20.

Which of the following statements is TRUE?

A)

Monopoly firms can incur losses and go bankrupt.

B)

Monopoly firms will always make a profit because they have no competition.

C)

Monopoly firms may lose money in the short run, but in the long run they will earn an economic profit.

D)

Monopoly firms will earn a normal profit in the long run.

21.

For the monopolist, average profit per unit equals:

A)

P - ATC.

B)

P - AVC.

C)

P - MC.

D)

P - MR.

22.

Compared with competitive markets, monopolies charge ______ prices and produce a ______ output.

A)

lower; lower

B)

lower; higher

C)

higher; lower

D)

higher; higher

23.

A very important difference between perfect competition and monopoly is:

A)

the monopoly faces a downward-sloping demand curve, while the perfect competitor faces a horizontal demand curve.

B)

the monopoly faces an inelastic demand curve, while the perfect competitor faces an elastic demand curve.

C)

a monopoly is profitable, while a perfect competitor is only sometimes profitable.

D)

a monopoly is not regulated by the market, while a perfect competitor is regulated by the market.

24.

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

A)

lower; more

B)

higher; less

C)

higher; more

D)

lower; less

25.

A firm will engage in price discrimination when it believes that doing so will increase total:

A)

revenue.

B)

quantity sold.

C)

production cost.

D)

profits.