Question 1

Which of the following is a common barrier to entry in a monopoly market?

Accepted Answer

A) Economic profit of the monopolist. 
B) Antitrust laws. 
C) A rising long-run average total cost curve. 
D) Economies of scale. 
A) Economic profit of the monopolist. 
B) Antitrust laws. 
C) A rising long-run average total cost curve. 
D) Economies of scale.

Question 2

Which of the following statements is not correct?

Accepted Answer

A) A monopolist's ability to act as a price setter guarantees economic profits in the short run. 
B) The monopolist's marginal revenue is less than the price for any output greater than one. 
C) A monopolist's demand curve is the same as the market demand curve for the product. 
D) In the long run,a monopolist will experience only positive or zero economic profits. 
A) A monopolist's ability to act as a price setter guarantees economic profits in the short run. 
B) The monopolist's marginal revenue is less than the price for any output greater than one. 
C) A monopolist's demand curve is the same as the market demand curve for the product. 
D) In the long run,a monopolist will experience only positive or zero economic profits.

Question 3

Which of the following markets best illustrates the practice of price discrimination?

Accepted Answer

A) The airline market. 
B) The fast-food market. 
C) Wheat farming. 
D) The personal computer market. 
A) The airline market. 
B) The fast-food market. 
C) Wheat farming. 
D) The personal computer market.

Question 4

A monopoly occurs when one firm produces all of the market supply of a good or service.

Accepted Answer

A) True 
 B)False

Question 5

The marginal revenue of a monopolist falls below price because the firm

Accepted Answer

A) Is not limited by market demand. 
B) Faces a market demand curve that is inelastic. 
C) Confronts a downward-sloping demand curve. 
D) Has an upward-sloping marginal cost curve. 
A) Is not limited by market demand. 
B) Faces a market demand curve that is inelastic. 
C) Confronts a downward-sloping demand curve. 
D) Has an upward-sloping marginal cost curve.

Question 6

Reductions in minimum average costs that come about through increases in the size of plants and equipment are called

Accepted Answer

A) Barriers to entry. 
B) Economies to monopoly power. 
C) Economies of scale. 
D) Diseconomies of entry. 
A) Barriers to entry. 
B) Economies to monopoly power. 
C) Economies of scale. 
D) Diseconomies of entry.

Question 7

A monopoly

Accepted Answer

A) Maximizes profits at the output level where MR > MC. 
B) Produces less output than a competitive industry,ceteris paribus. 
C) Charges the same price as a competitive industry,ceteris paribus. 
D) Maximizes profits at the output where P = MR. 
A) Maximizes profits at the output level where MR > MC. 
B) Produces less output than a competitive industry,ceteris paribus. 
C) Charges the same price as a competitive industry,ceteris paribus. 
D) Maximizes profits at the output where P = MR.

Question 8

In Figure 24.2,the profit-maximizing level of output is

Accepted Answer

A) Between 2 and 3 units. 
B) Between 4 and 5 units. 
C) 4 units. 
D) Between 5 and 6 units. 
A) Between 2 and 3 units. 
B) Between 4 and 5 units. 
C) 4 units. 
D) Between 5 and 6 units.

Question 9

Based on the headline "Russia's Sable Monopoly Persists" you could predict that

Accepted Answer

A) Output is more than it would be in a competitive sable market. 
B) Long-run economic profit is positive in the sable market. 
C) The sable market is contestable. 
D) Sable producers are franchise monopolists. 
A) Output is more than it would be in a competitive sable market. 
B) Long-run economic profit is positive in the sable market. 
C) The sable market is contestable. 
D) Sable producers are franchise monopolists.

Question 10

A firm can take advantage of economies of scale through

Accepted Answer

A) Investment decisions to increase capacity. 
B) A production decision to increase capacity. 
C) Investment decisions to reduce capacity. 
D) A production decision to increase output. 
A) Investment decisions to increase capacity. 
B) A production decision to increase capacity. 
C) Investment decisions to reduce capacity. 
D) A production decision to increase output.

Question 11

A patent gives a firm the exclusive right to produce a product for

Accepted Answer

A) 6 months. 
B) 2 years. 
C) 20 years. 
D) Forever. 
A) 6 months. 
B) 2 years. 
C) 20 years. 
D) Forever.

Question 12

Price-discriminating firms charge higher prices to those who

Accepted Answer

A) Have greater incomes. 
B) Have lower price elasticities of demand. 
C) Have many substitutes available to them. 
D) Want the product less. 
A) Have greater incomes. 
B) Have lower price elasticities of demand. 
C) Have many substitutes available to them. 
D) Want the product less.

Question 13

According to the text,a convincing argument against concentration of market power is that

Accepted Answer

A) Market power increases incentives for innovation and invention. 
B) Market power results in lower barriers to entry. 
C) The exercise of market power results in a higher price. 
D) Large firms can produce more efficiently than small firms because of diminishing returns in production. 
A) Market power increases incentives for innovation and invention. 
B) Market power results in lower barriers to entry. 
C) The exercise of market power results in a higher price. 
D) Large firms can produce more efficiently than small firms because of diminishing returns in production.

Question 14

Monopolists are price

Accepted Answer

A) Takers,as are competitive firms. 
B) Takers,but competitive firms are price makers. 
C) Makers,but competitive firms are price takers. 
D) Makers,as are competitive firms. 
A) Takers,as are competitive firms. 
B) Takers,but competitive firms are price makers. 
C) Makers,but competitive firms are price takers. 
D) Makers,as are competitive firms.

Question 15

A monopoly can have a high degree of market power because of all but

Accepted Answer

A) Control over key inputs. 
B) Government-bestowed franchise rights. 
C) A downward-sloping demand curve for its product. 
D) The presence of many close substitutes for its product. 
A) Control over key inputs. 
B) Government-bestowed franchise rights. 
C) A downward-sloping demand curve for its product. 
D) The presence of many close substitutes for its product.

Question 16

According to the text,one argument in favor of concentration of market power is that

Accepted Answer

A) Market power always increases incentives for innovation and invention. 
B) Market power results in higher prices and lower quantities. 
C) The exercise of market power provides a more desirable mix of output. 
D) Large firms can sometimes produce more efficiently than small firms because of economies of scale in production. 
A) Market power always increases incentives for innovation and invention. 
B) Market power results in higher prices and lower quantities. 
C) The exercise of market power provides a more desirable mix of output. 
D) Large firms can sometimes produce more efficiently than small firms because of economies of scale in production.

Question 17

If a monopolist is producing a level of output where MR exceeds MC,then it should

Accepted Answer

A) Raise its price. 
B) Increase its output. 
C) Lower its output. 
D) Shift its marginal cost curve upward. 
A) Raise its price. 
B) Increase its output. 
C) Lower its output. 
D) Shift its marginal cost curve upward.

Question 18

Which of the following is a common barrier to entry in a monopoly market?

Accepted Answer

A) Economic profits greater than zero for the monopolist. 
B) A rising long-run average total cost curve. 
C) A patent on a new product. 
D) A vertical supply curve. 
A) Economic profits greater than zero for the monopolist. 
B) A rising long-run average total cost curve. 
C) A patent on a new product. 
D) A vertical supply curve.

Question 19

Price discrimination is best defined as

Accepted Answer

A) Charging an excessive price for a product. 
B) The charging of different prices by different companies for the same product. 
C) The selling of an individual good at different prices to different consumers by a single seller. 
D) The selling of differentiated goods to consumers at different prices. 
A) Charging an excessive price for a product. 
B) The charging of different prices by different companies for the same product. 
C) The selling of an individual good at different prices to different consumers by a single seller. 
D) The selling of differentiated goods to consumers at different prices.

Question 20

The federal government's lawsuit against AT&T was motivated in large part by

Accepted Answer

A) AT&T's inefficient and inadequate R&D expenditures. 
B) The extension of its market power to other markets. 
C) Its practice of price discrimination. 
D) The diseconomies of scale resulting from AT&T's enormous size. 
A) AT&T's inefficient and inadequate R&D expenditures. 
B) The extension of its market power to other markets. 
C) Its practice of price discrimination. 
D) The diseconomies of scale resulting from AT&T's enormous size.

Exam 24: Monopoly

Which of the following is a common barrier to entry in a monopoly market?

Which of the following statements is not correct?

Which of the following markets best illustrates the practice of price discrimination?

A monopoly occurs when one firm produces all of the market supply of a good or service.

The marginal revenue of a monopolist falls below price because the firm

Reductions in minimum average costs that come about through increases in the size of plants and equipment are called

A monopoly

In Figure 24.2,the profit-maximizing level of output is

Based on the headline "Russia's Sable Monopoly Persists" you could predict that

A firm can take advantage of economies of scale through

A patent gives a firm the exclusive right to produce a product for

Price-discriminating firms charge higher prices to those who

According to the text,a convincing argument against concentration of market power is that

Monopolists are price

A monopoly can have a high degree of market power because of all but

According to the text,one argument in favor of concentration of market power is that

If a monopolist is producing a level of output where MR exceeds MC,then it should

Which of the following is a common barrier to entry in a monopoly market?

Price discrimination is best defined as

The federal government's lawsuit against AT&T was motivated in large part by

Economics: the Core Issues

The Useconomy: a Global View

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The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

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Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

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Transfer Payments: Welfare and Social Security

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