Question 1

The profit-maximizing monopolist shown in the figure would

Accepted Answer

A)  charge a price equal to C and earn an economic profit of AFDC . 
B)  charge a price equal to C and earn an economic profit of AFEB . 
C)  charge a price equal to C and earn an economic profit of BEDC . 
D)  charge a price equal to A and earn an economic profit of AFDC . 
A)  charge a price equal to C and earn an economic profit of AFDC . 
B)  charge a price equal to C and earn an economic profit of AFEB . 
C)  charge a price equal to C and earn an economic profit of BEDC . 
D)  charge a price equal to A and earn an economic profit of AFDC .

Question 2

In markets characterized by oligopoly,

Accepted Answer

A)  the oligopolists earn the highest profit when they cooperate and behave like a monopolist. 
B)  collusive agreements will always prevail. 
C)  collective profits are always lower with cartel arrangements than they are without cartel arrangements. 
D)  pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market. 
A)  the oligopolists earn the highest profit when they cooperate and behave like a monopolist. 
B)  collusive agreements will always prevail. 
C)  collective profits are always lower with cartel arrangements than they are without cartel arrangements. 
D)  pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.

Question 3

Figure 11-20  
At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

Accepted Answer

A)  $264 
B)  $306 
C)  $216 
D)  $187 
E)  $176 
A)  $264 
B)  $306 
C)  $216 
D)  $187 
E)  $176

Question 4

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 5

In general, an organization of sellers designed to coordinate supply decisions so that the joint profits of the members is maximized is called a(n) ____. If they are successful, the total market output and price will most closely approximate the output and price in a(n) ____ market. (Fill in the blanks.)

Accepted Answer

A)  cooperative; open price-taker 
B)  cartel; monopoly 
C)  cartel; open price-taker 
D)  OPEC; competitive price-searcher 
A)  cooperative; open price-taker 
B)  cartel; monopoly 
C)  cartel; open price-taker 
D)  OPEC; competitive price-searcher

Question 6

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 7

Use the figure to answer the following question(s).
Figure 11-10
 
If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

Accepted Answer

A)  P 1 
B)  P 2 
C)  P 3 
D)  P 4 
A)  P 1 
B)  P 2 
C)  P 3 
D)  P 4

Question 8

Which of the following conditions would increase the likelihood of successful collusion among American automobile producers?

Accepted Answer

A)  vigorous enforcement of antitrust laws 
B)  strong quality competition that makes it difficult to monitor price cuts by rival firms 
C)  imposition of tariffs or quotas on imported automobiles 
D)  The market demand for automobiles fluctuates substantially. 
A)  vigorous enforcement of antitrust laws 
B)  strong quality competition that makes it difficult to monitor price cuts by rival firms 
C)  imposition of tariffs or quotas on imported automobiles 
D)  The market demand for automobiles fluctuates substantially.

Question 9

If a local ready-mix cement company is the only producer of cement in the local market, the monopoly power of the firm will

Accepted Answer

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

Question 10

Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

Accepted Answer

A)  a higher price. 
B)  decreased consumer surplus. 
C)  the elimination of economic profit. 
D)  less output. 
A)  a higher price. 
B)  decreased consumer surplus. 
C)  the elimination of economic profit. 
D)  less output.

Question 11

Figure 11-9  
From Figure 11-9, indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

Accepted Answer

A)  BFEC 
B)  AGEC 
C)  BHEC 
D)  EFH 
A)  BFEC 
B)  AGEC 
C)  BHEC 
D)  EFH

Question 12

To increase joint profits, a cartel will attempt to

Accepted Answer

A)  restrict output in order to increase the market price of the good produced. 
B)  restrict output in order to decrease the market price of the good produced. 
C)  expand output in order to increase the market price of the good produced. 
D)  expand output in order to decrease the market price of the good produced. 
A)  restrict output in order to increase the market price of the good produced. 
B)  restrict output in order to decrease the market price of the good produced. 
C)  expand output in order to increase the market price of the good produced. 
D)  expand output in order to decrease the market price of the good produced.

Question 13

If a local government began licensing funeral homes in the area, effectively making them into a cartel, we would expect

Accepted Answer

A)  the price of funeral services to rise, and the number of funerals performed in the area to fall. 
B)  the price of funeral services to rise, and the number of funerals performed in the area to increase as well. 
C)  the price of funeral services to fall, and the number of funerals performed in the area to increase. 
D)  the price of funeral services to fall, and the number of funerals performed in the area to fall as well. 
A)  the price of funeral services to rise, and the number of funerals performed in the area to fall. 
B)  the price of funeral services to rise, and the number of funerals performed in the area to increase as well. 
C)  the price of funeral services to fall, and the number of funerals performed in the area to increase. 
D)  the price of funeral services to fall, and the number of funerals performed in the area to fall as well.

Question 14

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is

Accepted Answer

A)  $.01. 
B)  $1. 
C)  $2.99. 
D)  $3. 
E)  $600. 
A)  $.01. 
B)  $1. 
C)  $2.99. 
D)  $3. 
E)  $600.

Question 15

Patent laws that allow the inventor to maintain monopoly rights to an invention increase the price of the product and

Accepted Answer

A)  increase the profitability of inventive activities, thereby speeding up technological developments. 
B)  increase the profitability of inventive activities, thereby slowing down technological developments. 
C)  decrease the profitability of inventive activities, thereby speeding up technological developments. 
D)  decrease the profitability of inventive activities, thereby slowing down technological developments. 
A)  increase the profitability of inventive activities, thereby speeding up technological developments. 
B)  increase the profitability of inventive activities, thereby slowing down technological developments. 
C)  decrease the profitability of inventive activities, thereby speeding up technological developments. 
D)  decrease the profitability of inventive activities, thereby slowing down technological developments.

Question 16

Which of the following is true of pure monopoly?

Accepted Answer

A)  Monopoly expands the options available to consumers. 
B)  Monopoly results in allocative inefficiency. 
C)  Profits and losses induce firms to enter and exit from industries. 
D)  Monopoly works well when governments regulate prices. 
A)  Monopoly expands the options available to consumers. 
B)  Monopoly results in allocative inefficiency. 
C)  Profits and losses induce firms to enter and exit from industries. 
D)  Monopoly works well when governments regulate prices.

Question 17

If a firm has substantial market power, it must be operating in an industry that would be classified as

Accepted Answer

A)  a monopoly or oligopoly. 
B)  competitive price-taker. 
C)  competitive price-searcher. 
D)  competitive price-searcher or price-taker. 
E)  competitive price-taker or a monopoly. 
A)  a monopoly or oligopoly. 
B)  competitive price-taker. 
C)  competitive price-searcher. 
D)  competitive price-searcher or price-taker. 
E)  competitive price-taker or a monopoly.

Question 18

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Accepted Answer

A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource 
A)  legally enforced patent rights 
B)  an inelastic demand for a product 
C)  licensing 
D)  control over an essential resource

Question 19

Which of the following best explains why economists are generally critical of unregulated monopolists?

Accepted Answer

A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumers waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them. 
A)  Monopolists do not try to minimize their costs of production. 
B)  Monopolists produce where marginal revenue is greater than marginal costs. 
C)  Monopolists attempt to produce too many products, and as a result, their prices are high, and consumers waste time trying to choose between too many options. 
D)  Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.

Question 20

Other things constant, production of an identical product in an oligopolistic industry

Accepted Answer

A)  makes it likely that a cartel will disintegrate. 
B)  makes secret price cuts easier to detect. 
C)  makes collusion more difficult. 
D)  causes irrational pricing policies in the long run. 
A)  makes it likely that a cartel will disintegrate. 
B)  makes secret price cuts easier to detect. 
C)  makes collusion more difficult. 
D)  causes irrational pricing policies in the long run.

The profit-maximizing monopolist shown in the figure would

In markets characterized by oligopoly,

Figure 11-20 At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

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

In general, an organization of sellers designed to coordinate supply decisions so that the joint profits of the members is maximized is called a(n) . If they are successful, the total market output and price will most closely approximate the output and price in a(n) market. (Fill in the blanks.)

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?

Use the figure to answer the following question(s). Figure 11-10 If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

Which of the following conditions would increase the likelihood of successful collusion among American automobile producers?

If a local ready-mix cement company is the only producer of cement in the local market, the monopoly power of the firm will

Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

Figure 11-9 From Figure 11-9, indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

To increase joint profits, a cartel will attempt to

If a local government began licensing funeral homes in the area, effectively making them into a cartel, we would expect

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is

Patent laws that allow the inventor to maintain monopoly rights to an invention increase the price of the product and

Which of the following is true of pure monopoly?

If a firm has substantial market power, it must be operating in an industry that would be classified as

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Which of the following best explains why economists are generally critical of unregulated monopolists?

Other things constant, production of an identical product in an oligopolistic industry

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

The profit-maximizing monopolist shown in the figure would

In markets characterized by oligopoly,

Figure 11-20 At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of

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

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?

Use the figure to answer the following question(s). Figure 11-10 If the monopolist is regulated by the "marginal cost pricing" technique, what price in Figure 11-10 will be charged?

Which of the following conditions would increase the likelihood of successful collusion among American automobile producers?

If a local ready-mix cement company is the only producer of cement in the local market, the monopoly power of the firm will

Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

Figure 11-9 From Figure 11-9, indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

To increase joint profits, a cartel will attempt to

If a local government began licensing funeral homes in the area, effectively making them into a cartel, we would expect

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is

Patent laws that allow the inventor to maintain monopoly rights to an invention increase the price of the product and

Which of the following is true of pure monopoly?

If a firm has substantial market power, it must be operating in an industry that would be classified as

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?

Which of the following best explains why economists are generally critical of unregulated monopolists?

Other things constant, production of an identical product in an oligopolistic industry

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