Question 1

Which of the following is the most efficient way to reduce pollution emissions?

Accepted Answer

A)  Emission standards that cap allowable pollution. 
B)  Government pollution charges or taxes. 
C)  Legislated regulations limiting the quantity of emissions allowed by each firm. 
D)  Enforcement of property rights, when those rights are well-defined and transaction costs are low. 
A)  Emission standards that cap allowable pollution. 
B)  Government pollution charges or taxes. 
C)  Legislated regulations limiting the quantity of emissions allowed by each firm. 
D)  Enforcement of property rights, when those rights are well-defined and transaction costs are low.

Question 2

When it comes to environmental policy,

Accepted Answer

A)  choices are influenced by the costs and benefits that decision makers expect. 
B)  values are subjective, as in other areas of the economy. 
C)  policy choices often have unintended secondary effects. 
D)  all of the above are true. 
A)  choices are influenced by the costs and benefits that decision makers expect. 
B)  values are subjective, as in other areas of the economy. 
C)  policy choices often have unintended secondary effects. 
D)  all of the above are true.

Question 3

One of the effects of patents is to

Accepted Answer

A)  reduce incentives for innovation. 
B)  give firms incentives to worry less about minimizing production costs. 
C)  temporarily provide the patent owner with monopoly power. 
D)  reduce the degree of monopoly power in the short run. 
A)  reduce incentives for innovation. 
B)  give firms incentives to worry less about minimizing production costs. 
C)  temporarily provide the patent owner with monopoly power. 
D)  reduce the degree of monopoly power in the short run.

Question 4

Government regulation is

Accepted Answer

A)  subject to the same problems of lack of information and lack of incentives for economic efficiency as centrally planned economies. 
B)  the only reliable way to improve environmental quality. 
C)  not subject to political concerns when it comes to environmental quality. 
D)  the most economically efficient way to reduce greenhouse gases. 
A)  subject to the same problems of lack of information and lack of incentives for economic efficiency as centrally planned economies. 
B)  the only reliable way to improve environmental quality. 
C)  not subject to political concerns when it comes to environmental quality. 
D)  the most economically efficient way to reduce greenhouse gases.

Question 5

Use the figure to answer the following question(s).
Figure 11-6  
-If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-6?

Accepted Answer

A)  price, P1; quantity produced, Q1 
B)  price, P2; quantity produced, Q2 
C)  price, P3; quantity produced, Q1 
D)  price, P3; quantity produced, Q2 
A)  price, P1; quantity produced, Q1 
B)  price, P2; quantity produced, Q2 
C)  price, P3; quantity produced, Q1 
D)  price, P3; quantity produced, Q2

Question 6

Collusion among sellers will be less attractive when

Accepted Answer

A)  it is difficult to determine if some firms are providing secret price cuts. 
B)  there are a small number of firms in the industry that are easily monitored. 
C)  the demand for the product is relatively stable. 
D)  the demand for the product is highly inelastic. 
A)  it is difficult to determine if some firms are providing secret price cuts. 
B)  there are a small number of firms in the industry that are easily monitored. 
C)  the demand for the product is relatively stable. 
D)  the demand for the product is highly inelastic.

Question 7

Use the figure to answer the following question(s).
Figure 11-13  
-If the firms in the industry depicted in Figure 11-13 compete with each other, what would the industry's price and output be?

Accepted Answer

A)  price, $10; output, 600 
B)  price, $15; output, 500 
C)  price, $20; output, 400 
D)  price, $25; output, 300 
A)  price, $10; output, 600 
B)  price, $15; output, 500 
C)  price, $20; output, 400 
D)  price, $25; output, 300

Question 8

Figure 11-17  
-Refer to Figure 11-17. The demand curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 9

A profit-maximizing monopolist that produces in the short run will

Accepted Answer

A)  produce the level of output where marginal revenue exceeds marginal cost by the largest amount. 
B)  increase output as long as the marginal revenue exceeds the marginal cost of producing that unit. 
C)  produce the level of output where average total cost is at a minimum. 
D)  increase price as long as the average revenue exceeds the average total cost. 
E)  produce the level of output where average revenue exceeds average total cost by the largest amount. 
A)  produce the level of output where marginal revenue exceeds marginal cost by the largest amount. 
B)  increase output as long as the marginal revenue exceeds the marginal cost of producing that unit. 
C)  produce the level of output where average total cost is at a minimum. 
D)  increase price as long as the average revenue exceeds the average total cost. 
E)  produce the level of output where average revenue exceeds average total cost by the largest amount.

Question 10

When entry barriers into a market are high,

Accepted Answer

A)  a monopolist will always be able to make an economic profit. 
B)  rival firms will enter and drive price down to the level of per-unit costs if the firms in the market are making economic profit. 
C)  entry into the market will not take place, at least not quickly, even if the firms currently in the market are making economic profits. 
D)  the producers in the market will have little or no incentive to produce efficiently (at a low cost). 
A)  a monopolist will always be able to make an economic profit. 
B)  rival firms will enter and drive price down to the level of per-unit costs if the firms in the market are making economic profit. 
C)  entry into the market will not take place, at least not quickly, even if the firms currently in the market are making economic profits. 
D)  the producers in the market will have little or no incentive to produce efficiently (at a low cost).

Question 11

Higher levels of carbon dioxide may have led, over the past century, to approximately a

Accepted Answer

A)  1 degree (F) warming of the earth. 
B)  10 degree (F) warming of the earth. 
C)  1 degree (F) cooling of the earth. 
D)  10 degree (F) cooling of the earth. 
A)  1 degree (F) warming of the earth. 
B)  10 degree (F) warming of the earth. 
C)  1 degree (F) cooling of the earth. 
D)  10 degree (F) cooling of the earth.

Question 12

Use the figure to answer the following question(s).
Figure 11-10  
-If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 13

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

Accepted Answer

A)  a competitive price-searcher market. 
B)  pure monopoly. 
C)  bilateral monopoly. 
D)  a competitive price-taker market. 
A)  a competitive price-searcher market. 
B)  pure monopoly. 
C)  bilateral monopoly. 
D)  a competitive price-taker market.

Question 14

To be a natural monopoly, a firm must

Accepted Answer

A)  control an essential natural resource input. 
B)  be very large. 
C)  have a continuously falling average cost curve as output rises. 
D)  have falling average costs over a substantial range of total market demand. 
A)  control an essential natural resource input. 
B)  be very large. 
C)  have a continuously falling average cost curve as output rises. 
D)  have falling average costs over a substantial range of total market demand.

Question 15

When firms use resources in an attempt to secure and maintain grants of market protection from the government, it is called

Accepted Answer

A)  rent-seeking. 
B)  collusion. 
C)  franchising. 
D)  resource investment. 
A)  rent-seeking. 
B)  collusion. 
C)  franchising. 
D)  resource investment.

Question 16

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Accepted Answer

A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource 
A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource

Question 17

Empirical evidence indicates that

Accepted Answer

A)  changes in the earth's cloud cover will clearly enhance the warming effects of carbon dioxide. 
B)  the increase in carbon dioxide, over thousands of years, is clearly the cause of global warming. 
C)  if global warming continues for another century, as most models forecast, the sea levels will clearly rise substantially, imposing costs much larger than the cost of preventing the warming. 
D)  the earth has warmed a little more than one degree Fahrenheit in the past century. 
A)  changes in the earth's cloud cover will clearly enhance the warming effects of carbon dioxide. 
B)  the increase in carbon dioxide, over thousands of years, is clearly the cause of global warming. 
C)  if global warming continues for another century, as most models forecast, the sea levels will clearly rise substantially, imposing costs much larger than the cost of preventing the warming. 
D)  the earth has warmed a little more than one degree Fahrenheit in the past century.

Question 18

Use the figure to answer the following question(s).
Figure 11-10  
-Given the cost and revenue curves illustrated in Figure 11-10, what price will a profit-maximizing monopolist charge?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 19

When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)

Accepted Answer

A)  is usually needed for the members to solidify their cooperation. 
B)  usually results in finer control of prices and markets by the group and larger profit margins. 
C)  is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. 
D)  seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement. 
A)  is usually needed for the members to solidify their cooperation. 
B)  usually results in finer control of prices and markets by the group and larger profit margins. 
C)  is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. 
D)  seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement.

Question 20

If marginal revenue exceeds marginal cost, a profit-maximizing monopolist will

Accepted Answer

A)  raise price and decrease output. 
B)  lower price and increase output. 
C)  reduce both output and price. 
D)  hold output constant and raise price. 
A)  raise price and decrease output. 
B)  lower price and increase output. 
C)  reduce both output and price. 
D)  hold output constant and raise price.

Which of the following is the most efficient way to reduce pollution emissions?

When it comes to environmental policy,

One of the effects of patents is to

Government regulation is

Use the figure to answer the following question(s). Figure 11-6 -If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-6?

Collusion among sellers will be less attractive when

Use the figure to answer the following question(s). Figure 11-13 -If the firms in the industry depicted in Figure 11-13 compete with each other, what would the industry's price and output be?

Figure 11-17 -Refer to Figure 11-17. The demand curve for a monopoly firm is depicted by curve

A profit-maximizing monopolist that produces in the short run will

When entry barriers into a market are high,

Higher levels of carbon dioxide may have led, over the past century, to approximately a

Use the figure to answer the following question(s). Figure 11-10 -If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

To be a natural monopoly, a firm must

When firms use resources in an attempt to secure and maintain grants of market protection from the government, it is called

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Empirical evidence indicates that

Use the figure to answer the following question(s). Figure 11-10 -Given the cost and revenue curves illustrated in Figure 11-10, what price will a profit-maximizing monopolist charge?

When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)

If marginal revenue exceeds marginal cost, a profit-maximizing monopolist 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 of the following is the most efficient way to reduce pollution emissions?

When it comes to environmental policy,

One of the effects of patents is to

Government regulation is

Use the figure to answer the following question(s). Figure 11-6 -If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-6?

Collusion among sellers will be less attractive when

Use the figure to answer the following question(s). Figure 11-13 -If the firms in the industry depicted in Figure 11-13 compete with each other, what would the industry's price and output be?

Figure 11-17 -Refer to Figure 11-17. The demand curve for a monopoly firm is depicted by curve

A profit-maximizing monopolist that produces in the short run will

When entry barriers into a market are high,

Higher levels of carbon dioxide may have led, over the past century, to approximately a

Use the figure to answer the following question(s). Figure 11-10 -If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

To be a natural monopoly, a firm must

When firms use resources in an attempt to secure and maintain grants of market protection from the government, it is called

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Empirical evidence indicates that

Use the figure to answer the following question(s). Figure 11-10 -Given the cost and revenue curves illustrated in Figure 11-10, what price will a profit-maximizing monopolist charge?

When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)

If marginal revenue exceeds marginal cost, a profit-maximizing monopolist 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