Ch11

Microeconomics, 4e (Perloff)

Chapter 11 Monopoly

11.1 Monopoly Profit Maximization

1) For a monopoly, marginal revenue is less than price because

A) the firm is a price taker.

B) the firm must lower price if it wishes to sell more output.

C) the firm can sell all of its output at any price.

D) the demand for the firm's output is perfectly elastic.

Answer: B

Topic: Monopoly Profit Maximization

2) For a monopoly, marginal revenue is less than price because

A) the demand for the firm's output is downward sloping.

B) the firm has no supply curve.

C) the firm can sell all of its output at any price.

D) the demand for the firm's output is perfectly elastic.

Answer: A

Topic: Monopoly Profit Maximization

3) Marginal Revenue is

A) the increase in total revenue from selling one more unit of output.

B) equal to P(1+1/e)

C) equal to P when the price elasticity of demand is infinite.

D) All of the above.

Answer: D

Topic: Monopoly Profit Maximization

4) At the current level of output a firm's marginal cost equal 16 and marginal revenue equals 10. The firms

A) is producing the profit-maximizing amount.

B) should produce more.

C) should produce less.

D) Not enough information.

Answer: C

Topic: Monopoly Profit Maximization

5) At an output level of 100 a monopolist faces MC=15 and MR=17. At output level q=101 the monopolists MC=16 and MR=15. To maximize profits the firm

A) should produce 100 units.

B) should produce 101 units.

C) cannot maximize profits.

D) is not a monopoly.

Answer: A

Topic: Monopoly Profit Maximization

6) If a firm is able to set price

A) is a monopoly.

B) its marginal revenue is constant.

C) it sells its output at a constant price.

D) it faces a downward-sloping demand curve.

Answer: D

Topic: Monopoly Profit Maximization

7) One difference between a monopoly and a competitive firm is that

A) only a monopoly is a price taker.

B) only a monopoly maximizes profit by setting marginal revenue...