Question 1

The telephone is an example of a product with network externalities.

Accepted Answer

A) True 
 B)False

Question 2

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

Accepted Answer

A) 100% 
B) 50% 
C) 25% 
D) 0% 
A) 100% 
B) 50% 
C) 25% 
D) 0%

Question 3

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

Accepted Answer

A) 0 units. 
B) 25 units. 
C) 50 units. 
D) 75 units. 
A) 0 units. 
B) 25 units. 
C) 50 units. 
D) 75 units.

Question 4

A dominant-firm's residual demand curve is

Accepted Answer

A) the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B) the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C) the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D) None of the above. 
A) the horizontal difference between the market demand curve and the supply curve of the fringe firms. 
B) the vertical difference between the market demand curve and the supply curve of the fringe firms. 
C) the demand curve left for the fringe firms after the dominant firm has determined an output level. 
D) None of the above.

Question 5

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

Accepted Answer

A) zero. 
B) one. 
C) infinity. 
D) undetermined. 
A) zero. 
B) one. 
C) infinity. 
D) undetermined.

Question 6

In the early 1900s,U.S.Steel acted as a dominant firm with over sixty percent (60%)of the market.Many,including the Supreme Court in 1920,viewed U.S.Steel as a "good" monopolist since competitive fringe firms prospered under this arrangement.Graph the market for steel as it might have existed at this time showing that being a member of the competitive fringe can be profitable.Assume a linear market demand and linear MC and AC that slope upward.

Accepted Answer

@#IMG-DLM& See the above figure.The competitive fr

Question 7

Optimal price regulation sets price equal to

Accepted Answer

A) marginal cost. 
B) average variable cost. 
C) average cost. 
D) minimum average cost. 
A) marginal cost. 
B) average variable cost. 
C) average cost. 
D) minimum average cost.

Question 8

Patents

Accepted Answer

A) will create a profit incentive to do research. 
B) might be welfare reducing if granted for too long a period. 
C) serve as a barrier to entry. 
D) All of the above. 
A) will create a profit incentive to do research. 
B) might be welfare reducing if granted for too long a period. 
C) serve as a barrier to entry. 
D) All of the above.

Question 9

Empirical evidence from electric-power-producing firms suggests that

Accepted Answer

A) all electric-power-producing firms are natural monopolies. 
B) no electric-power-producing firms are natural monopolies. 
C) the largest electric-power-producing firms are natural monopolies. 
D) the smallest electric-power-producing firms are natural monopolies. 
A) all electric-power-producing firms are natural monopolies. 
B) no electric-power-producing firms are natural monopolies. 
C) the largest electric-power-producing firms are natural monopolies. 
D) the smallest electric-power-producing firms are natural monopolies.

Question 10

When attempting price regulation,a government faces what problem(s)?

Accepted Answer

A) limited information 
B) bribes 
C) uncooperative firms 
D) All of the above 
A) limited information 
B) bribes 
C) uncooperative firms 
D) All of the above

Question 11

Forcing a natural monopoly to charge P = MC will not work.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following average cost functions suggests the presence of a natural monopoly?

Accepted Answer

A) AC = 2 
B) AC = 100/Q + 2 
C) TC = 100/Q + 2Q 
D) All of the above 
A) AC = 2 
B) AC = 100/Q + 2 
C) TC = 100/Q + 2Q 
D) All of the above

Question 13

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

Accepted Answer

A) pay the same wage to both types of labor. 
B) pay a lower wage to the labor purchased in the competitive market. 
C) pay a higher wage to the labor purchased in the competitive market. 
D) not exercise any of its monopsony power. 
A) pay the same wage to both types of labor. 
B) pay a lower wage to the labor purchased in the competitive market. 
C) pay a higher wage to the labor purchased in the competitive market. 
D) not exercise any of its monopsony power.

Question 14

The more elastic the demand curve,a monopoly

Accepted Answer

A) will have a larger Lerner Index. 
B) will face a lower marginal cost. 
C) will earn more profit. 
D) will lose more sales as it raises its price. 
A) will have a larger Lerner Index. 
B) will face a lower marginal cost. 
C) will earn more profit. 
D) will lose more sales as it raises its price.

Question 15

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

Accepted Answer

A) 3. 
B) 2. 
C) 1. 
D) 0. 
A) 3. 
B) 2. 
C) 1. 
D) 0.

Question 16

Since a monopoly can set any price it wants,it always makes a profit.

Accepted Answer

A) True 
 B)False

Question 17

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

Accepted Answer

A) is producing the profit-maximizing amount. 
B) should produce more. 
C) should produce less. 
D) Not enough information. 
A) is producing the profit-maximizing amount. 
B) should produce more. 
C) should produce less. 
D) Not enough information.

Question 18

If a firm takes the wage as given,then the firm's marginal expenditure on labor curve is

Accepted Answer

A) above the labor supply curve. 
B) below the labor supply curve. 
C) the same as the labor supply curve. 
D) upward sloping. 
A) above the labor supply curve. 
B) below the labor supply curve. 
C) the same as the labor supply curve. 
D) upward sloping.

Question 19

If the average cost curve for an individual firm is decreasing when it intersects the market demand curve,why is a natural monopoly likely to develop in this market? Explain.

Accepted Answer

Perfect competition leads to firms incre

Question 20

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Accepted Answer

A) -3. 
B) -1. 
C) -1/3. 
D) None of the above-the price elasticity does not matter. 
A) -3. 
B) -1. 
C) -1/3. 
D) None of the above-the price elasticity does not matter.

The telephone is an example of a product with network externalities.

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

A dominant-firm's residual demand curve is

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

Optimal price regulation sets price equal to

Patents

Empirical evidence from electric-power-producing firms suggests that

When attempting price regulation,a government faces what problem(s)?

Forcing a natural monopoly to charge P = MC will not work.

Which of the following average cost functions suggests the presence of a natural monopoly?

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

The more elastic the demand curve,a monopoly

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

Since a monopoly can set any price it wants,it always makes a profit.

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

If a firm takes the wage as given,then the firm's marginal expenditure on labor curve is

If the average cost curve for an individual firm is decreasing when it intersects the market demand curve,why is a natural monopoly likely to develop in this market? Explain.

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 11: Monopoly and Monopsony

The telephone is an example of a product with network externalities.

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?

-The above figure shows the demand and cost curves facing a monopoly.The monopoly maximizes profit by selling

A dominant-firm's residual demand curve is

If a monopoly can produce a good at zero marginal cost,then its Lerner Index is

Optimal price regulation sets price equal to

Patents

Empirical evidence from electric-power-producing firms suggests that

When attempting price regulation,a government faces what problem(s)?

Forcing a natural monopoly to charge P = MC will not work.

Which of the following average cost functions suggests the presence of a natural monopoly?

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

The more elastic the demand curve,a monopoly

If a monopoly is operating on the demand curve where price elasticity is equal to -3,and MR equals 2,then price is equal to

Since a monopoly can set any price it wants,it always makes a profit.

At the current level of output,a firm's marginal cost equals 16 and marginal revenue equals 10.The firm

If a firm takes the wage as given,then the firm's marginal expenditure on labor curve is

If the average cost curve for an individual firm is decreasing when it intersects the market demand curve,why is a natural monopoly likely to develop in this market? Explain.

A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters