Answered: At its present output a monopolist…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.1P

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6. At its present output a monopolist determines that its marginal revenue is P3 and its marginal cost is P4.50. The monopolist will increase its profits by:

a. reducing output and raising price

b. increasing both price and output

c. reducing both output and price

d. raising price while keeping output unchanged

7. The supply curve of a pure monopolist:

a. Is that portion of its marginal cost curve which lies above average variable cost

b. Is the same as that of a purely competitive industry

c. Is its average variable cost curve

d. Does not exist because prices are not “given” to a monopolist

8. A monopolistically competitive firm has a:

a. Highly elastic demand curve

b. perfectly inelastic demand curve

c. Highly inelastic demand curve

d. perfectly elastic demand curve

9. The automobile, household appliance, and automobile industries are all illustrations of:

a. pure monopoly

b. perfect competition

c. homogeneous oligopoly

d. differentiated oligopoly

10. An industry comprised of 40 firms, none of which has more than 3 percent of the total market for a differentiated product.

a. monopolistic competition

b. oligopoly

c. pure monopoly

d. pure competition

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