# Microeconomics Exam 2 Chapter 12

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 1. For a pure monopolist the relationship between total revenue and marginal revenue is such that: C. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. 2. For a pure monopolist, marginal revenue is less than price because: C. when a monopolist lowers price to sell more output, the lower price applies to all units sold. 3. Refer to the diagram for a nondiscriminating monopolist. Demand is elastic: C. for all levels of output less than q 2. 4. Refer to the diagram for a nondiscriminating monopolist. Marginal revenue will be zero at output: B. q 2 5. Refer to the diagram for a nondiscriminating monopolist. The profit-seeking monopolist will: C. never produce an output larger than q 2. 6. Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should: D. charge a higher price. 7. A pure monopolist should never produce in the: B. inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price. 8. Assuming no change in product demand, a pure monopolist: D. must lower price to increase sales. 9. If a monopolist were to produce in the inelastic segment of its demand curve: C. the firm would not be maximizing profits. 10. If a pure monopolist is operating in a range of output where demand is elastic: B. marginal revenue will be positive but declining. 11. Suppose a pure monopolist is charging a price of \$12 and the associated marginal revenue is \$9. We thus know that: C. total revenue is increasing. 12. A pure monopolist is selling six units at a price of \$12. If the marginal revenue of the seventh unit is \$5, then the: B. price of the seventh unit is \$11. 13. The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist’s demand curve measures: D. product price and average revenue. 14. The diagram indicates that the marginal revenue of the sixth unit of output is: A. -\$1. 15. Which of the following is incorrect ? Imperfectly competitive producers: B. do not compete with one another. 16. Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist: Refer to the table. The profit-maximizing monopolist will sell at a price: D. that cannot be determined with the information provided. 17. Answer the question on the basis of the following table showing the demand schedule facing a nondiscriminating monopolist: Refer to the table. Assume that this monopolist faces zero production costs. The profitmaximizing monopolist will set a price of: C. \$5. 18. If a nondiscriminating pure monopolist decides to sell one more unit of output, the marginal revenue associated with that unit will be: B. the price at which that unit is sold less the price reductions that apply to all other units of output.

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