AGB144 Exam 3 100% SOLUTION QUESTIONS AND ANSWERS

Which of the above diagrams correctly portray the demand (D) and marginal revenue (MR) curves of a monopoly? A. where demand and marginal revenue are equal and downward sloping B. where demand is greater than marginal revenue and both are downward sloping C. where demand and marginal revenue are equal and represented by a horizontal line D. where marginal revenue is greater than demand and both are downward sloping. - ANSWER B. where demand is greater than marginal revenue and both are downward sloping The MR = MC rule: A. applies only to pure competition. B. applies only to pure monopoly. C. does not apply to pure monopoly because price exceeds marginal revenue. D. applies both to pure monopoly and pure competition. - ANSWER D. applies both to pure monopoly and pure competition. An unregulated pure monopolist will maximize profits by producing that output at which: Answers: A. P = MC. B. P = ATC. C. MR = MC. D. MC = AC. - ANSWER C. MR = MC. Refer to the above diagram. To maximize profits or minimize losses this firm should produce: A. E units and charge price C. B. E units and charge price A. C. M units and charge price N. D. L units and charge price LK. - ANSWER B. E units and charge price A. Refer to the above diagram for a pure monopolist. Monopoly price will be: Answers: A. e. B. c. C. b. D. a. - ANSWER B. c. Refer to the above diagram for a pure monopolist. Monopoly output will be: A. between f and g. B. h. C. g. D. f. - ANSWER D. f.