1.A profit-maximizing monopolist finds that if it remains open, the best output is 50 a week, but at this output it would make a loss. Under what circumstances should it shut down?

a) If AR at this output is below AC.

b) If AR at this output is below AVC.

c) If MR at this output is below AC.

d) If MR at this output is below AVC.

2.Which of the following statements about a profit-maximizing monopolist is false?

a) This firm might respond to a fall in demand by reducing its output and reducing its price.

b) This firm might respond to a fall in demand by reducing its output and increasing its price.

c) This firm would respond to a fall in the price of a fixed input by increasing its output and reducing its price.

d) This firm would respond to a fall in the price of a variable input by increasing its output and reducing its price.

3.Suppose a monopolist discriminates between different groups of customers. Which of the following statements is false?

a) The best strategy for the monopolist is to set the highest prices for the types of customer with the least elastic demand.

b) Some customers will face a higher price than they would if the firm did not adopt price discrimination.

c) By having a relatively low price for some groups of customers, the monopolist is sure to make less profit than it would without price discrimination.

d) The monopolist might be able to make even more profit by discriminating between different individual customers.

4. Suppose a profit-maximizing monopolist faces no threats from possible new entrants to its industry. Which of the following statements about the firm's long-run equilibrium is false?

a) The firm's SAC curve will intersect its LAC curve at its chosen output

b) The firm's SMC curve and its LMC curve will both intersect its MR curve at its chosen output.

c) The firm may make a profit even in the long run.

d) If the firm suddenly started to worry about the prospect of new entrants, it might decide to reduce its price.

5.A monopoly will only produce in this range of the demand curve:

a)flat

b) inelastic

c) uninsured

d) restricted

e) elastic

6. When one firm can produce the socially optimal quantity at the lowest cost due to economies of scale, it is called:

A)free trade

B) natural monopoly

C) perfect competition

D) socialism

E) absolute monopoly

7. In a city, the electric regulations allow for only a single public utility to provide electricity to the residents of the city. Which of the following is true

I. The market for electricity is a monopoly in this city

II. the barriers to entry into the electricity market are due to regulation.

III. The electricity company can charge whatever price it desires since it has no competition.

a)I only

b) II only

c) III only

d) I and II only

e) I, II, and III

8. Which of the following is a key assumption of the monopoly model?

a)A product with few close substitutes

b) strategic game planning with rivals

c) Price setting behavior

d) Only a few direct competitors

e) Extensive product differentiation

9. If a monopolist cannot price discriminate and wants to increase the number of units that it sells, it must

a)set the market quantity higher and charge the same price

b) lower the price it charges for its good

c) differentiate its good from that of its rivals

d) obtain a patent for the good it produces

e) agree to set the price with rivals

10.In analyzing a monopoly from the point of view of economic efficiency, a monopoly . . .

A. Can sell whatever it can produce at the price it decides.

B. produces too little and charges too low a price.

C. produces too much.

D. produces too little and charges too high a price.

11. Suppose a profit-making unregulated natural monopoly is brought under the control of a regulator who requires it in future to follow a marginal cost pricing rule. Which of the following statements isfalse?

A) The monopoly would move from making a profit to making a loss.

B) The monopoly would reduce its output.

C) The monopoly would now set its output where itsMCcurve intersects itsARcurve.

D) The monopolist's price would now equal its marginal cost.

12. Which of the following are assumptions of the monopoly model?

I. Barriers to entry

II. One firm produces a product with no close substitutes.

III. The firm sets the market price of the product.

A) I only

B) I and II only

C) II only

D) I and III only

E) I, II and III

13. A monopolist's demand curve slopes downward, while the monopolist's marginal revenue curve

A) slopes downward but is flatter and intersects the demand

B) slopes downward but lies above the demand

C) is horizontal and equal to the price

D) slopes downward and lies below the demand curve

E) does not exist because price changes along the demand curve

14. When a single-price monopolist lowers the price to sell more output, it must lower the price on all units sold. As a result,

A) the firm's marginal revenue curve is downward sloping and the same as the demand curve.

B) the firm's marginal revenue is downward sloping and lies above the firm's demand curve.

C) the firm's marginal revenue is downward sloping and lies below the firm's demand curve.

D) the firm's marginal revenue is upward sloping and lies below the firm's demand curve.

E) the firm's marginal revenue is horizontal and lies below the firm's demand curve.

15. A monopolist is currently selling 3 units at a price of $5. If the firm lowers the price to $4, a total of 4 units will be sold. The firm calculates that the marginal revenue of the fourth unit is ______, which is ______ the price of the fourth unit.

A) $1; less than

B) $16; greater than

C) $4; equal to

D) $2; less than

E) $3; less than

18. Refer to the following diagram.