### Microeconomics Practice Set - 9: Price and Output Under Pure Monopoly

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1. When the D curve is elastic, MR is

1. 1

2. 0

3. positive

4. negative

2. If P = $10 at the point on the D curve where e = 0.5, MR is 1.$5

2. $0 3. -$1

4. -\$10

3. The best, or optimum, level of output for the pure monopolist occurs at the point where

1. STC is minimum

2. TR = STC

3. TR is maximum

4. the TR and STC curves are parallel

4. At the best, or optimum, level of output for the pure monopolist

1. MR = SMC

2. P = SMC

3. P = lowest SAC

4. P is highest

5. In the short run, the monopolist

1. breaks even

2. incurs a loss

3. makes a profit

4. any of the above

6. If the monopolist incurs losses in the short run, then in the long run

1. the monopolist will go out of business

2. the monopolist will stay in business

3. the monopolist will break even

4. any of the above is possible

7. The monopolist who is in

1. short-run equilibrium will also be in a long-run equilibrium

2. long-run equilibrium will also be in short-run equilibrium

3. long-run equilibrium may or may not be in short-run equilibrium

4. none of the above

8. In long-run equilibrium, the pure monopolist (as opposed to the perfectly competitive firm) can make pure profits because of

1. blocked entry

2. high selling prices

3. low LAC costs

9. The imposition of a maximum price at the point where the monopolist’s SMC curve intersects the D curve causes the monopolist to

1. break even

2. incur losses

3. make profits

4. any of the above

10. The imposition of a per-unit tax causes the monopolist’s

1. SAC curve alone to shift up

2. SAC and SMC curves to shift up, because the per-unit tax is like a fixed cost

3. SAC and SMC curves to shift up, because the per-unit tax is like a variable cost

4. none of the above

11. Which form of monopoly regulation is most advantageous for the consumer?

1. Price control

2. lump-sum tax

3. per-unit tax

4. all of the above three forms are equally advantageous

12. If the demand curves for a monopolist’s commodity are identical in two separate markets, then, by practicing thirddegree price discrimination, the monopolist

1. will increase TR and total profits

2. can increase TR and total profits

3. cannot increase TR and total profits

4. will charge a different price in different markets