Question 1

Which of the following are illegal under the antitrust laws of the United States?

Accepted Answer

A)  charging prices that exceed average total costs 
B)  charging some consumers different prices than others 
C)  mergers that unnecessarily create excessively large firms 
D)  collusive behavior or other actions designed to create a monopoly or cartel 
A)  charging prices that exceed average total costs 
B)  charging some consumers different prices than others 
C)  mergers that unnecessarily create excessively large firms 
D)  collusive behavior or other actions designed to create a monopoly or cartel

Question 2

An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a

Accepted Answer

A)  consumer cooperative. 
B)  marketing association. 
C)  regulatory agency. 
D)  cartel. 
A)  consumer cooperative. 
B)  marketing association. 
C)  regulatory agency. 
D)  cartel.

Question 3

Economic thinking indicates that efficient adaptation strategies to reduce harms from future global warming will

Accepted Answer

A)  focus on reducing overall carbon emissions. 
B)  emphasize changes like those imposed on prosperous nations by the Kyoto Treaty. 
C)  focus on reducing the effects of serious problems that we know to exist. 
D)  ensure that every precaution will be taken to reduce any possible risks for the future. 
A)  focus on reducing overall carbon emissions. 
B)  emphasize changes like those imposed on prosperous nations by the Kyoto Treaty. 
C)  focus on reducing the effects of serious problems that we know to exist. 
D)  ensure that every precaution will be taken to reduce any possible risks for the future.

Question 4

Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price. If a firm wanted to break this agreement and not be detected, what would be one way to do this?

Accepted Answer

One answer might be secret price cuts to

Question 5

Use the figure to answer the following question(s).
Figure 11-3  
-What is the maximum profit per month that the monopolist will be able to earn in Figure 11-3?

Accepted Answer

A)  zero 
B)  approximately $20,000 
C)  approximately $50,000 
D)  approximately $100,000 
A)  zero 
B)  approximately $20,000 
C)  approximately $50,000 
D)  approximately $100,000

Question 6

Figure 11-21  
-The welfare loss associated with the unregulated natural monopoly in Figure 11-21 is shown by the area

Accepted Answer

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

Question 7

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

Accepted Answer

A)  Economists cannot determine if barriers to entry exist in a market. 
B)  Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. 
C)  The government prevents economists from acquiring the information that would lead to good predictions. 
D)  Firms have a set price and output policy, but the policy is concealed to discourage competition. 
A)  Economists cannot determine if barriers to entry exist in a market. 
B)  Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. 
C)  The government prevents economists from acquiring the information that would lead to good predictions. 
D)  Firms have a set price and output policy, but the policy is concealed to discourage competition.

Question 8

Cartels are difficult to maintain because

Accepted Answer

A)  antitrust laws are difficult to enforce. 
B)  cartel agreements are conducive to monopoly outcomes. 
C)  there is always tension between cooperation and self-interest in a cartel. 
D)  firms pay little attention to the decision made by other firms. 
A)  antitrust laws are difficult to enforce. 
B)  cartel agreements are conducive to monopoly outcomes. 
C)  there is always tension between cooperation and self-interest in a cartel. 
D)  firms pay little attention to the decision made by other firms.

Question 9

Use the figure to answer the following question(s).
Figure 11-2  
-What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

Accepted Answer

A)  zero 
B)  approximately $10,000 
C)  approximately $20,000 
D)  approximately $40,000 
A)  zero 
B)  approximately $10,000 
C)  approximately $20,000 
D)  approximately $40,000

Question 10

When natural monopoly is present in an industry, the per-unit costs of production will be

Accepted Answer

A)  lowest when there are a large number of producers in the industry. 
B)  lowest when a single firm generates the entire output of the industry. 
C)  lower for small firms than for large firms. 
D)  minimized at the output that maximizes the industry's profitability. 
A)  lowest when there are a large number of producers in the industry. 
B)  lowest when a single firm generates the entire output of the industry. 
C)  lower for small firms than for large firms. 
D)  minimized at the output that maximizes the industry's profitability.

Question 11

When economists talk about a barrier to entry, they are referring to

Accepted Answer

A)  a factor that makes it difficult for potential competitors to enter a market. 
B)  the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. 
C)  the downward-sloping portion of the long-run average total cost curve. 
D)  the declining output experienced as additional units of a variable input are used with a given amount of a fixed input. 
A)  a factor that makes it difficult for potential competitors to enter a market. 
B)  the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. 
C)  the downward-sloping portion of the long-run average total cost curve. 
D)  the declining output experienced as additional units of a variable input are used with a given amount of a fixed input.

Question 12

The scientific evidence on the causes and consequences of global warming

Accepted Answer

A)  is clear and indisputable. 
B)  has considerable uncertainty in its findings. 
C)  indicates global warming should be stopped regardless of cost. 
D)  is of no importance to economists. 
A)  is clear and indisputable. 
B)  has considerable uncertainty in its findings. 
C)  indicates global warming should be stopped regardless of cost. 
D)  is of no importance to economists.

Question 13

The fish in the ocean are

Accepted Answer

A)  allocated efficiently because there are no limitations on entry into the ocean fisheries business. 
B)  scarce, but only because of the highly restrictive regulations imposed by various nations. 
C)  a commonly owned, open access resource and therefore they are often over-exploited. 
D)  privately owned and therefore they are allocated efficiently. 
A)  allocated efficiently because there are no limitations on entry into the ocean fisheries business. 
B)  scarce, but only because of the highly restrictive regulations imposed by various nations. 
C)  a commonly owned, open access resource and therefore they are often over-exploited. 
D)  privately owned and therefore they are allocated efficiently.

Question 14

When barriers to entry are high, a monopolist (or cartel) will often be able to increase their profits by

Accepted Answer

A)  expanding their output so they can increase their price. 
B)  reducing their output so they can raise their price. 
C)  expanding their output so they can lower their price. 
D)  reducing their output so they can lower their price. 
A)  expanding their output so they can increase their price. 
B)  reducing their output so they can raise their price. 
C)  expanding their output so they can lower their price. 
D)  reducing their output so they can lower their price.

Question 15

Figure 11-17  
-Refer to Figure 11-17. Profit will be maximized by charging a price equal to

Accepted Answer

A)  P0. 
B)  P1. 
C)  P2. 
D)  P3. 
A)  P0. 
B)  P1. 
C)  P2. 
D)  P3.

Question 16

In the case where a natural monopoly exists in an industry,

Accepted Answer

A)  a competitive market structure will be costly and difficult to maintain. 
B)  a competitive market structure will be more efficient and more equitable. 
C)  government regulations will always improve efficiency in this industry. 
D)  economies of scale will not be a consideration when analyzing the proper structure of the industry. 
A)  a competitive market structure will be costly and difficult to maintain. 
B)  a competitive market structure will be more efficient and more equitable. 
C)  government regulations will always improve efficiency in this industry. 
D)  economies of scale will not be a consideration when analyzing the proper structure of the industry.

Question 17

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

Accepted Answer

A)  an unprecedented increase in truck sales 
B)  an immediate response by GM and Dodge 
C)  a visit from the antitrust authorities of the government 
D)  a revolution from Ford stockholders 
E)  announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years 
A)  an unprecedented increase in truck sales 
B)  an immediate response by GM and Dodge 
C)  a visit from the antitrust authorities of the government 
D)  a revolution from Ford stockholders 
E)  announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years

Question 18

The demand curve of a monopolist is

Accepted Answer

A)  identical to the marginal cost curve. 
B)  downward sloping and above the marginal revenue curve. 
C)  downward sloping and below the marginal revenue. 
D)  elastic because of a recognized interdependence with other firms. 
A)  identical to the marginal cost curve. 
B)  downward sloping and above the marginal revenue curve. 
C)  downward sloping and below the marginal revenue. 
D)  elastic because of a recognized interdependence with other firms.

Question 19

Figure 11-17  
-Refer to Figure 11-17. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1. 
A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1.

Question 20

"Since the wind and the flowing rivers can take away industrial waste without charge, polluting is a profitable activity even when people are seriously harmed downwind or downstream, unless environmental regulators stop it." This statement is

Accepted Answer

A)  false if the property rights of downwind or downstream individuals are protected. 
B)  true if the property rights of industrialists are enforced. 
C)  never true. 
D)  always true. 
A)  false if the property rights of downwind or downstream individuals are protected. 
B)  true if the property rights of industrialists are enforced. 
C)  never true. 
D)  always true.

Which of the following are illegal under the antitrust laws of the United States?

An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a

Economic thinking indicates that efficient adaptation strategies to reduce harms from future global warming will

Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price. If a firm wanted to break this agreement and not be detected, what would be one way to do this?

Use the figure to answer the following question(s). Figure 11-3 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-3?

Figure 11-21 -The welfare loss associated with the unregulated natural monopoly in Figure 11-21 is shown by the area

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

Cartels are difficult to maintain because

Use the figure to answer the following question(s). Figure 11-2 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

When natural monopoly is present in an industry, the per-unit costs of production will be

When economists talk about a barrier to entry, they are referring to

The scientific evidence on the causes and consequences of global warming

The fish in the ocean are

When barriers to entry are high, a monopolist (or cartel) will often be able to increase their profits by

Figure 11-17 -Refer to Figure 11-17. Profit will be maximized by charging a price equal to

In the case where a natural monopoly exists in an industry,

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

The demand curve of a monopolist is

Figure 11-17 -Refer to Figure 11-17. If the monopoly firm is currently producing Q₃ units of output, then a decrease in output will necessarily cause profit to

"Since the wind and the flowing rivers can take away industrial waste without charge, polluting is a profitable activity even when people are seriously harmed downwind or downstream, unless environmental regulators stop it." This statement is

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 are illegal under the antitrust laws of the United States?

An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a

Economic thinking indicates that efficient adaptation strategies to reduce harms from future global warming will

Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price. If a firm wanted to break this agreement and not be detected, what would be one way to do this?

Use the figure to answer the following question(s). Figure 11-3 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-3?

Figure 11-21 -The welfare loss associated with the unregulated natural monopoly in Figure 11-21 is shown by the area

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

Cartels are difficult to maintain because

Use the figure to answer the following question(s). Figure 11-2 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

When natural monopoly is present in an industry, the per-unit costs of production will be

When economists talk about a barrier to entry, they are referring to

The scientific evidence on the causes and consequences of global warming

The fish in the ocean are

When barriers to entry are high, a monopolist (or cartel) will often be able to increase their profits by

Figure 11-17 -Refer to Figure 11-17. Profit will be maximized by charging a price equal to

In the case where a natural monopoly exists in an industry,

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

The demand curve of a monopolist is

Figure 11-17 -Refer to Figure 11-17. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

"Since the wind and the flowing rivers can take away industrial waste without charge, polluting is a profitable activity even when people are seriously harmed downwind or downstream, unless environmental regulators stop it." This statement is

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

Figure 11-17 -Refer to Figure 11-17. If the monopoly firm is currently producing Q₃ units of output, then a decrease in output will necessarily cause profit to