Question 1

An industry is said to be a natural monopoly when

Accepted Answer

A) legal barriers limit entry into the market. 
B) diseconomies of scale are present in the market. 
C) the market demand for the product supplied by a firm is inelastic. 
D) long-run ATC continues to decline as firm size increases. 
E) larger firms have higher per-unit costs than their smaller rivals. 
A) legal barriers limit entry into the market. 
B) diseconomies of scale are present in the market. 
C) the market demand for the product supplied by a firm is inelastic. 
D) long-run ATC continues to decline as firm size increases. 
E) larger firms have higher per-unit costs than their smaller rivals.

Question 2

If pizza used to be produced in a competitive price-taker market,and now the pizza market has become a monopoly,we can expect

Accepted Answer

A) less pizza to be sold at a higher price. 
B) more pizza to be sold at a higher price. 
C) less pizza to be sold at a lower price. 
D) more pizza to be sold at a lower price. 
E) the same amount of pizza to be sold at the same price. 
A) less pizza to be sold at a higher price. 
B) more pizza to be sold at a higher price. 
C) less pizza to be sold at a lower price. 
D) more pizza to be sold at a lower price. 
E) the same amount of pizza to be sold at the same price.

Question 3

One answer to the problem of natural monopoly is provision of the good by a government-owned and operated firm.Why is that option not used very often?

Accepted Answer

We cannot necessarily expect more effici

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

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 6

Figure 11-16
  
-Refer to Figure 11-16.To maximize its profit,a monopolist would choose which of the following outcomes?

Accepted Answer

A) 100 units of output and a price of $10 per unit 
B) 100 units of output and a price of $20 per unit 
C) 150 units of output and a price of $15 per unit 
D) 200 units of output and a price of $20 per unit 
A) 100 units of output and a price of $10 per unit 
B) 100 units of output and a price of $20 per unit 
C) 150 units of output and a price of $15 per unit 
D) 200 units of output and a price of $20 per unit

Question 7

Which of the following is a valid criticism of unregulated monopoly?

Accepted Answer

A) Monopoly limits the options available to consumers. 
B) Relative to a competitive market,a monopolist generally will produce too great an output. 
C) Profit-maximizing monopolists will fail to produce at the lowest possible cost. 
D) A monopoly's output will often be more than if the market were competitive. 
A) Monopoly limits the options available to consumers. 
B) Relative to a competitive market,a monopolist generally will produce too great an output. 
C) Profit-maximizing monopolists will fail to produce at the lowest possible cost. 
D) A monopoly's output will often be more than if the market were competitive.

Question 8

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 9

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 10

One key characteristic that is distinctive of an oligopoly market is that

Accepted Answer

A) the demand curve facing each firm is downward sloping,with a marginal revenue curve that lies below the firm's demand curve. 
B) the decisions of one seller often influence the price of products,the output,and the profits of rival firms. 
C) there is only one firm that produces a product for which there are no good substitutes. 
D) there are many sellers in the market and each is small relative to the total market. 
A) the demand curve facing each firm is downward sloping,with a marginal revenue curve that lies below the firm's demand curve. 
B) the decisions of one seller often influence the price of products,the output,and the profits of rival firms. 
C) there is only one firm that produces a product for which there are no good substitutes. 
D) there are many sellers in the market and each is small relative to the total market.

Question 11

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 12

Table 11-1
  
-Refer to Table 11-1.The maximum profit this monopolist can earn is

Accepted Answer

A) $5. 
B) $15. 
C) $16 
D) $28 
A) $5. 
B) $15. 
C) $16 
D) $28

Question 13

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 P₂. 
B) close to P₂. 
C) approximately equal to P₁. 
D) less than P₁. 
A) greater than P₂. 
B) close to P₂. 
C) approximately equal to P₁. 
D) less than P₁.

Question 14

Economists generally criticize high barriers to market entry because

Accepted Answer

A) the ability of consumers to discipline producers is weakened. 
B) unregulated monopolists and oligopolists can often gain by increasing output and raising price. 
C) legal barriers to entry will encourage firms to "invest" resources in developing highly desired products that consumers are willing to pay more for. 
D) entry barriers are popular with consumers but not businesses. 
A) the ability of consumers to discipline producers is weakened. 
B) unregulated monopolists and oligopolists can often gain by increasing output and raising price. 
C) legal barriers to entry will encourage firms to "invest" resources in developing highly desired products that consumers are willing to pay more for. 
D) entry barriers are popular with consumers but not businesses.

Question 15

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is in a competitive,open price-taker market?

Accepted Answer

A) Marginal revenue and price are equal for a price taker but not a monopolist. 
B) Monopolists can earn economic profits in the long run,but price takers cannot. 
C) A price taker sells its output at a price equal to marginal cost,while a monopolist sells its output at a price higher than marginal cost. 
D) All of the above are true. 
A) Marginal revenue and price are equal for a price taker but not a monopolist. 
B) Monopolists can earn economic profits in the long run,but price takers cannot. 
C) A price taker sells its output at a price equal to marginal cost,while a monopolist sells its output at a price higher than marginal cost. 
D) All of the above are true.

Question 16

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
  
-Refer to Figure 11-17.The average total 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 17

Being a monopolist in the market

Accepted Answer

A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not invalidate the profit-maximization rule to produce where MR = MC. 
D) All of the above are correct. 
A) guarantees a positive short-run profit. 
B) guarantees a positive long-run profit. 
C) does not invalidate the profit-maximization rule to produce where MR = MC. 
D) All of the above are correct.

Question 18

The demand curve of a monopolist is

Accepted Answer

A) identical to the marginal cost curve. 
B) downward sloping and above the marginal revenue curve. 
C) downward sloping and below the marginal revenue. 
D) elastic because of a recognized interdependence with other firms. 
A) identical to the marginal cost curve. 
B) downward sloping and above the marginal revenue curve. 
C) downward sloping and below the marginal revenue. 
D) elastic because of a recognized interdependence with other firms.

Question 19

Cartels are difficult to maintain because

Accepted Answer

A) antitrust laws are difficult to enforce. 
B) cartel agreements are conducive to monopoly outcomes. 
C) there is always tension between cooperation and self-interest in a cartel. 
D) firms pay little attention to the decision made by other firms. 
A) antitrust laws are difficult to enforce. 
B) cartel agreements are conducive to monopoly outcomes. 
C) there is always tension between cooperation and self-interest in a cartel. 
D) firms pay little attention to the decision made by other firms.

Question 20

Which one of the following is the best description of a monopolist?

Accepted Answer

A) a firm that produces a single product 
B) a firm that is the sole producer of a narrowly defined product class,such as yellow,grade-A butter produced in Jackson County,Wisconsin 
C) a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry 
D) a firm that is large relative to its competitors 
A) a firm that produces a single product 
B) a firm that is the sole producer of a narrowly defined product class,such as yellow,grade-A butter produced in Jackson County,Wisconsin 
C) a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry 
D) a firm that is large relative to its competitors

Exam 24: Aprice-Searcher Markets With High Entry Barriers

An industry is said to be a natural monopoly when

If pizza used to be produced in a competitive price-taker market,and now the pizza market has become a monopoly,we can expect

One answer to the problem of natural monopoly is provision of the good by a government-owned and operated firm.Why is that option not used very often?

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

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

Figure 11-16 -Refer to Figure 11-16.To maximize its profit,a monopolist would choose which of the following outcomes?

Which of the following is a valid criticism of unregulated monopoly?

A monopolist will maximize profits by

To increase joint profits,a cartel will attempt to

One key characteristic that is distinctive of an oligopoly market is that

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

Table 11-1 -Refer to Table 11-1.The maximum profit this monopolist can earn is

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

Economists generally criticize high barriers to market entry because

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is in a competitive,open price-taker market?

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

Being a monopolist in the market

The demand curve of a monopolist is

Cartels are difficult to maintain because

Which one of the following is the best description of a monopolist?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice 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

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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