Homework 10 In Tutorial Library

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TITLE: Homework 10

UNIVERSITY / INSTITUTE: Purdue University

CLASS / COURSE: ECON 25100: Microeconomics

QUESTION DESCRIPTION:

Homework 10
 
1. Pure monopoly refers to: 
 
A. any market in which the demand curve to the firm is downsloping.  
B. a standardized product being produced by many firms.  
 C. a single firm producing a product for which there are no close substitutes.    
D. a large number of firms producing a differentiated product.  
 
2. Which of the following is correct? 
 
A. Both purely competitive and monopolistic firms are "price takers."  
B. Both purely competitive and monopolistic firms are "price makers."  
 C. A purely competitive firm is a "price taker," while a monopolist is a "price maker."    
D. A purely competitive firm is a "price maker," while a monopolist is a "price taker."  
 
3. A purely monopolistic firm: 
 
A. has no entry barriers.  
 B. faces a downsloping demand curve.    
C. produces a product or service for which there are many close substitutes.  
D. earns only a normal profit in the long run.  
 
4. Pure monopolists may obtain economic profits in the long run because: 
 
A. of advertising.  
B. marginal revenue is constant as sales increase.  
 C. of barriers to entry.    
D. of rising average fixed costs.  
 
5. Which of the following is a characteristic of pure monopoly? 
 
A. close substitute products  
 B. barriers to entry    
C. the absence of market power  
D. "price taking"  
 
6. A natural monopoly occurs when: 
 
 A. long-run average costs decline continuously through the range of demand.    
B. a firm owns or controls some resource essential to production.  
C. long-run average costs rise continuously as output is increased.  
D. economies of scale are obtained at relatively low levels of output.  
 
7. When a firm is on the inelastic segment of its demand curve, it can: 
 
A. increase total revenue by reducing price.  
B. decrease total costs by decreasing price.  
C. increase profits by increasing price.    
 D. increase total revenue by more than the increase in total cost by increasing price.  
 
8. Answer the question on the basis of the demand schedule shown below: 
Refer to the above data. The marginal revenue obtained from selling the third unit of output is: 
 
A. $6.  
B. $1.  
 C. $3.    
D. $5.  
 
9. The demand curve faced by a pure monopolist: 
 
A. may be either more or less elastic than that faced by a single purely competitive firm.  
 B. is less elastic than that faced by a single purely competitive firm.    
C. has the same elasticity as that faced by a single purely competitive firm.  
D. is more elastic than that faced by a single purely competitive firm.  
 
10. For a pure monopolist marginal revenue is less than price because: 
 
A. the monopolist's demand curve is perfectly elastic.  
B. the monopolist's demand curve is perfectly inelastic.  
 C. when a monopolist lowers price to sell more output, the lower price applies to all units sold.    
D. the monopolist's total revenue curve is linear and slopes upward to the right.  

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SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Microeconomics

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