Question 1

Which one of the following factors reduces the likelihood that a cartel agreement will lead to higher producer profit?

Accepted Answer

A)  significant barriers to entry into the cartelized market 
B)  the development of substitutes for the good produced by the cartel 
C)  government restrictions that limit competition from new rivals 
D)  a small number of sellers involved in the cartel agreement 
A)  significant barriers to entry into the cartelized market 
B)  the development of substitutes for the good produced by the cartel 
C)  government restrictions that limit competition from new rivals 
D)  a small number of sellers involved in the cartel agreement B

Question 2

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

Accepted Answer

A)  redistribute income from consumers to business decision makers without affecting the allocation of resources. 
B)  may be a source of business monopoly power, but they may also encourage innovation in the long run. 
C)  encourage product development and the adoption of cost-reducing technologies in the short run but in the long run generally lead to business monopoly. 
D)  help inventors at the expense of consumers in the long run. 
A)  redistribute income from consumers to business decision makers without affecting the allocation of resources. 
B)  may be a source of business monopoly power, but they may also encourage innovation in the long run. 
C)  encourage product development and the adoption of cost-reducing technologies in the short run but in the long run generally lead to business monopoly. 
D)  help inventors at the expense of consumers in the long run. B

Question 3

Use the figure to answer the following question(s).
Figure 11-14  
-What quantity would the industry depicted in Figure 11-14 produce if member firms were successfully colluding?

Accepted Answer

A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 
A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 B

Question 4

Regarding wealth and environmental quality,

Accepted Answer

A)  richer people are more willing to make sacrifices to gain greater environmental quality. 
B)  poor nations are less resilient when faced with the threats caused by environmental degradation. 
C)  richer people are more able to make sacrifices to gain greater environmental quality. 
D)  all of the above 
A)  richer people are more willing to make sacrifices to gain greater environmental quality. 
B)  poor nations are less resilient when faced with the threats caused by environmental degradation. 
C)  richer people are more able to make sacrifices to gain greater environmental quality. 
D)  all of the above

Question 5

Suppose a market is initially competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

Accepted Answer

A)  an increase in market output and an increase in the price of the product. 
B)  an increase in market output and an decrease in the price of the product. 
C)  a decrease in market output and an increase in the price of the product. 
D)  a decrease in market output and a decrease in the price of the product. 
A)  an increase in market output and an increase in the price of the product. 
B)  an increase in market output and an decrease in the price of the product. 
C)  a decrease in market output and an increase in the price of the product. 
D)  a decrease in market output and a decrease in the price of the product.

Question 6

A natural monopoly is a market where

Accepted Answer

A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm. 
A)  a single firm has control over a vital natural resource. 
B)  many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. 
C)  a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. 
D)  many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.

Question 7

When the federal government owns parks that are funded by tax dollars

Accepted Answer

A)  park managers receive full information about visitor desires and make decisions accordingly. 
B)  the same incentive structure exists for public park managers as private park managers. 
C)  park managers devote much time and effort to satisfying political desires instead of visitor desires. 
D)  park managers will be less likely to mismanage the park. 
A)  park managers receive full information about visitor desires and make decisions accordingly. 
B)  the same incentive structure exists for public park managers as private park managers. 
C)  park managers devote much time and effort to satisfying political desires instead of visitor desires. 
D)  park managers will be less likely to mismanage the park.

Question 8

Consider the following demand and cost information for a monopoly.
Table 11-1
  
-Refer to Table 11-1. To maximize profit, the monopolist sets price at

Accepted Answer

A)  $10 
B)  $15 
C)  $20 
D)  $25 
A)  $10 
B)  $15 
C)  $20 
D)  $25

Question 9

Which of the following is a valid criticism of unregulated monopoly?

Accepted Answer

A)  Monopoly limits the options available to consumers. 
B)  Relative to a competitive market, a monopolist generally will produce too great an output. 
C)  Profit-maximizing monopolists will fail to produce at the lowest possible cost. 
D)  A monopoly's output will often be more than if the market were competitive. 
A)  Monopoly limits the options available to consumers. 
B)  Relative to a competitive market, a monopolist generally will produce too great an output. 
C)  Profit-maximizing monopolists will fail to produce at the lowest possible cost. 
D)  A monopoly's output will often be more than if the market were competitive.

Question 10

If mutual interdependence among firms is present, each profit-maximizing firm in the market

Accepted Answer

A)  produces a product that must be identical to the products of its rivals. 
B)  must consider the reactions of its rivals when it determines its price policy. 
C)  faces a perfectly elastic demand curve for its product. 
D)  faces a perfectly inelastic demand curve for its product. 
A)  produces a product that must be identical to the products of its rivals. 
B)  must consider the reactions of its rivals when it determines its price policy. 
C)  faces a perfectly elastic demand curve for its product. 
D)  faces a perfectly inelastic demand curve for its product.

Question 11

It is difficult to predict the behavior of oligopolistic firms because

Accepted Answer

A)  there are few real-world examples of oligopolies for economists to study. 
B)  oligopolists make decisions independently of each other. 
C)  firms in oligopolistic industries react to each other's behavior in many ways. 
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory. 
A)  there are few real-world examples of oligopolies for economists to study. 
B)  oligopolists make decisions independently of each other. 
C)  firms in oligopolistic industries react to each other's behavior in many ways. 
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory.

Question 12

When a single firm has control over the market supply of a resource that is essential to the production of a good,

Accepted Answer

A)  economies of scale are usually important. 
B)  monopoly is frequently the result. 
C)  diseconomies of scale are the usual cause. 
D)  competition for the resource makes monopoly almost impossible 
A)  economies of scale are usually important. 
B)  monopoly is frequently the result. 
C)  diseconomies of scale are the usual cause. 
D)  competition for the resource makes monopoly almost impossible

Question 13

Figure 11-19  
-In the short run, the monopolist depicted in Figure 11-19 should

Accepted Answer

A)  shut down because P  AVC at some output levels. 
D)  continue producing because P > ATC at all output levels. 
E)  continue producing because monopolists never shut down. 
A)  shut down because P  AVC at some output levels. 
D)  continue producing because P > ATC at all output levels. 
E)  continue producing because monopolists never shut down.

Question 14

Which of the following is an obstacle that would reduce the likelihood of effective collusion among oligopolists?

Accepted Answer

A)  a highly inelastic market demand for the product 
B)  a small number of firms in the market 
C)  production of a homogeneous product 
D)  highly unstable demand for the product 
A)  a highly inelastic market demand for the product 
B)  a small number of firms in the market 
C)  production of a homogeneous product 
D)  highly unstable demand for the product

Question 15

With regard to environmental programs and regulations, economic analysis indicates that

Accepted Answer

A)  environmental quality is something that people value and, therefore, are willing to pay for. 
B)  people value many other things, but environmental values always come first. 
C)  income levels exert little impact on the demand for environmental quality. 
D)  the cost of an environmental policy matters little if the policy provides environmental health benefits. 
A)  environmental quality is something that people value and, therefore, are willing to pay for. 
B)  people value many other things, but environmental values always come first. 
C)  income levels exert little impact on the demand for environmental quality. 
D)  the cost of an environmental policy matters little if the policy provides environmental health benefits.

Question 16

Which of the following is an important side effect of government licensing and other grants of monopoly power?

Accepted Answer

A)  The number of options available to consumers is increased. 
B)  Competition is enhanced. 
C)  Firms will produce more efficiently. 
D)  Rent-seeking is encouraged. 
A)  The number of options available to consumers is increased. 
B)  Competition is enhanced. 
C)  Firms will produce more efficiently. 
D)  Rent-seeking is encouraged.

Question 17

Since its beginning, the cable television industry has been viewed as a natural monopoly. Typically, cities would grant individual firms local monopolies and then regulate them. Is this a valid approach from an economic perspective? What do you expect the future of the television-viewing market to hold?

Accepted Answer

Economies of scale would appear to be im

Question 18

Which of the following is true under natural monopoly?

Accepted Answer

A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale will be present. 
D)  Output is produced under conditions of constant cost. 
A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale will be present. 
D)  Output is produced under conditions of constant cost.

Question 19

Figure 11-21  
-In Figure 11-21, the increase in consumer surplus that occurs when price is set equal to marginal cost rather than at the profit-maximizing level, as it would be in an unregulated monopoly, is shown by area

Accepted Answer

A)  abc 
B)  adf 
C)  cef 
D)  dfeg 
E)  bcfd 
A)  abc 
B)  adf 
C)  cef 
D)  dfeg 
E)  bcfd

Question 20

The price charged by oligopolists will

Accepted Answer

A)  equal the equilibrium price in a price-takers market if the oligopolists collude. 
B)  equal the monopoly price if the oligopolists do not collude. 
C)  generally fall between the monopoly and competitive market equilibrium prices. 
D)  be the same whether the oligopolists cooperate with one another or not; only profit is affected. 
A)  equal the equilibrium price in a price-takers market if the oligopolists collude. 
B)  equal the monopoly price if the oligopolists do not collude. 
C)  generally fall between the monopoly and competitive market equilibrium prices. 
D)  be the same whether the oligopolists cooperate with one another or not; only profit is affected.

Which one of the following factors reduces the likelihood that a cartel agreement will lead to higher producer profit?

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

Use the figure to answer the following question(s). Figure 11-14 -What quantity would the industry depicted in Figure 11-14 produce if member firms were successfully colluding?

Regarding wealth and environmental quality,

Suppose a market is initially competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

A natural monopoly is a market where

When the federal government owns parks that are funded by tax dollars

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. To maximize profit, the monopolist sets price at

Which of the following is a valid criticism of unregulated monopoly?

If mutual interdependence among firms is present, each profit-maximizing firm in the market

It is difficult to predict the behavior of oligopolistic firms because

When a single firm has control over the market supply of a resource that is essential to the production of a good,

Figure 11-19 -In the short run, the monopolist depicted in Figure 11-19 should

Which of the following is an obstacle that would reduce the likelihood of effective collusion among oligopolists?

With regard to environmental programs and regulations, economic analysis indicates that

Which of the following is an important side effect of government licensing and other grants of monopoly power?

Which of the following is true under natural monopoly?

Figure 11-21 -In Figure 11-21, the increase in consumer surplus that occurs when price is set equal to marginal cost rather than at the profit-maximizing level, as it would be in an unregulated monopoly, is shown by area

The price charged by oligopolists will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 11: Price-Searcher Markets With High Entry Barriers

Which one of the following factors reduces the likelihood that a cartel agreement will lead to higher producer profit?

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

Use the figure to answer the following question(s). Figure 11-14 -What quantity would the industry depicted in Figure 11-14 produce if member firms were successfully colluding?

Regarding wealth and environmental quality,

Suppose a market is initially competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

A natural monopoly is a market where

When the federal government owns parks that are funded by tax dollars

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. To maximize profit, the monopolist sets price at

Which of the following is a valid criticism of unregulated monopoly?

If mutual interdependence among firms is present, each profit-maximizing firm in the market

It is difficult to predict the behavior of oligopolistic firms because

When a single firm has control over the market supply of a resource that is essential to the production of a good,

Figure 11-19 -In the short run, the monopolist depicted in Figure 11-19 should

Which of the following is an obstacle that would reduce the likelihood of effective collusion among oligopolists?

With regard to environmental programs and regulations, economic analysis indicates that

Which of the following is an important side effect of government licensing and other grants of monopoly power?

Which of the following is true under natural monopoly?

Figure 11-21 -In Figure 11-21, the increase in consumer surplus that occurs when price is set equal to marginal cost rather than at the profit-maximizing level, as it would be in an unregulated monopoly, is shown by area

The price charged by oligopolists will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters