Question

1) The "Profit-Max/Loss-Min/Shutdown Rule" applies to:

Group of answer choices

Pure Monopoly only

Perfect Competition only

Most market structures

All market structures

3) A firm in a monopoly market structure always operates at an economic profit.

Group of answer choices

True

False

4) Comparing monopoly and competitive market structures, "Deadweight Loss" refers to:

Group of answer choices

Underground markets developing to supply the monopoly good.

Shortages caused by high monopoly pricing.

The production gap resulting from under-allocation of resources.

Surpluses caused by monopoly underproduction.

5) In order to engage in price discrimination, which of the following must be true?

Group of answer choices

Market can be segmented

Firm has monopoly power

All of these

Goods cannot be resold

6) Suppose society decides a monopoly must produce at an allocatively efficient level. Therefore it regulates the market so that the market price is equal to marginal cost (P = MC), we call this the:

Group of answer choices

Fair-Return Price

Socially Optimal Price

Social Construct Price

Monopoly Market Price

7) Suppose a society does not wish to be forced to subsidize a monopoly producing at an allocatively efficient level. However, they are also unwilling to allow the monopoly to set its own production level. This "Fair-Return Price" level occurs when:

Group of answer choices

P = MC

MR = MC

P = MR

P = ATC

8)

Since firms that are not in perfect competition face downward-sloping demand curves, we know that to increase sales quantity they must lower prices. As a result:

Group of answer choices

Product Price is less than Marginal Revenue

Price and Revenue are no longer related

Price and Revenue are equal to each other

Marginal Revenue is less than Product Price

9)

Even if their business costs are identical, Monopoly market structures generally produce fewer goods and services than a business in a Purely Competitive market. However, business costs for a monopoly market structure are usually very different from the competitive model for variety of reasons.

Which of the following does NOT affect business costs in a monopoly market?

Group of answer choices

Higher Average Wages

Rent-Seeking Expenses

Perfectly Elastic Demand

Economies of Scale

Answer 1

1. All market structures

Explanation: These rules are applicable for all market structures.

3. True

Explanation: A monopoly has market power and it always operates in economic profit.

4. The production gap resulting from under-allocation of resources.

Explanation: Under production takes place in an economy as compared to perfect competition.

5. All of these

Explanation: All of the factors are required for price discrimination.