Question 1

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 2

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

Accepted Answer

A)  redistribute income from consumers to business decision makers without affecting the allocation of resources. 
B)  may be a source of business monopoly power, but they may also encourage innovation in the long run. 
C)  encourage product development and the adoption of cost-reducing technologies in the short run but in the long run generally lead to business monopoly. 
D)  help inventors at the expense of consumers in the long run. 
A)  redistribute income from consumers to business decision makers without affecting the allocation of resources. 
B)  may be a source of business monopoly power, but they may also encourage innovation in the long run. 
C)  encourage product development and the adoption of cost-reducing technologies in the short run but in the long run generally lead to business monopoly. 
D)  help inventors at the expense of consumers in the long run.

Question 3

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
Refer to Figure 11-17. The marginal cost curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 4

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
Refer to Figure 11-17. The marginal revenue curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 5

Figure 11-20  
The profit-maximizing price the monopoly will charge in Figure 11-20 is

Accepted Answer

A)  irrelevant since the firm should shut down 
B)  $11 
C)  $16 
D)  $18 
E)  $22 
A)  irrelevant since the firm should shut down 
B)  $11 
C)  $16 
D)  $18 
E)  $22

Question 6

Use the table to answer the following question.
Table 11-5
 
The demand and cost schedules of a monopolist are presented in Table 11-5. 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 7

Use the figure to answer the following question(s).
Figure 11-12
 
If the firms in this oligopolistic industry depicted in Figure 11-12 can collude effectively and restrict the entry of potential competitors, the price of their product will tend to be

Accepted Answer

A)  greater than P 2. 
B)  close to P 2. 
C)  approximately equal to P 1. 
D)  less than P 1. 
A)  greater than P 2. 
B)  close to P 2. 
C)  approximately equal to P 1. 
D)  less than P 1.

Question 8

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
Refer to Figure 11-17. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1. 
A)  remain unchanged. 
B)  decrease. 
C)  increase as long as the new level of output is at least Q2. 
D)  increase as long as the new level of output is at least Q1.

Question 9

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 10

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Accepted Answer

A)  P = MR because there are no close substitutes for the monopolist's product. 
B)  P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit. 
C)  P 
D)  P = MR only at the profit-maximizing quantity. 
A)  P = MR because there are no close substitutes for the monopolist's product. 
B)  P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit. 
C)  P 
D)  P = MR only at the profit-maximizing quantity.

Question 11

Under which of the following market conditions is it most difficult to maintain a cartel agreement?

Accepted Answer

A)  There are many firms in the industry and these firms have similar costs. 
B)  There are many firms in the industry and these firms have different costs. 
C)  There are few firms in the industry and these firms have similar costs. 
D)  There are few firms in the industry and these firms have different costs. 
A)  There are many firms in the industry and these firms have similar costs. 
B)  There are many firms in the industry and these firms have different costs. 
C)  There are few firms in the industry and these firms have similar costs. 
D)  There are few firms in the industry and these firms have different costs.

Question 12

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

Accepted Answer

A)  the power to sell a given output at whatever price it chooses. 
B)  no freedom from the rigors of intense competition. 
C)  a monopoly over the product it produces. 
D)  enough market share to be somewhat insulated from competition. 
A)  the power to sell a given output at whatever price it chooses. 
B)  no freedom from the rigors of intense competition. 
C)  a monopoly over the product it produces. 
D)  enough market share to be somewhat insulated from competition.

Question 13

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist

Accepted Answer

A)  is producing his profit-maximizing level of output. 
B)  could increase his profit by increasing his output. 
C)  could increase his profit by increasing his price. 
D)  should exit the market if he has positive fixed cost. 
A)  is producing his profit-maximizing level of output. 
B)  could increase his profit by increasing his output. 
C)  could increase his profit by increasing his price. 
D)  should exit the market if he has positive fixed cost.

Question 14

Cartel members have an incentive to cheat on cartel agreements because

Accepted Answer

A)  the cartel cannot maximize profits. 
B)  the cartel price is the competitive price. 
C)  the demand curve for the firm is more elastic than the cartel's demand curve. 
D)  the industry profit would be higher under competitive conditions. 
A)  the cartel cannot maximize profits. 
B)  the cartel price is the competitive price. 
C)  the demand curve for the firm is more elastic than the cartel's demand curve. 
D)  the industry profit would be higher under competitive conditions.

Question 15

Which of the following is true under natural monopoly?

Accepted Answer

A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale will be present. 
D)  Output is produced under conditions of constant cost. 
A)  The marginal cost curve will be above the average cost curve. 
B)  The monopolist will set price equal to marginal cost and will earn economic profits. 
C)  Economies of scale will be present. 
D)  Output is produced under conditions of constant cost.

Question 16

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 17

When a single firm has control over the market supply of a resource that is essential to the production of a good,

Accepted Answer

A)  economies of scale are usually important. 
B)  monopoly is frequently the result. 
C)  diseconomies of scale are the usual cause. 
D)  competition for the resource makes monopoly almost impossible 
A)  economies of scale are usually important. 
B)  monopoly is frequently the result. 
C)  diseconomies of scale are the usual cause. 
D)  competition for the resource makes monopoly almost impossible

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

Which of the following will reduce the likelihood of effective collusion among oligopolistic producers?

Accepted Answer

A)  inability to keep new firms from entering the market 
B)  a small number of firms in the market 
C)  a stable market demand for the product 
D)  a highly inelastic market demand for the product 
A)  inability to keep new firms from entering the market 
B)  a small number of firms in the market 
C)  a stable market demand for the product 
D)  a highly inelastic market demand for the product

Question 20

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

Accepted Answer

A)  There is always more than one firm in competitive price-searcher and competitive price-taker markets. 
B)  Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not. 
C)  In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly. 
D)  A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not. 
A)  There is always more than one firm in competitive price-searcher and competitive price-taker markets. 
B)  Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not. 
C)  In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly. 
D)  A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not.

Collusion

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. The marginal cost curve for a monopoly firm is depicted by curve

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. The marginal revenue curve for a monopoly firm is depicted by curve

Figure 11-20 The profit-maximizing price the monopoly will charge in Figure 11-20 is

Use the table to answer the following question. Table 11-5 The demand and cost schedules of a monopolist are presented in Table 11-5. What price should a profit-maximizing monopolist charge?

Use the figure to answer the following question(s). Figure 11-12 If the firms in this oligopolistic industry depicted in Figure 11-12 can collude effectively and restrict the entry of potential competitors, the price of their product will tend to be

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. If the monopoly firm is currently producing Q₃ units of output, then a decrease in output will necessarily cause profit to

The key element in preserving a monopoly is

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Under which of the following market conditions is it most difficult to maintain a cartel agreement?

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

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist

Cartel members have an incentive to cheat on cartel agreements because

Which of the following is true under natural monopoly?

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

When a single firm has control over the market supply of a resource that is essential to the production of a good,

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

Which of the following will reduce the likelihood of effective collusion among oligopolistic producers?

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

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

Exam 11: Price-Searcher Markets With High Entry Barriers

Collusion

Economic analysis suggests that patent laws that can often be used to limit the entry of potential competitors into an industry

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. The marginal cost curve for a monopoly firm is depicted by curve

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. The marginal revenue curve for a monopoly firm is depicted by curve

Figure 11-20 The profit-maximizing price the monopoly will charge in Figure 11-20 is

Use the table to answer the following question. Table 11-5 The demand and cost schedules of a monopolist are presented in Table 11-5. What price should a profit-maximizing monopolist charge?

Use the figure to answer the following question(s). Figure 11-12 If the firms in this oligopolistic industry depicted in Figure 11-12 can collude effectively and restrict the entry of potential competitors, the price of their product will tend to be

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to

The key element in preserving a monopoly is

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Under which of the following market conditions is it most difficult to maintain a cartel agreement?

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

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist

Cartel members have an incentive to cheat on cartel agreements because

Which of the following is true under natural monopoly?

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

When a single firm has control over the market supply of a resource that is essential to the production of a good,

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

Which of the following will reduce the likelihood of effective collusion among oligopolistic producers?

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

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

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 Refer to Figure 11-17. If the monopoly firm is currently producing Q₃ units of output, then a decrease in output will necessarily cause profit to