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Chapter 12 Pure Monopoly Answer Key
Multiple Choice Questions
1.
Pure monopoly refers to
2.
Which of the following is correct?
3.
A purely monopolistic firm
12-2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 12-03 Explain how demand is seen by a pure monopoly.
Test Bank: I
Top i c : Monopoly Demand
4.
Pure monopolists may obtain economic profits in the long run because
5.
Which of the following best approximates a pure monopoly?
6.
Which of the following is a characteristic of pure monopoly?
12-3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Remember
D iffic ul t y : 01 Easy
Learning Objective: 12-01 List the characteristics of pure monopoly.
Test Bank: I
Top i c : An Introduction to Pure Monopoly
7.
Which of the following is not a barrier to entry?
8.
Barriers to entering an industry
9.
A natural monopoly occurs when
10.
Large minimum efficient scale of plant combined with limited market demand may lead
to
11.
What do economies of scale, the ownership of essential raw materials, and patents have
in common?
12.
The nondiscriminating pure monopolist's demand curve
13.
The nondiscriminating monopolist's demand curve
14.
If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for
$35, its marginal revenue
12-6
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Top i c : Monopoly Demand
15.
For an imperfectly competitive firm,
16.
When a firm is on the inelastic segment of its demand curve, it can
17.
In the accompanying diagram, if price is reduced from P1 to P2, total revenue will
18.
In the accompanying diagram, the quantitative difference between areas A and C for reducing
the price from P1 to P2 measures
19.
Answer the question on the basis of the accompanying demand schedule.
Price
Quantity Demanded
$7
1
6
2
5
3
4
4
3
5
The marginal revenue obtained from selling the third unit of output is
20.
Answer the question on the basis of the accompanying demand schedule.
Price
Quantity Demanded
$7
1
6
2
5
3
4
4
3
5
The marginal revenue obtained from selling the fourth unit of output is
12-10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D iffic ul t y : 02 Medium
Learning Objective: 12-03 Explain how demand is seen by a pure monopoly.
Test Bank: I
Top i c : Monopoly Demand
Type: Table
21.
Answer the question on the basis of the accompanying demand schedule.
Price
Quantity Demanded
$7
1
6
2
5
3
4
4
3
5
At the point where 3 units are being sold, the coefficient of price elasticity of demand
22. A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages
per week at $10,000 each, but if it restricts its output to 9
per week it can sell these at
$11,000 each. The marginal revenue of the 10th unit of sales per week is
12-11
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Ac ce ss ib il it y: Keyboard Navigation
Blooms: Understand
D iffic ul t y : 02 Medium
Learning Objective: 12-03 Explain how demand is seen by a pure monopoly.
Test Bank: I
Top i c : Monopoly Demand
23.
Refer to the two diagrams for individual firms. Figure 1 pertains to , while Figure 2 refers to
.
24.
Refer to the two diagrams for individual firms. In Figure 2, line B represents the firm's
12-13
25.
Refer to the two diagrams for individual firms. Line A represents the firm's
26.
Refer to the two diagrams for individual firms. Figure 2 pertains to
27.
Refer to the two diagrams for individual firms. In Figure 2 the firm's demand and marginal
revenue curves are represented by
28. With respect to the pure monopolist's demand curve, it can be said that
12-16
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
D iffic ul t y : 02 Medium
Learning Objective: 12-03 Explain how demand is seen by a pure monopoly.
Test Bank: I
Top i c : Monopoly Demand
29.
The firm described in the accompanying diagram is selling in
30.
In the accompanying diagram, demand is relatively elastic
31.
In the accompanying diagram, demand is relatively inelastic
32.
Refer to the diagram. If this somehow was a costless product (that is, the total cost of any
level of output was zero), the firm would maximize
profits by
33.
The demand curve faced by a pure monopolist
12-20
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D.
is more elastic than that faced by a single purely competitive firm.
AACSB: Knowledge Application
Ac ce ss ib il it y: Keyboard Navigation
Blooms: Understand
D iffic ul t y : 02 Medium
Learning Objective: 12-03 Explain how demand is seen by a pure monopoly.
Test Bank: I
Top i c : Monopoly Demand
34.
The marginal revenue curve for a monopolist
35.
If the firm in the diagram lowers price from P1 to P2, it will
