B. A competitive firm should increase output; a monopoly may not.

C. A monopoly should increase output, a competitive firm may not.

D. A monopoly should decrease output, a competitive firm may not.

E. None of the above.

26. Which of the following levels of output (q₁,…, q₅) would maximize a non-discriminating monopoly’s profit?

A. q₁, such that P(q₁) = MC(q₁)

B. q₂, such that P(q₂) = ATC(q₂)

C. Any q₃, such that P(q₃) > MR(q₃)

D. q₄, such that TR(q₄) – TC(q₄) > TR(q) – TC(q) for any q ≠ q₄

E. q₅, such that MR(q₅) = 0

27. Which of the following levels of output (q₆,…, q₁₀) would maximize a discriminating monopoly’s profit?

A. q₆, such that P(q₆) = MC(q₆)

B. q₇, such that P(q₇) = ATC(q₇)

C. Any q₈, such that P(q₈) > MR(q₈)

D. q₉, such that MR(q₉) = MC(q₉)

E. More than one answer is correct

28. Which of these statements about monopolies is wrong?

A. For any given level of output, a monopoly would normally charge a higher price than a price-taking firm with the same cost schedule

B. Monopolization usually entails social losses

C. A monopoly does not have a supply function

D. In a monopolized market, discrimination can actually increase social welfare

E. A monopoly would produce at such level of output q, that the difference between price and marginal cost would be highest

29. The graph above describes a non-discriminating monopoly. According to the graph, economic profit of this monopoly would be equal to:

A. (p₄ – p₁)q₁

B. (p₂ – p₁)q₃

C. (p₆ – p₄)q₁

D. (p₅ – p₁)q₂

E. (p₅ – p₃)q₂

30. Suppose that ATC curve of a natural monopolist crosses the demand curve at 666 units of output. This firm would:

A. always produce more than 666 units

B. always produce less than 666 units

C. always produce 666 units

D. always produce less than 333 units

E. cannot tell from the information given

31. If demand for a monopoly’s output is perfectly inelastic, imposing a per-unit tax on this monopoly will:

A. Increase the equilibrium price, and decrease the equilibrium quantity

B. Increase consumer surplus, but decrease social welfare

C. Decrease consumer surplus, and cause a deadweight loss

D. Increase both average and marginal cost

E. Increase monopoly profits

32. With respect to price elasticity, it is true that:

A. In general, a monopoly faces less elastic demand than a competitive firm

B. If a competitive industry gets monopolized, price elasticity of market demand for this industry’s output won’t necessarily change

C. A monopoly should not produce where demand is inelastic

D. Statements A and C are correct

Date: 2015-12-17; view: 697