Microeconomics And Behavior 9th Edition By Robert H Frank – Test Bank

Overview

10. A natural monopoly always has

A. a downward sloping long run average cost curve.

B. a downward sloping marginal cost curve.

C. its profit maximization point where price = marginal cost.

D. patent rights.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-02 Describe five factors that often enable firms to become monopolists and explain why economies of scale and related network economies are the most important and enduring sources of monopoly.
Topic: Five Sources of Monopoly

11. The total revenue curve for a firm is given by TR = 2Q.

A. The firm is definitely a monopolist.

B. The firm is definitely not a monopolist.

C. The firm may be a monopolist or a perfectly competitive firm.

D. One cannot tell from the equation what market form applies.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

12. If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce at

A. the lowest point of marginal revenue curve.

B. elasticity of demand equals 1.

C. the lowest point of marginal profit curve.

D. All of the choices are correct.

AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

13. If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce where demand elasticity is __________________ if it will produce at all.

A. inelastic

B. elastic

C. 1

D. Information is inadequate to answer the question.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

14. A monopolist has a marginal revenue curve given by MR = 102 – Q, and a total cost curve given by TC = Q2 + 16. The monopolist’s profit maximizing price and quantity are _______, _____ respectively.

A. 85; 34

B. 52; 50

C. 100; 2

D. 77; 50

AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

15. A profit maximizing monopolist sets output where

A. MC = MR.

B. MC = P.

C. MC = demand.

D. it depends on the average costs in each case.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

16. The marginal revenue curve of a single price monopolist

A. lies above the demand curve.

B. lies below the demand curve.

C. lies along the demand curve.

D. is a horizontal line.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

17. If a firm could perfectly price discriminate,

A. the marginal revenue curve would be the same as the demand curve.

B. the marginal revenue curve would lie below the demand curve.

C. the marginal revenue curve would lie above the demand curve.

D. there would be no marginal revenue function.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-05 Describe various techniques whereby monopolists are able to make price-sensitive buyers eligible for discounts while continuing to charge higher prices to buyers whose demands are less elastic.
Topic: Price Discrimination

18. If a profit maximizing monopolist sells output for $100, then we know that its marginal revenue is

A. more than $100 if it is a perfect price discriminator.

B. less than $100 if it is a single price monopolist.

C. equal to $100 in all cases.

D. less than $100 if it is a perfect price discriminator.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

19. If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue will be

A. a straight line with a negative slope of twice the demand curve slope.

B. a straight line with a negative slope of one-half the demand curve slope.

C. identical to the demand curve.

D. a horizontal line.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

20. The demand equation for a single price monopolist is P = 50 – Q. The marginal revenue equation for this monopolist is

A. 25 – Q.

B. 50 – 2Q.

C. 50 – Q.

D. 100 – Q.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-03 Explain why marginal revenue is typically less than the product price for a monopolist; but equal to price for a perfectly competitive firm.
Topic: The Profit-Maximizing Monopolist

21. The demand equation for a single price monopolist is P = 120 – 3Q. The marginal revenue curve for this monopolist is

A. 120 – 1.5Q.

B. 60 – 3Q.

C. 60 – 6Q.

D. 120 – 6Q.