Question 1

Pollution charges will be efficient if

Accepted Answer

A)  the charge is just equal to the cost borne by others from the pollution. 
B)  the charge is greater than the cost borne by others from the pollution. 
C)  the charge is less than the cost borne by others from the pollution. 
D)  none of the above. 
A)  the charge is just equal to the cost borne by others from the pollution. 
B)  the charge is greater than the cost borne by others from the pollution. 
C)  the charge is less than the cost borne by others from the pollution. 
D)  none of the above.

Question 2

Which of the following explains why monopoly is uncommon in the real world?

Accepted Answer

A)  firms usually face downward-sloping demand curves. 
B)  supply curves slope upward. 
C)  price is usually set equal to marginal cost by firms. 
D)  there are reasonable substitutes for most goods. 
A)  firms usually face downward-sloping demand curves. 
B)  supply curves slope upward. 
C)  price is usually set equal to marginal cost by firms. 
D)  there are reasonable substitutes for most goods.

Question 3

Patents grant their owners

Accepted Answer

A)  a property right to new products and production processes that they have developed. 
B)  the exclusive right to use a newly developed process or product forever. 
C)  the right to use resources owned by their competitors. 
D)  an exemption from laws that prohibit price discrimination. 
A)  a property right to new products and production processes that they have developed. 
B)  the exclusive right to use a newly developed process or product forever. 
C)  the right to use resources owned by their competitors. 
D)  an exemption from laws that prohibit price discrimination.

Question 4

Use the figure to answer the following question(s).
Figure 11-12  
-Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry. The price of this product is most likely to be

Accepted Answer

A)  greater than P2. 
B)  P2. 
C)  P1. 
D)  in the range between P1 and P2. 
A)  greater than P2. 
B)  P2. 
C)  P1. 
D)  in the range between P1 and P2.

Question 5

Which of the following is a unique characteristic of the oligopolistic market structure?

Accepted Answer

A)  low barriers to entry 
B)  a large number of firms producing highly differentiated products that are complements to each other 
C)  product differentiation among the products produced by individual firms 
D)  mutual interdependence among firms in demand, and thus, in price decisions 
A)  low barriers to entry 
B)  a large number of firms producing highly differentiated products that are complements to each other 
C)  product differentiation among the products produced by individual firms 
D)  mutual interdependence among firms in demand, and thus, in price decisions

Question 6

Consider the following demand and cost information for a monopoly.
Table 11-1
  
-Refer to Table 11-1. The maximum profit this monopolist can earn is

Accepted Answer

A)  $8. 
B)  $18. 
C)  $42. 
D)  $48. 
A)  $8. 
B)  $18. 
C)  $42. 
D)  $48.

Question 7

When a park is funded by visitors, but not by taxpayers in general,

Accepted Answer

A)  there will be too few parks, because most people will not pay to use a park. 
B)  visitors will be better served, because poor service would lead to reductions in revenues. 
C)  park budgets will decline. 
D)  park quality will decline. 
A)  there will be too few parks, because most people will not pay to use a park. 
B)  visitors will be better served, because poor service would lead to reductions in revenues. 
C)  park budgets will decline. 
D)  park quality will decline.

Question 8

A natural monopoly is defined as an industry in which one firm

Accepted Answer

A)  can produce the entire industry output at a lower average cost than a larger number of firms could. 
B)  can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C)  is very large relative to other firms that could enter the industry. 
D)  can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry. 
A)  can produce the entire industry output at a lower average cost than a larger number of firms could. 
B)  can produce the entire industry output at a lower marginal cost than a larger number of firms could. 
C)  is very large relative to other firms that could enter the industry. 
D)  can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

Question 9

Use the figure to answer the following question(s).
Figure 11-8  
-The demand and cost conditions in an industry are as depicted in Figure 11-8. In the viewpoint of economic efficiency, what would the ideal price and output be?

Accepted Answer

A)  price, $10; quantity produced, 100 
B)  price, $15; quantity produced, 50 
C)  price, $15; quantity produced, 75 
D)  price, $20; quantity produced, 50 
A)  price, $10; quantity produced, 100 
B)  price, $15; quantity produced, 50 
C)  price, $15; quantity produced, 75 
D)  price, $20; quantity produced, 50

Question 10

Oligopolies would like to act like a

Accepted Answer

A)  duopoly, but self-interest often drives them closer to the competitive outcome. 
B)  competitive firm, but self-interest often drives them closer to the duopoly outcome. 
C)  monopoly, but self-interest often drives them closer to the duopoly outcome. 
D)  monopoly, but self-interest often drives them closer to the competitive outcome. 
A)  duopoly, but self-interest often drives them closer to the competitive outcome. 
B)  competitive firm, but self-interest often drives them closer to the duopoly outcome. 
C)  monopoly, but self-interest often drives them closer to the duopoly outcome. 
D)  monopoly, but self-interest often drives them closer to the competitive outcome.

Question 11

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 12

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 13

Each member of a cartel

Accepted Answer

A)  faces a temptation to cheat on the agreement because lowering its price slightly below the established price will usually increase the firm's sales and profit. 
B)  faces a temptation to cheat on the agreement because raising its price slightly above the established price will usually increase the firm's sales and profit. 
C)  has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually have no impact on the firm's sales and profit. 
D)  has no temptation to cheat on the agreement because raising its price slightly above the established price will usually decrease the firm's sales and profit. 
E)  has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually lower the firm's sales and profit. 
A)  faces a temptation to cheat on the agreement because lowering its price slightly below the established price will usually increase the firm's sales and profit. 
B)  faces a temptation to cheat on the agreement because raising its price slightly above the established price will usually increase the firm's sales and profit. 
C)  has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually have no impact on the firm's sales and profit. 
D)  has no temptation to cheat on the agreement because raising its price slightly above the established price will usually decrease the firm's sales and profit. 
E)  has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually lower the firm's sales and profit.

Question 14

Which of the following is an effort to establish property rights and promote more efficient allocation of ocean fisheries?

Accepted Answer

A)  Regulations limiting the length of the fishing season. 
B)  Regulations reducing the size of fishing boats and other equipment used in the industry. 
C)  Establishment of transferable individual fishing quotas. 
D)  Complete open access of ocean fishing to anyone who would like to enter the business. 
A)  Regulations limiting the length of the fishing season. 
B)  Regulations reducing the size of fishing boats and other equipment used in the industry. 
C)  Establishment of transferable individual fishing quotas. 
D)  Complete open access of ocean fishing to anyone who would like to enter the business.

Question 15

What problem does the government have that makes price regulation less than an ideal solution?

Accepted Answer

A)  There is no effective way to enforce price regulation. 
B)  The government cannot tell what price a firm is charging. 
C)  Regulators frequently will not have the information they need to set prices. 
D)  Regulation often will lead to lower costs. 
A)  There is no effective way to enforce price regulation. 
B)  The government cannot tell what price a firm is charging. 
C)  Regulators frequently will not have the information they need to set prices. 
D)  Regulation often will lead to lower costs.

Question 16

In an oligopolistic market, if rival sellers act independently, each will have a strong incentive to

Accepted Answer

A)  reduce price in order to increase sales and gain a larger share of the total market. 
B)  increase price in order to get a larger share of the market and make larger profits. 
C)  restrict output and raise price in order to achieve higher profits. 
D)  maintain agreements to lower price and decrease product quality in order to earn higher profits. 
A)  reduce price in order to increase sales and gain a larger share of the total market. 
B)  increase price in order to get a larger share of the market and make larger profits. 
C)  restrict output and raise price in order to achieve higher profits. 
D)  maintain agreements to lower price and decrease product quality in order to earn higher profits.

Question 17

A monopolist will earn economic profits as long as his price exceeds

Accepted Answer

A)  marginal revenue. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost. 
A)  marginal revenue. 
B)  average fixed cost. 
C)  average variable cost. 
D)  average total cost.

Question 18

For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140. Marginal revenue at that output level is

Accepted Answer

A)  equal to $140. 
B)  greater than $140. 
C)  less than $140. 
D)  less than marginal cost. 
E)  greater than average revenue. 
A)  equal to $140. 
B)  greater than $140. 
C)  less than $140. 
D)  less than marginal cost. 
E)  greater than average revenue.

Question 19

Figure 11-18  
-The profit-maximizing output and price for the firm in Figure 11-18, which charges the same price to all customers, are

Accepted Answer

A)  117 and $14 
B)  150 and $22 
C)  150 and $14 
D)  117 and $22 
E)  117 and $24 
A)  117 and $14 
B)  150 and $22 
C)  150 and $14 
D)  117 and $22 
E)  117 and $24

Question 20

The Endangered Species Act

Accepted Answer

A)  weakened the property rights of landowners. 
B)  encourages landowners to find new ways to provide habitat for listed species. 
C)  provides compensation to landowners affected by the law. 
D)  has not benefited any of the species protected under the act. 
A)  weakened the property rights of landowners. 
B)  encourages landowners to find new ways to provide habitat for listed species. 
C)  provides compensation to landowners affected by the law. 
D)  has not benefited any of the species protected under the act.

Pollution charges will be efficient if

Which of the following explains why monopoly is uncommon in the real world?

Patents grant their owners

Use the figure to answer the following question(s). Figure 11-12 -Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry. The price of this product is most likely to be

Which of the following is a unique characteristic of the oligopolistic market structure?

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. The maximum profit this monopolist can earn is

When a park is funded by visitors, but not by taxpayers in general,

A natural monopoly is defined as an industry in which one firm

Use the figure to answer the following question(s). Figure 11-8 -The demand and cost conditions in an industry are as depicted in Figure 11-8. In the viewpoint of economic efficiency, what would the ideal price and output be?

Oligopolies would like to act like a

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

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

Each member of a cartel

Which of the following is an effort to establish property rights and promote more efficient allocation of ocean fisheries?

What problem does the government have that makes price regulation less than an ideal solution?

In an oligopolistic market, if rival sellers act independently, each will have a strong incentive to

A monopolist will earn economic profits as long as his price exceeds

For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140. Marginal revenue at that output level is

Figure 11-18 -The profit-maximizing output and price for the firm in Figure 11-18, which charges the same price to all customers, are

The Endangered Species Act

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

Pollution charges will be efficient if

Which of the following explains why monopoly is uncommon in the real world?

Patents grant their owners

Use the figure to answer the following question(s). Figure 11-12 -Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry. The price of this product is most likely to be

Which of the following is a unique characteristic of the oligopolistic market structure?

Consider the following demand and cost information for a monopoly. Table 11-1 -Refer to Table 11-1. The maximum profit this monopolist can earn is

When a park is funded by visitors, but not by taxpayers in general,

A natural monopoly is defined as an industry in which one firm

Use the figure to answer the following question(s). Figure 11-8 -The demand and cost conditions in an industry are as depicted in Figure 11-8. In the viewpoint of economic efficiency, what would the ideal price and output be?

Oligopolies would like to act like a

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

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

Each member of a cartel

Which of the following is an effort to establish property rights and promote more efficient allocation of ocean fisheries?

What problem does the government have that makes price regulation less than an ideal solution?

In an oligopolistic market, if rival sellers act independently, each will have a strong incentive to

A monopolist will earn economic profits as long as his price exceeds

For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140. Marginal revenue at that output level is

Figure 11-18 -The profit-maximizing output and price for the firm in Figure 11-18, which charges the same price to all customers, are

The Endangered Species Act

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