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Answer the following questions and then press 'Submit' to get your score.

Question 1

Which of the following statements about price-takers is false?

a) They include monopolistic competitors and monopolists.

b) They can always raise their prices and still retain some customers.

c) They may set different prices in the short run and in the long run.

d) We do not analyse them using diagrams with supply and demand curves.

Question 2

On a graph for a monopolist or monopolistic competitor, which of the following curves coincide?

a) The demand and average revenue curves only.

b) The demand and marginal revenue curves only.

c) The average revenue and marginal revenue curves only.

d) The demand, average revenue and marginal revenue curves.

Question 3

A profit-maximizing monopolist sets an output of 100 per day and a price of £10. Which of the following statements is true?

a) The firm's SMC and MR curves intersect at an output of 100, and the point on its demand curve at this output is at £10.

b) The firm's SMC and MR curves intersect at an output of 100, and the point on its MR curve at this output is at £10.

c) The firm's SMC and AR curves intersect at an output of 100, and the point on its MR curve at this output is at £10.

d) The firm's SMC and AR curves intersect at an output of 100, and the point on its AR curve at this output is at £10.

Question 4

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 SAC.

b) If AR at this output is below AVC.

c) If MR at this output is below SAC.

d) If MR at this output is below AVC.

Question 5

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.

Question 6

Suppose a monopolist discriminates between different groups of customer. 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 more profit by instead discriminating between different individual customers.

Question 7

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 may make a profit indefinitely.

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

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

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

Question 8

Which of the following statements about a monopolistic competitor is false?

a) It faces a downward sloping demand curve.

b) Its demand curve, and those for its competitors, may all be in different positions.

c) It will produce at the output where its MR and SMC curves intersect, provided it would make either a profit or a loss that was less than its total fixed cost.

d) It supply curve is part of its marginal cost curve.

Question 9

Which of the following statements about the long-run equilibrium of a profit-maximizing monopolistic competitor is false?

a) The firm will just break even.

b) The firm's SMC curve and its LMC curve will just touch each other at its chosen output.

c) The firm's SAC curve and its LAC curve will just touch each other at its chosen output.

d) The firms AR curve and its SAC curve will just touch each other at its chosen output.

Question 10

A student alleges that there are four differences between monopolistic competitors and monopolists, as follows. Which of these alleged differences is false?

a) There are many firms in monopolistic competition and only one in monopoly.

b) The monopolist may make a profit in the long run whereas the monopolistic competitor will not.

c) Price discrimination is less common with monopolists than with monopolistic competitors.

d) A monopolist would never react to the imposition of a tax on its product by reducing its price, but a monopolistic competitor might.

What is true for a profit

Which of the following is not generally true about a profit

What is the monopolist's profit at the profit

Is the demand curve for a monopoly elastic?