly cannot maximize profit


8.    Consumers who clip and redeem discount coupons
    a.    exhibit more price elasticity of demand for a given product than consumers who do not clip and redeem coupons
    b.    exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons
    c.    exhibit less price elasticity fo demand for a given product than consumers who do not clip and redeem coupons    
    d.    cause total revenue to decrease for firms that issue coupons for their products

Answer 1

Question 5

Pure monopolist maximizes profit when it produce that level of output corresponding to which MR equal MC. However, price is determined with respect to demand curve corresponding to the profit maximizing level of output.

Since, MR curve lies to the left of the demand curve for a monopolist.

Price is greater than the MC at the level of output that maximize profit.

So, pure monopolists sell where P>MC.

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

Question 6

A monopolist faces downward sloping demand curve as it can sell more only by lowering the price.

Downward slope implies negative slope.

So, the demand curve faced by a monopolist is negatively sloped.

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