Question 1

A monopolist finds out that if he lowers his price from $10 to $8, sales rise from 100 units to 115 units. Therefore, in this price range,

Accepted Answer

A)  marginal revenue is positive. 
B)  marginal revenue is negative. 
C)  the price elasticity of demand is greater than one. 
D)  both a and c are correct. 
A)  marginal revenue is positive. 
B)  marginal revenue is negative. 
C)  the price elasticity of demand is greater than one. 
D)  both a and c are correct.

Question 2

Figure 11-18  
-The total revenue for the firm in Figure 11-18, a monopolist that maximizes profit while charging all customers the same price, is

Accepted Answer

A)  $2,574 
B)  $2,808 
C)  $2,100 
D)  $1,638 
E)  $3,300 
A)  $2,574 
B)  $2,808 
C)  $2,100 
D)  $1,638 
E)  $3,300

Question 3

The incentive for managers of a government-operated firm (for example, a state university or the U.S. Post Office) to operate efficiently will be

Accepted Answer

A)  low because all government workers are lazy. 
B)  low because there are no residual claimants to monitor and institute cost-reducing measures. 
C)  high because government employees and officials will be less concerned with personal gain. 
D)  high because voters can easily detect those who are to blame for inefficiencies and replace them. 
A)  low because all government workers are lazy. 
B)  low because there are no residual claimants to monitor and institute cost-reducing measures. 
C)  high because government employees and officials will be less concerned with personal gain. 
D)  high because voters can easily detect those who are to blame for inefficiencies and replace them.

Question 4

When it is difficult to assign and enforce property rights,

Accepted Answer

A)  markets result in outcomes that are often inefficient. 
B)  courts can easily negotiate efficient outcomes. 
C)  establishing better property rights is always the best way to deal with environmental problems. 
D)  government regulation can never improve on the outcomes generated by competitive markets. 
A)  markets result in outcomes that are often inefficient. 
B)  courts can easily negotiate efficient outcomes. 
C)  establishing better property rights is always the best way to deal with environmental problems. 
D)  government regulation can never improve on the outcomes generated by competitive markets.

Question 5

Providing citizens with enforceable property rights to resources

Accepted Answer

A)  increases resource conservation and decreases wasteful resource use. 
B)  promotes economic prosperity and thus increases demand for environmental quality. 
C)  provides people with a strong incentive not to damage the privately owned resources of others. 
D)  does all of the above. 
A)  increases resource conservation and decreases wasteful resource use. 
B)  promotes economic prosperity and thus increases demand for environmental quality. 
C)  provides people with a strong incentive not to damage the privately owned resources of others. 
D)  does all of the above.

Question 6

When oligopolistic firms collude to maximize their joint profits, in comparison with the situation in competitive markets, their actions generally lead to

Accepted Answer

A)  a larger output and lower prices. 
B)  a smaller output and higher prices. 
C)  a smaller output and lower prices. 
D)  the same output and higher prices. 
A)  a larger output and lower prices. 
B)  a smaller output and higher prices. 
C)  a smaller output and lower prices. 
D)  the same output and higher prices.

Question 7

Which one of the following is the best description of a monopolist?

Accepted Answer

A)  a firm that produces a single product 
B)  a firm that is the sole producer of a narrowly defined product class, such as yellow, grade-A butter produced in Wisconsin 
C)  a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry 
D)  a firm that is large relative to its competitors 
A)  a firm that produces a single product 
B)  a firm that is the sole producer of a narrowly defined product class, such as yellow, grade-A butter produced in Wisconsin 
C)  a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry 
D)  a firm that is large relative to its competitors

Question 8

Which of the following is true under unregulated monopoly?

Accepted Answer

A)  Monopoly results in more output than under pure competition. 
B)  Monopoly results in a more efficient allocation of resources than competition. 
C)  Monopoly expands the choices available to consumers. 
D)  Monopoly results in lower output and higher prices than competition. 
A)  Monopoly results in more output than under pure competition. 
B)  Monopoly results in a more efficient allocation of resources than competition. 
C)  Monopoly expands the choices available to consumers. 
D)  Monopoly results in lower output and higher prices than competition.

Question 9

Because of the rise of global competition and free trade,

Accepted Answer

A)  antitrust policy may be less necessary than previously thought. 
B)  U.S. industrial concentration poses more of a threat to consumers. 
C)  U.S. markets are becoming less competitive. 
D)  U.S. manufacturers are seeking fewer trade barriers. 
A)  antitrust policy may be less necessary than previously thought. 
B)  U.S. industrial concentration poses more of a threat to consumers. 
C)  U.S. markets are becoming less competitive. 
D)  U.S. manufacturers are seeking fewer trade barriers.

Question 10

Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

Accepted Answer

A)  The output of the monopolist will be too large and its price too high. 
B)  The output of the monopolist will be too large and its price too low. 
C)  The output of the monopolist will be too small and its price too high. 
D)  The output of the monopolist will be too small and its price too low. 
A)  The output of the monopolist will be too large and its price too high. 
B)  The output of the monopolist will be too large and its price too low. 
C)  The output of the monopolist will be too small and its price too high. 
D)  The output of the monopolist will be too small and its price too low.

Question 11

When the government imposes a barrier to entry in a market,

Accepted Answer

A)  more resources will be wasted by firms attempting to secure and maintain market power. 
B)  the options available to consumers will increase in the protected market. 
C)  allocative efficiency will be improved by the reduction of wasteful competition. 
D)  consumers will be better able to direct the smaller number of producers to serve their interests. 
A)  more resources will be wasted by firms attempting to secure and maintain market power. 
B)  the options available to consumers will increase in the protected market. 
C)  allocative efficiency will be improved by the reduction of wasteful competition. 
D)  consumers will be better able to direct the smaller number of producers to serve their interests.

Question 12

Which of the following has tended to increase the competitiveness of markets in the United States during the last couple of decades?

Accepted Answer

A)  increases in transport costs 
B)  development of the Internet 
C)  decreased competition from imports 
D)  more government regulation of product quality 
A)  increases in transport costs 
B)  development of the Internet 
C)  decreased competition from imports 
D)  more government regulation of product quality

Question 13

The Big River Power Company is a regulated monopolist with pricing structured such that the stockholders receive a "fair" rate of return based on the firm's unit costs. Can economic thinking predict how the company executive offices are likely to be furnished? Given a choice between Hawaii and downtown Cleveland (20 miles away), where would we expect the Board of Directors to meet?

Accepted Answer

We would expect the firm to ha

Question 14

When is the definition and enforcement of property rights especially difficult?

Accepted Answer

A)  When many polluters harm a large group of people by emitting the same pollutant. 
B)  When a single polluter is harming a single person or entity. 
C)  When land is owned by a corporation. 
D)  When the benefits of prosecution are clear. 
A)  When many polluters harm a large group of people by emitting the same pollutant. 
B)  When a single polluter is harming a single person or entity. 
C)  When land is owned by a corporation. 
D)  When the benefits of prosecution are clear.

Question 15

Cartel agreements are difficult to maintain because individual members

Accepted Answer

A)  can gain by raising their price above the price that is best for the cartel. 
B)  are often unable to police the price and output policies of other members. 
C)  can gain by secretly raising their price above the price that is best for the cartel. 
D)  can enforce price arrangements vigorously in court. 
A)  can gain by raising their price above the price that is best for the cartel. 
B)  are often unable to police the price and output policies of other members. 
C)  can gain by secretly raising their price above the price that is best for the cartel. 
D)  can enforce price arrangements vigorously in court.

Question 16

Which of the following is a characteristic of an oligopolistic industry?

Accepted Answer

A)  interdependence of a firm's price and output decisions 
B)  low barriers to entry 
C)  small output of individual firms relative to the total market 
D)  a large number of competing firms 
A)  interdependence of a firm's price and output decisions 
B)  low barriers to entry 
C)  small output of individual firms relative to the total market 
D)  a large number of competing firms

Question 17

-The demand and total cost schedules of a monopolist are presented in Table 11-3. What price should a profit-maximizing monopolist charge?

Accepted Answer

A)  $10 
B)  $9 
C)  $8 
D)  $7 
A)  $10 
B)  $9 
C)  $8 
D)  $7

Question 18

Use the figure to answer the following question(s).
Figure 11-2  
-The cost and demand conditions for a monopolist are depicted in Figure 11-2. If the monopolist is maximizing profit, it will charge a price of

Accepted Answer

A)  $30 and produce an output of 4,000. 
B)  $40 and produce an output of 4,000. 
C)  $40 and produce an output of 2,000. 
D)  more than $40. 
A)  $30 and produce an output of 4,000. 
B)  $40 and produce an output of 4,000. 
C)  $40 and produce an output of 2,000. 
D)  more than $40.

Question 19

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

Accepted Answer

A)  Air quality in New York City. 
B)  Water pollution caused by a large number of firms at a location near the same river. 
C)  Noise pollution from aircraft near a busy airport. 
D)  All of the above. 
A)  Air quality in New York City. 
B)  Water pollution caused by a large number of firms at a location near the same river. 
C)  Noise pollution from aircraft near a busy airport. 
D)  All of the above.

Question 20

The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist.
Figure 11-15  
-Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing?

Accepted Answer

A)  Triangle bde 
B)  Triangle bge 
C)  Rectangle acdb 
D)  Rectangle cfgd 
A)  Triangle bde 
B)  Triangle bge 
C)  Rectangle acdb 
D)  Rectangle cfgd

A monopolist finds out that if he lowers his price from $10 to $8, sales rise from 100 units to 115 units. Therefore, in this price range,

Figure 11-18 -The total revenue for the firm in Figure 11-18, a monopolist that maximizes profit while charging all customers the same price, is

The incentive for managers of a government-operated firm (for example, a state university or the U.S. Post Office) to operate efficiently will be

When it is difficult to assign and enforce property rights,

Providing citizens with enforceable property rights to resources

When oligopolistic firms collude to maximize their joint profits, in comparison with the situation in competitive markets, their actions generally lead to

Which one of the following is the best description of a monopolist?

Which of the following is true under unregulated monopoly?

Because of the rise of global competition and free trade,

Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

When the government imposes a barrier to entry in a market,

Which of the following has tended to increase the competitiveness of markets in the United States during the last couple of decades?

When is the definition and enforcement of property rights especially difficult?

Cartel agreements are difficult to maintain because individual members

Which of the following is a characteristic of an oligopolistic industry?

-The demand and total cost schedules of a monopolist are presented in Table 11-3. What price should a profit-maximizing monopolist charge?

Use the figure to answer the following question(s). Figure 11-2 -The cost and demand conditions for a monopolist are depicted in Figure 11-2. If the monopolist is maximizing profit, it will charge a price of

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. Figure 11-15 -Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing?

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

A monopolist finds out that if he lowers his price from $10 to $8, sales rise from 100 units to 115 units. Therefore, in this price range,

Figure 11-18 -The total revenue for the firm in Figure 11-18, a monopolist that maximizes profit while charging all customers the same price, is

The incentive for managers of a government-operated firm (for example, a state university or the U.S. Post Office) to operate efficiently will be

When it is difficult to assign and enforce property rights,

Providing citizens with enforceable property rights to resources

When oligopolistic firms collude to maximize their joint profits, in comparison with the situation in competitive markets, their actions generally lead to

Which one of the following is the best description of a monopolist?

Which of the following is true under unregulated monopoly?

Because of the rise of global competition and free trade,

Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

When the government imposes a barrier to entry in a market,

Which of the following has tended to increase the competitiveness of markets in the United States during the last couple of decades?

When is the definition and enforcement of property rights especially difficult?

Cartel agreements are difficult to maintain because individual members

Which of the following is a characteristic of an oligopolistic industry?

-The demand and total cost schedules of a monopolist are presented in Table 11-3. What price should a profit-maximizing monopolist charge?

Use the figure to answer the following question(s). Figure 11-2 -The cost and demand conditions for a monopolist are depicted in Figure 11-2. If the monopolist is maximizing profit, it will charge a price of

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. Figure 11-15 -Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing?

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