# 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.
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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.
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3. Refer to the diagram for a nondiscriminating monopolist. Demand is elastic:
C. for all levels of output less than q 2.
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4. Refer to the diagram for a nondiscriminating monopolist. Marginal revenue will be zero at output:
B. q 2
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5. Refer to the diagram for a nondiscriminating monopolist. The profit-seeking monopolist will:
C. never produce an output larger than q 2.
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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.
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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.
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8. Assuming no change in product demand, a pure monopolist:
D. must lower price to increase sales.
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9. If a monopolist were to produce in the inelastic segment of its demand curve:
C. the firm would not be maximizing profits.
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10. If a pure monopolist is operating in a range of output where demand is elastic:
B. marginal revenue will be positive but declining.
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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.
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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.
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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.
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14. The diagram indicates that the marginal revenue of the sixth unit of output is:
A. -\$1.
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15. Which of the following is incorrect ? Imperfectly competitive producers: