Question 1

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

Accepted Answer

A) Economists cannot determine if barriers to entry exist in a market. 
B) Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. 
C) The government prevents economists from acquiring the information that would lead to good predictions. 
D) Firms have a set price and output policy, but the policy is concealed to discourage competition. 
A) Economists cannot determine if barriers to entry exist in a market. 
B) Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. 
C) The government prevents economists from acquiring the information that would lead to good predictions. 
D) Firms have a set price and output policy, but the policy is concealed to discourage competition.

Question 2

The demand curve facing an individual oligopolistic firm will be

Accepted Answer

A) considerably more inelastic than the industry demand curve. 
B) considerably more elastic than the industry demand curve. 
C) perfectly elastic at the market price. 
D) perfectly inelastic at the market price. 
A) considerably more inelastic than the industry demand curve. 
B) considerably more elastic than the industry demand curve. 
C) perfectly elastic at the market price. 
D) perfectly inelastic at the market price.

Question 3

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 4

Which of the following explains why monopoly is uncommon in the real world?

Accepted Answer

A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) price is usually set equal to marginal cost by firms. 
D) there are reasonable substitutes for most goods. 
A) firms usually face downward-sloping demand curves. 
B) supply curves slope upward. 
C) price is usually set equal to marginal cost by firms. 
D) there are reasonable substitutes for most goods.

Question 5

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 6

What should a profit maximizing monopolist do if she is currently producing where MC < MR?

Accepted Answer

A) Increase output until MC = MR. 
B) Decrease output until MC = MR. 
C) Shut down in the long run. 
D) Keep producing at this level. 
E) Operate only in the short run. 
A) Increase output until MC = MR. 
B) Decrease output until MC = MR. 
C) Shut down in the long run. 
D) Keep producing at this level. 
E) Operate only in the short run.

Question 7

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 8

Allowing firms to receive patents on new inventions

Accepted Answer

A) increases the price consumers pay for patented products. 
B) gives firms a greater incentive to conduct research and development to invent new products. 
C) results in much lower prices than would be present if other firms were allowed to compete. 
D) does both a and b, but not c. 
A) increases the price consumers pay for patented products. 
B) gives firms a greater incentive to conduct research and development to invent new products. 
C) results in much lower prices than would be present if other firms were allowed to compete. 
D) does both a and b, but not c.

Question 9

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.

Exam 11: A: Price-Searcher Markets With High Entry Barriers

Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?

The demand curve facing an individual oligopolistic firm will be

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

Which of the following explains why monopoly is uncommon in the real world?

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

What should a profit maximizing monopolist do if she is currently producing where MC < MR?

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

Allowing firms to receive patents on new inventions

Figure 11-17 -Refer to Figure 11-17. The average total cost curve for a monopoly firm is depicted by curve

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

B: Price-Searcher Markets With High 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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters