Question 1

Figure 11-20  
-At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total revenue of

Accepted Answer

A)  $308 
B)  $187 
C)  $216 
D)  $306 
E)  $272 
A)  $308 
B)  $187 
C)  $216 
D)  $306 
E)  $272

Question 2

The key element in preserving a monopoly is

Accepted Answer

A)  government subsidy of critical enterprises. 
B)  keeping potential rivals out of the market. 
C)  guaranteeing availability of substitute products. 
D)  increased advertising expenditure. 
A)  government subsidy of critical enterprises. 
B)  keeping potential rivals out of the market. 
C)  guaranteeing availability of substitute products. 
D)  increased advertising expenditure.

Question 3

A market situation where a small number of sellers compose the entire industry is called

Accepted Answer

A)  monopolistic competition. 
B)  monopsony. 
C)  monopoly. 
D)  oligopoly. 
A)  monopolistic competition. 
B)  monopsony. 
C)  monopoly. 
D)  oligopoly.

Question 4

Mr. Stewart owns the only hardware store in a small Midwestern town. His nearest competition is more than 50 miles away, yet he does not earn any economic profit. Does someone need to explain the economic concept of monopoly to him?

Accepted Answer

Most likely, Mr. Stewart is aware of the

Question 5

Licensing is a process in which a firm wanting to enter a market must

Accepted Answer

A)  require all potential customers to obtain government permission to purchase the product. 
B)  notify the government within a certain period after it has entered the market. 
C)  pay all overdue taxes before entering the market. 
D)  obtain permission from the government to enter the market. 
A)  require all potential customers to obtain government permission to purchase the product. 
B)  notify the government within a certain period after it has entered the market. 
C)  pay all overdue taxes before entering the market. 
D)  obtain permission from the government to enter the market.

Question 6

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

Accepted Answer

A)  restrict output to increase the price even higher. 
B)  raise price and expand output to increase profit. 
C)  lower price and expand output to increase profit. 
D)  attempt to maintain this position because it is consistent with profit maximization. 
A)  restrict output to increase the price even higher. 
B)  raise price and expand output to increase profit. 
C)  lower price and expand output to increase profit. 
D)  attempt to maintain this position because it is consistent with profit maximization.

Question 7

Regulating "natural monopolies" according to the "rate of return" criterion is likely to

Accepted Answer

A)  increase the monopolist's incentive to minimize cost. 
B)  increase output compared to the situation where the firm is unregulated. 
C)  completely eliminate the "welfare loss" due to monopoly. 
D)  do all of the above 
A)  increase the monopolist's incentive to minimize cost. 
B)  increase output compared to the situation where the firm is unregulated. 
C)  completely eliminate the "welfare loss" due to monopoly. 
D)  do all of the above

Question 8

Even though a cartel is often profitable for its members, cartel arrangements contain the seeds of their own disintegration because

Accepted Answer

A)  a price maintained above each cartel member's marginal cost provides each member with an incentive to offer secret price reductions to attract additional customers. 
B)  the profits earned by cartel members will induce others to enter the industry. 
C)  cartel members will attempt to garner more of the total profit for themselves by cheating on their agreement with other members. 
D)  all of the above are correct. 
A)  a price maintained above each cartel member's marginal cost provides each member with an incentive to offer secret price reductions to attract additional customers. 
B)  the profits earned by cartel members will induce others to enter the industry. 
C)  cartel members will attempt to garner more of the total profit for themselves by cheating on their agreement with other members. 
D)  all of the above are correct.

Question 9

When a regulatory agency uses marginal cost pricing to regulate a monopolist,

Accepted Answer

A)  price will exceed marginal cost. 
B)  production costs will probably exceed the total revenues of the monopolist. 
C)  marginal cost will equal average total cost. 
D)  social welfare could be improved if average cost pricing was used instead 
A)  price will exceed marginal cost. 
B)  production costs will probably exceed the total revenues of the monopolist. 
C)  marginal cost will equal average total cost. 
D)  social welfare could be improved if average cost pricing was used instead

Question 10

Most of our environmental problems exist because of

Accepted Answer

A)  a lack of enforced and easily traded property rights. 
B)  consumer ignorance. 
C)  profit maximization on the part of business firms. 
D)  the failure of political officials to regulate business activities. 
A)  a lack of enforced and easily traded property rights. 
B)  consumer ignorance. 
C)  profit maximization on the part of business firms. 
D)  the failure of political officials to regulate business activities.

Question 11

An oligopolistic firm that is deciding the price to charge, the output to produce, or the quality of product to offer, must consider

Accepted Answer

A)  the regulatory price limits that are always present with oligopoly. 
B)  the potential reactions of rivals in the market. 
C)  the fact that per-unit costs will usually increase as the scale of production increases. 
D)  that entry barriers into oligopolistic markets are low. 
A)  the regulatory price limits that are always present with oligopoly. 
B)  the potential reactions of rivals in the market. 
C)  the fact that per-unit costs will usually increase as the scale of production increases. 
D)  that entry barriers into oligopolistic markets are low.

Question 12

When the federal government owns land resources, such as parks, that are funded by tax dollars,

Accepted Answer

A)  park mangers receive full information about visitor desires simply by asking visitors. 
B)  public park managers have the same incentives as private park managers, where visitors pay at least the actual costs of use. 
C)  park managers devote much time and effort to satisfying congressional desires instead of visitor desires. 
D)  park managers will be well-informed of visitor demands regardless of the funding mechanism. 
A)  park mangers receive full information about visitor desires simply by asking visitors. 
B)  public park managers have the same incentives as private park managers, where visitors pay at least the actual costs of use. 
C)  park managers devote much time and effort to satisfying congressional desires instead of visitor desires. 
D)  park managers will be well-informed of visitor demands regardless of the funding mechanism.

Question 13

Government-operated firms with monopoly power

Accepted Answer

A)  will necessarily meet the criteria of economic efficiency, as long as price equals average total cost. 
B)  will always be more efficient than private firms because they do not have to make a profit. 
C)  are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees. 
D)  are highly responsive to changes in the preferences of individual consumers since consumers are also voters. 
A)  will necessarily meet the criteria of economic efficiency, as long as price equals average total cost. 
B)  will always be more efficient than private firms because they do not have to make a profit. 
C)  are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees. 
D)  are highly responsive to changes in the preferences of individual consumers since consumers are also voters.

Question 14

Collusion

Accepted Answer

A)  is exactly the same thing as competition. 
B)  involves cooperative actions by sellers at the expense of buyers. 
C)  requires competitive actions by sellers to win customers from rival firms. 
D)  can only be achieved in price-taker markets. 
A)  is exactly the same thing as competition. 
B)  involves cooperative actions by sellers at the expense of buyers. 
C)  requires competitive actions by sellers to win customers from rival firms. 
D)  can only be achieved in price-taker markets.

Question 15

Consider the following demand and cost information for a monopoly.
Table 11-1
  
-Refer to Table 11-1. The marginal cost of the fourth unit is

Accepted Answer

A)  $6. 
B)  $12. 
C)  $25. 
D)  $60. 
A)  $6. 
B)  $12. 
C)  $25. 
D)  $60.

Question 16

Figure 11-20  
-At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

Accepted Answer

A)  $264 
B)  $306 
C)  $216 
D)  $187 
E)  $176 
A)  $264 
B)  $306 
C)  $216 
D)  $187 
E)  $176

Question 17

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 18

Which of the following will likely have the strongest demand for large expenditures on environmental quality?

Accepted Answer

A)  Wealthy countries. 
B)  Poor countries. 
C)  Countries with air pollution problems. 
D)  Countries with water pollution problems. 
A)  Wealthy countries. 
B)  Poor countries. 
C)  Countries with air pollution problems. 
D)  Countries with water pollution problems.

Question 19

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

Accepted Answer

A)  they are unable to maintain the same degree of monopoly power achieved by a monopolist. 
B)  each firm's profit always ends up being zero. 
C)  competitive pressures are absent from the market. 
D)  it will be easier to maintain collusive agreements. 
A)  they are unable to maintain the same degree of monopoly power achieved by a monopolist. 
B)  each firm's profit always ends up being zero. 
C)  competitive pressures are absent from the market. 
D)  it will be easier to maintain collusive agreements.

Question 20

Which of the following is true of pure monopoly?

Accepted Answer

A)  Monopoly expands the options available to consumers. 
B)  Monopoly results in allocative inefficiency. 
C)  Profits and losses induce firms to enter and exit from industries. 
D)  Monopoly works well when governments regulate prices. 
A)  Monopoly expands the options available to consumers. 
B)  Monopoly results in allocative inefficiency. 
C)  Profits and losses induce firms to enter and exit from industries. 
D)  Monopoly works well when governments regulate prices.

Figure 11-20 -At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total revenue of

The key element in preserving a monopoly is

A market situation where a small number of sellers compose the entire industry is called

Mr. Stewart owns the only hardware store in a small Midwestern town. His nearest competition is more than 50 miles away, yet he does not earn any economic profit. Does someone need to explain the economic concept of monopoly to him?

Licensing is a process in which a firm wanting to enter a market must

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

Regulating "natural monopolies" according to the "rate of return" criterion is likely to

Even though a cartel is often profitable for its members, cartel arrangements contain the seeds of their own disintegration because

When a regulatory agency uses marginal cost pricing to regulate a monopolist,

Most of our environmental problems exist because of

An oligopolistic firm that is deciding the price to charge, the output to produce, or the quality of product to offer, must consider

When the federal government owns land resources, such as parks, that are funded by tax dollars,

Government-operated firms with monopoly power

Collusion

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. The marginal cost of the fourth unit is

Figure 11-20 -At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

Government regulation is

Which of the following will likely have the strongest demand for large expenditures on environmental quality?

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

Which of the following is true of pure monopoly?

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

Figure 11-20 -At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total revenue of

The key element in preserving a monopoly is

A market situation where a small number of sellers compose the entire industry is called

Mr. Stewart owns the only hardware store in a small Midwestern town. His nearest competition is more than 50 miles away, yet he does not earn any economic profit. Does someone need to explain the economic concept of monopoly to him?

Licensing is a process in which a firm wanting to enter a market must

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

Regulating "natural monopolies" according to the "rate of return" criterion is likely to

Even though a cartel is often profitable for its members, cartel arrangements contain the seeds of their own disintegration because

When a regulatory agency uses marginal cost pricing to regulate a monopolist,

Most of our environmental problems exist because of

An oligopolistic firm that is deciding the price to charge, the output to produce, or the quality of product to offer, must consider

When the federal government owns land resources, such as parks, that are funded by tax dollars,

Government-operated firms with monopoly power

Collusion

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. The marginal cost of the fourth unit is

Figure 11-20 -At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

Government regulation is

Which of the following will likely have the strongest demand for large expenditures on environmental quality?

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

Which of the following is true of pure monopoly?

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