X-inefficiency
Please explain the answers
1. If a monopolist produces 100 units of output at a market price of $5 per unit with marginal revenue per unit equaling $4, we would expect that if the monopolist’s good was provided under pure competition, quantity would be:
A. Higher than 100 units, price lower than $5, and MR = price
B. Lower than 100 units, price greater than $5, and MR = price
C. Higher than 100 units, price greater than $5, and MR = price
D. Lower than 100 units, price lower than $5, and MR = price
Answer: A
2. X-inefficiency is said to occur when a firm’s:
A. Average costs of producing any output are greater than the minimum possible average costs
B. Marginal costs of producing any output are greater than the minimum possible total costs
C. Total costs of producing any output are greater than the minimum possible average costs
D. Short-run costs of producing any output are greater than the long-run costs
Answer: A
3. Other things equal, a price discriminating monopolist will:
A. realize a smaller economic profit than a nondiscriminating monopolist.
B. produce a larger output than a nondiscriminating monopolist.
C. produce the same output as a nondiscriminating monopolist.
D. produce a smaller output than a nondiscriminating monopolist.
Answer: B
4. Price discrimination refers to:
A. selling a given product for different prices at two different points in time.
B. any price above that which is equal to a minimum average total cost.
C. the selling of a given product at different prices that do not reflect cost differences.
D. the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.
Answer: C