Question 1

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 2

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

Accepted Answer

A) an unprecedented increase in truck sales 
B) an immediate response by GM and Dodge 
C) a visit from the antitrust authorities of the government 
D) a revolution from Ford stockholders 
E) announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years 
A) an unprecedented increase in truck sales 
B) an immediate response by GM and Dodge 
C) a visit from the antitrust authorities of the government 
D) a revolution from Ford stockholders 
E) announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years

Question 3

Figure 11-18
  
-The total cost for the firm in Figure 11-18, a monopolist that maximizes profit while charging all customers the same price, is

Accepted Answer

A) $3,300 
B) $3,400 
C) $2,808 
D) $2,340 
E) $1,638 
A) $3,300 
B) $3,400 
C) $2,808 
D) $2,340 
E) $1,638

Question 4

One of the effects of patents is to

Accepted Answer

A) reduce incentives for innovation. 
B) give firms incentives to worry less about minimizing production costs. 
C) temporarily provide the patent owner with monopoly power. 
D) reduce the degree of monopoly power in the short run. 
A) reduce incentives for innovation. 
B) give firms incentives to worry less about minimizing production costs. 
C) temporarily provide the patent owner with monopoly power. 
D) reduce the degree of monopoly power in the short run.

Question 5

Which of the following is most likely to contribute to the presence of monopoly in an industry?

Accepted Answer

A) economies of scale 
B) an elastic market demand for the product produced by the industry 
C) inefficiency due to bureaucratic decision-making procedures in the industry 
D) controlling over 50 percent of the market 
A) economies of scale 
B) an elastic market demand for the product produced by the industry 
C) inefficiency due to bureaucratic decision-making procedures in the industry 
D) controlling over 50 percent of the market

Question 6

Government-operated firms with monopoly power

Accepted Answer

A) will necessarily meet the criteria of economic efficiency, as long as price equals average total cost. 
B) will always be more efficient than private firms because they do not have to make a profit. 
C) are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees. 
D) are highly responsive to changes in the preferences of individual consumers since consumers are also voters. 
A) will necessarily meet the criteria of economic efficiency, as long as price equals average total cost. 
B) will always be more efficient than private firms because they do not have to make a profit. 
C) are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees. 
D) are highly responsive to changes in the preferences of individual consumers since consumers are also voters.

Question 7

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 8

Table 11-4
  
-The demand and total cost schedules of a monopolist are presented in Table 11-4. What price should a profit-maximizing monopolist charge?

Accepted Answer

A) $24 
B) $23 
C) $22 
D) $21 
A) $24 
B) $23 
C) $22 
D) $21

Question 9

Table 11-2
  
-The demand and total cost schedules of a monopolist are presented in Table 11-2. 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 10

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

Accepted Answer

A) low entry barriers into the market 
B) a production of a homogenous product 
C) a stable market demand for the product 
D) a highly inelastic market demand for the product 
A) low entry barriers into the market 
B) a production of a homogenous product 
C) a stable market demand for the product 
D) a highly inelastic market demand for the product

Question 11

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 12

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 13

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 14

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 15

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

Question 16

Figure 11-8
  
-The demand and cost conditions in an industry are as depicted in Figure 11-8. In the viewpoint of economic efficiency, what would the ideal price and output be?

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 17

In essence, patents grant their owners

Accepted Answer

A) a property right to new products and production processes that they have developed. 
B) the exclusive right to use a newly developed process or product forever. 
C) the right to use resources owned by their competitors. 
D) an exemption from laws that prohibit price discrimination. 
A) a property right to new products and production processes that they have developed. 
B) the exclusive right to use a newly developed process or product forever. 
C) the right to use resources owned by their competitors. 
D) an exemption from laws that prohibit price discrimination.

Question 18

Figure 11-17
  
-Refer to Figure 11-17. The demand 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 19

Table 11-3
  
-The demand and total cost schedules of a monopolist are presented in Table 11-3. 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 20

Under which one of the following market structures are firms most likely to enter into a price-fixing agreement designed to maximize their joint profit?

Accepted Answer

A) price-taker markets with low entry barriers 
B) pure monopoly 
C) price-searcher markets with low entry barriers 
D) oligopoly 
A) price-taker markets with low entry barriers 
B) pure monopoly 
C) price-searcher markets with low entry barriers 
D) oligopoly

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

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

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

Figure 11-18 -The total cost for the firm in Figure 11-18, a monopolist that maximizes profit while charging all customers the same price, is

One of the effects of patents is to

Which of the following is most likely to contribute to the presence of monopoly in an industry?

Government-operated firms with monopoly power

Graphically, the marginal revenue curve of a monopolist

Table 11-4 -The demand and total cost schedules of a monopolist are presented in Table 11-4. What price should a profit-maximizing monopolist charge?

Table 11-2 -The demand and total cost schedules of a monopolist are presented in Table 11-2. What price should a profit-maximizing monopolist charge?

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

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

It is difficult to predict the behavior of oligopolistic firms because

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

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

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

Figure 11-8 -The demand and cost conditions in an industry are as depicted in Figure 11-8. In the viewpoint of economic efficiency, what would the ideal price and output be?

In essence, patents grant their owners

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

Table 11-3 -The demand and total cost schedules of a monopolist are presented in Table 11-3. What price should a profit-maximizing monopolist charge?

Under which one of the following market structures are firms most likely to enter into a price-fixing agreement designed to maximize their joint profit?

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

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