Imperfect Competition and Monopoly Curves

A single-price monopolist’s marginal revenue is

• equal to its price

• less than its price

• greater than its price

• negative when it maximizes revenues

• zero when it maximizes profit

What price would this monopolist charge?

• R

• S

• T

• U

• V

What quantity would this monopolist produce?

• 0

• Q1

• Q2

• Q3

• Q4

What is the area of economic profit for this profit-maximizing monopolist?

• RSJI

• R0Q1I

• RULI

• RVNI

• U0Q4M

If this firm was perfectly competitive, what price would they charge?

• R

• S

• T

• U

• V

Which of the following is true if a monopolist’s marginal revenue is negative at the current level of output?

• Demand for its product is unit elastic.

• Demand for its product is price elastic.

• Demand for its product is price inelastic.

• Marginal cost is equal to price.

• Marginal revenue is equal to price.

Assume that a monopolist is producing in the inelastic portion of its demand curve. Which of the following will occur if the monopolist decreases its price?

• Marginal revenue will decrease, but profits will increase.

• Marginal revenue will increase, but profits will decrease.

• Total revenue will decrease, but profits will increase.

• Both total revenue and profits will decrease.

• Both total revenue and profits will increase.

A monopoly is different from a perfectly competitive firm in that a monopoly

• does not have a U-shaped average total cost curve

• has an average fixed cost curve that is perfectly horizontal

• has a marginal revenue curve that lies below its demand curve

• always earns economic profits

• operates in the inelastic segment of its demand curve

Which of the following statements is true for a monopolist at the profit-maximizing output level?

• Price exceeds marginal revenue.

• Marginal costs exceeds price.

• Demand is price inelastic.

• Price equals marginal cost, which equals average total cost.

• The demand curve intersects the supply curve.

Which of the following statements about the firm whose cost and revenue curves are shown above is correct?

• Its profit-maximizing price is $5.

• Its profit-maximizing output level is 200 units.

• Its maximum profit is $4,000.

• If it produces 250 units, it will earn no economic profits.

• At the profit-maximizing level of output, its total cost is $1,000.