Question 1

Laws designed to prevent monopoly and promote competition are known as

Accepted Answer

A)  antitrust laws. 
B)  statutory amendments. 
C)  fair-pricing legislation. 
D)  breakup bills. 
A)  antitrust laws. 
B)  statutory amendments. 
C)  fair-pricing legislation. 
D)  breakup bills.

Question 2

It is difficult to predict the behavior of oligopolistic firms because

Accepted Answer

A)  there are few real-world examples of oligopolies for economists to study. 
B)  oligopolists make decisions independently of each other. 
C)  firms in oligopolistic industries react to each other's behavior in many ways. 
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory. 
A)  there are few real-world examples of oligopolies for economists to study. 
B)  oligopolists make decisions independently of each other. 
C)  firms in oligopolistic industries react to each other's behavior in many ways. 
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory.

Question 3

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 4

In a small, isolated town in a western state, there are only four dentists. In such a case, we can be confident that

Accepted Answer

A)  there are high profits in the dental business in this town. 
B)  there are no profits in the dental business in this town. 
C)  the possibility of new dentists coming to town will limit the profits of the existing dentists. 
D)  collusion cannot occur among the four dentists. 
A)  there are high profits in the dental business in this town. 
B)  there are no profits in the dental business in this town. 
C)  the possibility of new dentists coming to town will limit the profits of the existing dentists. 
D)  collusion cannot occur among the four dentists.

Question 5

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

Question 6

Graphically, the marginal revenue curve of a monopolist

Accepted Answer

A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal − 1 when the elasticity of demand is unitary. 
A)  will sometimes lie below the demand curve of the monopolist. 
B)  will always lie below the demand curve of the monopolist. 
C)  is the same as the demand curve of the monopolist. 
D)  will equal − 1 when the elasticity of demand is unitary.

Question 7

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

Accepted Answer

A)  a competitive price-searcher market. 
B)  pure monopoly. 
C)  bilateral monopoly. 
D)  a competitive price-taker market. 
A)  a competitive price-searcher market. 
B)  pure monopoly. 
C)  bilateral monopoly. 
D)  a competitive price-taker market.

Question 8

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 9

An oligopolistic market

Accepted Answer

A)  has a small number of rival firms, and each is large relative to the size of the market. 
B)  is characterized by firms that merely take the price that is determined by the forces of supply and demand in the market. 
C)  has low entry barriers facing firms that may be interested in entering the market. 
D)  has a large number of firms that are small relative to the size of the market. 
A)  has a small number of rival firms, and each is large relative to the size of the market. 
B)  is characterized by firms that merely take the price that is determined by the forces of supply and demand in the market. 
C)  has low entry barriers facing firms that may be interested in entering the market. 
D)  has a large number of firms that are small relative to the size of the market.

Question 10

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

Accepted Answer

A)  $10 
B)  $15 
C)  $20 
D)  $25 
A)  $10 
B)  $15 
C)  $20 
D)  $25

Question 11

When entry barriers into a market are high,

Accepted Answer

A)  a monopolist will always be able to make an economic profit. 
B)  rival firms will enter and drive price down to the level of per-unit costs if the firms in the market are making economic profit. 
C)  entry into the market will not take place, at least not quickly, even if the firms currently in the market are making economic profits. 
D)  the producers in the market will have little or no incentive to produce efficiently (at a low cost). 
A)  a monopolist will always be able to make an economic profit. 
B)  rival firms will enter and drive price down to the level of per-unit costs if the firms in the market are making economic profit. 
C)  entry into the market will not take place, at least not quickly, even if the firms currently in the market are making economic profits. 
D)  the producers in the market will have little or no incentive to produce efficiently (at a low cost).

Question 12

A law that requires hairdressers to undergo many hours of training and acquire a license before they can offer haircuts to the public, is an example of a

Accepted Answer

A)  positive externality. 
B)  natural monopoly. 
C)  barrier to entry. 
D)  public good. 
A)  positive externality. 
B)  natural monopoly. 
C)  barrier to entry. 
D)  public good.

Question 13

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 14

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

Question 15

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 16

If government officials break a natural monopoly up into several smaller firms, then

Accepted Answer

A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease. 
A)  competition will force firms to attain economic profits rather than accounting profits. 
B)  competition will force firms to produce surplus output, which drives up price. 
C)  the average costs of production will increase. 
D)  the average costs of production will decrease.

Question 17

"Market power" is an expression used to indicate that a firm has

Accepted Answer

A)  no rivals. 
B)  the power to sell a given output at whatever price it chooses. 
C)  some freedom from the rigors of intense competition. 
D)  a monopoly over the product it produces. 
A)  no rivals. 
B)  the power to sell a given output at whatever price it chooses. 
C)  some freedom from the rigors of intense competition. 
D)  a monopoly over the product it produces.

Question 18

If a local community has only one doctor, the monopoly power of the physician will

Accepted Answer

A)  be small if entry barriers into the local market are high. 
B)  depend on how many other physicians there are in the national market. 
C)  be total since there are not any other providers of the same service in the local market. 
D)  be minimal if the entry barriers restricting competition from other physicians are low. 
A)  be small if entry barriers into the local market are high. 
B)  depend on how many other physicians there are in the national market. 
C)  be total since there are not any other providers of the same service in the local market. 
D)  be minimal if the entry barriers restricting competition from other physicians are low.

Question 19

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 20

Figure 11-20  
The production level that will maximize the profit for the monopoly in Figure 11-20 is

Accepted Answer

A)  0 
B)  22 
C)  17 
D)  12 
E)  more than 22 
A)  0 
B)  22 
C)  17 
D)  12 
E)  more than 22

Laws designed to prevent monopoly and promote competition are known as

It is difficult to predict the behavior of oligopolistic firms because

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

In a small, isolated town in a western state, there are only four dentists. In such a case, we can be confident that

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

Graphically, the marginal revenue curve of a monopolist

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

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

An oligopolistic market

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

When entry barriers into a market are high,

A law that requires hairdressers to undergo many hours of training and acquire a license before they can offer haircuts to the public, is an example of a

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?

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?

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

If government officials break a natural monopoly up into several smaller firms, then

"Market power" is an expression used to indicate that a firm has

If a local community has only one doctor, the monopoly power of the physician will

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

Figure 11-20 The production level that will maximize the profit for the monopoly in Figure 11-20 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

Applying the Basics: Special Topics in Economics

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Exam 11: Price-Searcher Markets With High Entry Barriers

Laws designed to prevent monopoly and promote competition are known as

It is difficult to predict the behavior of oligopolistic firms because

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

In a small, isolated town in a western state, there are only four dentists. In such a case, we can be confident that

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

Graphically, the marginal revenue curve of a monopolist

If the firms in an oligopolistic industry can collude effectively (from the firms' viewpoints), the resulting price and output in the market will be most similar to that of

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

An oligopolistic market

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

When entry barriers into a market are high,

A law that requires hairdressers to undergo many hours of training and acquire a license before they can offer haircuts to the public, is an example of a

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?

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?

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

If government officials break a natural monopoly up into several smaller firms, then

"Market power" is an expression used to indicate that a firm has

If a local community has only one doctor, the monopoly power of the physician will

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

Figure 11-20 The production level that will maximize the profit for the monopoly in Figure 11-20 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

Applying the Basics: Special Topics in Economics

Filters