Question 1

In the area of business, rent-seeking often involves

Accepted Answer

A)  the use of resources to construct high-priced rental housing. 
B)  the use of resources to secure and maintain a grant of monopoly power from the government. 
C)  an agreement between firms to raise prices and limit entry. 
D)  an agreement between a firm and a customer that makes both parties better off. 
A)  the use of resources to construct high-priced rental housing. 
B)  the use of resources to secure and maintain a grant of monopoly power from the government. 
C)  an agreement between firms to raise prices and limit entry. 
D)  an agreement between a firm and a customer that makes both parties better off.

Question 2

Which of the following is, so far, the most utilized method to reduce emissions of industrial pollution to politically chosen levels, while encouraging efficient choices by polluters?

Accepted Answer

A)  Government pollution charges or taxes. 
B)  Non-tradable emission standards that cap allowable pollution for each emitter. 
C)  Cap and trade emission permits. 
D)  Regulations that would effectively prohibit all emissions. 
A)  Government pollution charges or taxes. 
B)  Non-tradable emission standards that cap allowable pollution for each emitter. 
C)  Cap and trade emission permits. 
D)  Regulations that would effectively prohibit all emissions.

Question 3

Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?

Accepted Answer

The Postal Service is designed to provid

Question 4

It can be difficult to define and enforce property rights against damaging pollutants when

Accepted Answer

A)  many polluters are harming one person. 
B)  many polluters harm the same large group of people with the same pollutant. 
C)  the harms are difficult to quantify. 
D)  All of the above are true. 
A)  many polluters are harming one person. 
B)  many polluters harm the same large group of people with the same pollutant. 
C)  the harms are difficult to quantify. 
D)  All of the above are true.

Question 5

When a monopolist is producing at the profit-maximizing output level, the value to consumers of one additional unit of output will

Accepted Answer

A)  exceed the monopolist's marginal cost. 
B)  equal the monopolist's marginal cost. 
C)  be less than the monopolist's marginal cost. 
D)  exceed the price of the additional unit. 
A)  exceed the monopolist's marginal cost. 
B)  equal the monopolist's marginal cost. 
C)  be less than the monopolist's marginal cost. 
D)  exceed the price of the additional unit.

Question 6

A monopolist will maximize profits by

Accepted Answer

A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost. 
A)  setting his price as high as possible. 
B)  setting his price at the level that will maximize per-unit profit. 
C)  producing the output where marginal revenue equals marginal cost. 
D)  producing the output where price equals marginal cost.

Question 7

A profit-maximizing monopolist will continue expanding output as long as

Accepted Answer

A)  marginal revenue exceeds marginal cost. 
B)  marginal revenue is positive. 
C)  the cost of producing an additional unit exceeds the marginal revenue derived from the unit. 
D)  economic profit is more than zero. 
A)  marginal revenue exceeds marginal cost. 
B)  marginal revenue is positive. 
C)  the cost of producing an additional unit exceeds the marginal revenue derived from the unit. 
D)  economic profit is more than zero.

Question 8

What is the economically efficient level of emissions from a particular source?

Accepted Answer

A)  Zero. 
B)  The quantity at which the marginal cost to achieve lower emissions equals the additional value of reducing pollution. 
C)  The level determined by EPA (Environmental Protection Agency) scientists that will save the most lives. 
D)  The level emitted when markets are allowed to function with no government regulation. 
A)  Zero. 
B)  The quantity at which the marginal cost to achieve lower emissions equals the additional value of reducing pollution. 
C)  The level determined by EPA (Environmental Protection Agency) scientists that will save the most lives. 
D)  The level emitted when markets are allowed to function with no government regulation.

Question 9

Use the figure to answer the following question(s).
Figure 11-14  
-Using Figure 11-14, determine what quantity these firms would produce, in the short run, if the firms were engaging in vigorous competition.

Accepted Answer

A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 
A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4

Question 10

A regulatory agency that imposes a price ceiling in order to limit monopoly profits to a "fair rate of return" is forcing the monopolist to sell at a price equal to

Accepted Answer

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

Question 11

Use the figure to answer the following question(s).
Figure 11-8  
-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 11-8?

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 12

Oligopolistic agreements on price tend to be unstable because

Accepted Answer

A)  although the monopoly price is the best price for all firms, oligopolists are unaware of this and thus charge prices that are lower than the price that could be charged by a monopolists, therefore, decreasing social welfare. 
B)  although the monopoly price maximizes the joint profits of the firms, a secret price cut by any individual firm will increase the profits of that firm; hence, collusive agreements tend to break down. 
C)  the demand for the products of oligopolistic industries is inherently unstable relative to the demand for the products of non-oligopolistic industries because demand for products in oligopolistic industries are dependent on changes in consumer tastes and preferences. 
D)  firms in oligopolistic industries have more concern for consumers than do firms in competitive industries. 
A)  although the monopoly price is the best price for all firms, oligopolists are unaware of this and thus charge prices that are lower than the price that could be charged by a monopolists, therefore, decreasing social welfare. 
B)  although the monopoly price maximizes the joint profits of the firms, a secret price cut by any individual firm will increase the profits of that firm; hence, collusive agreements tend to break down. 
C)  the demand for the products of oligopolistic industries is inherently unstable relative to the demand for the products of non-oligopolistic industries because demand for products in oligopolistic industries are dependent on changes in consumer tastes and preferences. 
D)  firms in oligopolistic industries have more concern for consumers than do firms in competitive industries.

Question 13

Use the figure to answer the following question(s).
Figure 11-13  
-Using Figure 11-13, determine the maximum joint monthly profit of the firms if they operate as a cartel.

Accepted Answer

A)  zero 
B)  $1,500 
C)  $3,000 
D)  $4,500 
A)  zero 
B)  $1,500 
C)  $3,000 
D)  $4,500

Question 14

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Accepted Answer

A)  the government does not have information about which firms are monopolies. 
B)  firms that are monopolies do not have information about their level of profit or about potential competition. 
C)  consumers do not have information about which firms are competitive and which firms are monopolies. 
D)  regulators do not have information about the demand and marginal costs of the firms that they regulate. 
A)  the government does not have information about which firms are monopolies. 
B)  firms that are monopolies do not have information about their level of profit or about potential competition. 
C)  consumers do not have information about which firms are competitive and which firms are monopolies. 
D)  regulators do not have information about the demand and marginal costs of the firms that they regulate.

Question 15

Breaking a monopoly firm into several rival firms will be unlikely to improve economic efficiency when economies of scale are important because

Accepted Answer

A)  several smaller firms will have higher per-unit costs than a single larger firm. 
B)  a single firm will have higher per-unit costs than several smaller firms. 
C)  it is harder to regulate many smaller firms than it is one large firm. 
D)  consumers will find it harder to choose among the products of many alternative sellers. 
A)  several smaller firms will have higher per-unit costs than a single larger firm. 
B)  a single firm will have higher per-unit costs than several smaller firms. 
C)  it is harder to regulate many smaller firms than it is one large firm. 
D)  consumers will find it harder to choose among the products of many alternative sellers.

Question 16

Suppose a monopolist and a competitive price-taker firm have the same cost curves. The monopoly firm would

Accepted Answer

A)  charge a lower price than the competitive price-taker firm. 
B)  charge a higher price than the competitive price-taker firm. 
C)  charge the same price as the competitive price-taker firm. 
D)  refuse to operate in the short run unless an economic profit could be made. 
E)  refuse to operate in the short run if an economic loss was present. 
A)  charge a lower price than the competitive price-taker firm. 
B)  charge a higher price than the competitive price-taker firm. 
C)  charge the same price as the competitive price-taker firm. 
D)  refuse to operate in the short run unless an economic profit could be made. 
E)  refuse to operate in the short run if an economic loss was present.

Question 17

Figure 11-18  
-The firm in Figure 11-18, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Accepted Answer

A)  $0 
B)  $234 
C)  $482 
D)  $960 
E)  $468 
A)  $0 
B)  $234 
C)  $482 
D)  $960 
E)  $468

Question 18

Use the figure to answer the following question(s).
Figure 11-7  
-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 11-7?

Accepted Answer

A)  price, $7; quantity produced, 100 
B)  price, $10; quantity produced, 170 
C)  price, $14; quantity produced, 100 
D)  price, $7; quantity produced, 200 
A)  price, $7; quantity produced, 100 
B)  price, $10; quantity produced, 170 
C)  price, $14; quantity produced, 100 
D)  price, $7; quantity produced, 200

Question 19

If the average total cost curve is always above the demand curve of a monopolist,

Accepted Answer

A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  even a monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output. 
A)  the profits of the monopolist will be large. 
B)  the monopolist must be producing inefficiently. 
C)  even a monopolist will suffer economic losses. 
D)  entry will occur, forcing the monopolist to reduce price and expand output.

Question 20

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

Accepted Answer

A)  A monopolist will maximize profit, while firms in competitive price-searcher markets will maximize sales. 
B)  A monopolist may be able to earn long-run economic profit, but firms in competitive price-searcher markets will not be able to do so. 
C)  A monopolist will charge a price that is greater than its marginal cost, but competitive price searchers will charge prices that are just equal to their marginal cost. 
D)  A monopolist will charge a price that is just equal to its marginal cost, but competitive price searchers will charge prices that are greater than their marginal cost. 
A)  A monopolist will maximize profit, while firms in competitive price-searcher markets will maximize sales. 
B)  A monopolist may be able to earn long-run economic profit, but firms in competitive price-searcher markets will not be able to do so. 
C)  A monopolist will charge a price that is greater than its marginal cost, but competitive price searchers will charge prices that are just equal to their marginal cost. 
D)  A monopolist will charge a price that is just equal to its marginal cost, but competitive price searchers will charge prices that are greater than their marginal cost.

In the area of business, rent-seeking often involves

Which of the following is, so far, the most utilized method to reduce emissions of industrial pollution to politically chosen levels, while encouraging efficient choices by polluters?

Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?

It can be difficult to define and enforce property rights against damaging pollutants when

When a monopolist is producing at the profit-maximizing output level, the value to consumers of one additional unit of output will

A monopolist will maximize profits by

A profit-maximizing monopolist will continue expanding output as long as

What is the economically efficient level of emissions from a particular source?

Use the figure to answer the following question(s). Figure 11-14 -Using Figure 11-14, determine what quantity these firms would produce, in the short run, if the firms were engaging in vigorous competition.

A regulatory agency that imposes a price ceiling in order to limit monopoly profits to a "fair rate of return" is forcing the monopolist to sell at a price equal to

Use the figure to answer the following question(s). Figure 11-8 -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 11-8?

Oligopolistic agreements on price tend to be unstable because

Use the figure to answer the following question(s). Figure 11-13 -Using Figure 11-13, determine the maximum joint monthly profit of the firms if they operate as a cartel.

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Breaking a monopoly firm into several rival firms will be unlikely to improve economic efficiency when economies of scale are important because

Suppose a monopolist and a competitive price-taker firm have the same cost curves. The monopoly firm would

Figure 11-18 -The firm in Figure 11-18, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Use the figure to answer the following question(s). Figure 11-7 -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 11-7?

If the average total cost curve is always above the demand curve of a monopolist,

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

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

In the area of business, rent-seeking often involves

Which of the following is, so far, the most utilized method to reduce emissions of industrial pollution to politically chosen levels, while encouraging efficient choices by polluters?

Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?

It can be difficult to define and enforce property rights against damaging pollutants when

When a monopolist is producing at the profit-maximizing output level, the value to consumers of one additional unit of output will

A monopolist will maximize profits by

A profit-maximizing monopolist will continue expanding output as long as

What is the economically efficient level of emissions from a particular source?

Use the figure to answer the following question(s). Figure 11-14 -Using Figure 11-14, determine what quantity these firms would produce, in the short run, if the firms were engaging in vigorous competition.

A regulatory agency that imposes a price ceiling in order to limit monopoly profits to a "fair rate of return" is forcing the monopolist to sell at a price equal to

Use the figure to answer the following question(s). Figure 11-8 -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 11-8?

Oligopolistic agreements on price tend to be unstable because

Use the figure to answer the following question(s). Figure 11-13 -Using Figure 11-13, determine the maximum joint monthly profit of the firms if they operate as a cartel.

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Breaking a monopoly firm into several rival firms will be unlikely to improve economic efficiency when economies of scale are important because

Suppose a monopolist and a competitive price-taker firm have the same cost curves. The monopoly firm would

Figure 11-18 -The firm in Figure 11-18, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Use the figure to answer the following question(s). Figure 11-7 -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 11-7?

If the average total cost curve is always above the demand curve of a monopolist,

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

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