Question 1

Temporary price reductions designed to drive out competition are called:

Accepted Answer

A)  Marginal cost pricing. 
B)  Monopoly pricing. 
C)  Predatory pricing. 
D)  Price fixing. 
A)  Marginal cost pricing. 
B)  Monopoly pricing. 
C)  Predatory pricing. 
D)  Price fixing.

Question 2

If a seafood restaurant can raise the price of its fried shrimp without losing all of its customers,then the restaurant definitely:

Accepted Answer

A)  Has market power. 
B)  Is experiencing economies of scale. 
C)  Is using predatory pricing. 
D)  Has a monopoly. 
A)  Has market power. 
B)  Is experiencing economies of scale. 
C)  Is using predatory pricing. 
D)  Has a monopoly.

Question 3

In monopolistic competition there is more price-setting power than in perfect competition.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following practices is Microsoft accused of using to restrict competition?

Accepted Answer

A)  The threat of legal action. 
B)  Bundling products. 
C)  Exclusive licensing. 
D)  Government franchises. 
A)  The threat of legal action. 
B)  Bundling products. 
C)  Exclusive licensing. 
D)  Government franchises.

Question 5

The change in total revenue that results from a one-unit increase in quantity sold is:

Accepted Answer

A)  Marginal cost. 
B)  Marginal revenue. 
C)  Marginal profit. 
D)  Total revenue. 
A)  Marginal cost. 
B)  Marginal revenue. 
C)  Marginal profit. 
D)  Total revenue.

Question 6

If American Airlines engages in predatory pricing,it might:

Accepted Answer

A)  Lower fares when a new carrier enters the market and then raise fares as soon as the new carrier gains sufficient business. 
B)  Raise fares when a new carrier enters the market and then lower fares once the new carrier leaves the market. 
C)  Lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business. 
D)  Lower fares permanently once a new carrier enters the market in order to keep up in the expanding airline industry. 
A)  Lower fares when a new carrier enters the market and then raise fares as soon as the new carrier gains sufficient business. 
B)  Raise fares when a new carrier enters the market and then lower fares once the new carrier leaves the market. 
C)  Lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business. 
D)  Lower fares permanently once a new carrier enters the market in order to keep up in the expanding airline industry.

Question 7

List some of the barriers to entry for a monopolist.Explain how each barrier can preserve a monopoly.

Accepted Answer

a)Barriers to entry are such things as p

Question 8

Since a monopoly has market power:

Accepted Answer

A)  Its demand curve is upward sloping. 
B)  Its marginal revenue curve is below its demand curve. 
C)  It must hold price constant in order to sell an additional unit of output. 
D)  Its costs of production are minimal. 
A)  Its demand curve is upward sloping. 
B)  Its marginal revenue curve is below its demand curve. 
C)  It must hold price constant in order to sell an additional unit of output. 
D)  Its costs of production are minimal.

Question 9

A text NEWSWIRE article about Microsoft reported: "Microsoft mounted a deliberate assault upon entrepreneurial efforts that…could well have prevented the introduction of competition…" This passage suggests that Microsoft was able to erect barriers to entry and behave like:

Accepted Answer

A)  A perfectly contestable market. 
B)  A perfectly competitive market. 
C)  A natural monopoly. 
D)  A monopoly. 
A)  A perfectly contestable market. 
B)  A perfectly competitive market. 
C)  A natural monopoly. 
D)  A monopoly.

Question 10

Which of the following does not have the power to set prices?

Accepted Answer

A)  A duopoly. 
B)  A monopoly. 
C)  An oligopoly. 
D)  A perfect competitor. 
A)  A duopoly. 
B)  A monopoly. 
C)  An oligopoly. 
D)  A perfect competitor.

Question 11

A natural monopoly uses legal harassment and bundling of products to keep others out of the market.

Accepted Answer

A) True 
 B)False

Question 12

For a monopoly,profits are maximized at the output level where price and marginal cost are equal.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist:

Accepted Answer

A)  Maximizes profit at the output where price equals marginal cost. 
B)  Charges a higher price than a competitive firm,ceteris paribus. 
C)  Is a price taker since it has market power. 
D)  Cannot earn an economic profit in the long run. 
A)  Maximizes profit at the output where price equals marginal cost. 
B)  Charges a higher price than a competitive firm,ceteris paribus. 
C)  Is a price taker since it has market power. 
D)  Cannot earn an economic profit in the long run.

Question 14

According to the profit-maximization rule,a firm should produce at the rate of output where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following helps to keep potential competitors out of a monopoly market?

Accepted Answer

A)  Bundled products. 
B)  The profit motive. 
C)  Rising average total costs. 
D)  A high price for the gooD. 
A)  Bundled products. 
B)  The profit motive. 
C)  Rising average total costs. 
D)  A high price for the gooD.

Question 16

The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3  
-In Table 7.3,profit maximization is achieved at a production rate of:

Accepted Answer

A)  1 submarine per year. 
B)  3 submarines per year. 
C)  4 submarines per year. 
D)  5 submarines per year. 
A)  1 submarine per year. 
B)  3 submarines per year. 
C)  4 submarines per year. 
D)  5 submarines per year.

Question 17

Which of the following is not a barrier to entry into a monopoly market?

Accepted Answer

A)  The exclusive right to produce a good. 
B)  The existence of substitute goods. 
C)  Legal action against new firms that enter the market. 
D)  A patent on important technology. 
A)  The exclusive right to produce a good. 
B)  The existence of substitute goods. 
C)  Legal action against new firms that enter the market. 
D)  A patent on important technology.

Question 18

The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3  
-In Table 7.3,at an output rate of 5 submarines per year,marginal revenue is equal to:

Accepted Answer

A)  -$30 million. 
B)  $10 million. 
C)  $90 million. 
D)  $250 million. 
A)  -$30 million. 
B)  $10 million. 
C)  $90 million. 
D)  $250 million.

Question 19

The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3  
-In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _____ and marginal revenue is equal to _____.

Accepted Answer

A)  $30 million;$90 million 
B)  $50 million;$50 million 
C)  $40 million;$70 million 
D)  $70 million;$30 million 
A)  $30 million;$90 million 
B)  $50 million;$50 million 
C)  $40 million;$70 million 
D)  $70 million;$30 million

Question 20

Which of the following is not consistent with a monopoly industry?

Accepted Answer

A)  Production and supplies are constrained. 
B)  Barriers to entry keep potential competitors out of the market. 
C)  There is no pressure to reduce costs or improve product quality. 
D)  Many firms produce identical or similar products. 
A)  Production and supplies are constrained. 
B)  Barriers to entry keep potential competitors out of the market. 
C)  There is no pressure to reduce costs or improve product quality. 
D)  Many firms produce identical or similar products.

Temporary price reductions designed to drive out competition are called:

If a seafood restaurant can raise the price of its fried shrimp without losing all of its customers,then the restaurant definitely:

In monopolistic competition there is more price-setting power than in perfect competition.

Which of the following practices is Microsoft accused of using to restrict competition?

The change in total revenue that results from a one-unit increase in quantity sold is:

If American Airlines engages in predatory pricing,it might:

List some of the barriers to entry for a monopolist.Explain how each barrier can preserve a monopoly.

Since a monopoly has market power:

A text NEWSWIRE article about Microsoft reported: "Microsoft mounted a deliberate assault upon entrepreneurial efforts that…could well have prevented the introduction of competition…" This passage suggests that Microsoft was able to erect barriers to entry and behave like:

Which of the following does not have the power to set prices?

A natural monopoly uses legal harassment and bundling of products to keep others out of the market.

For a monopoly,profits are maximized at the output level where price and marginal cost are equal.

A monopolist:

According to the profit-maximization rule,a firm should produce at the rate of output where marginal revenue equals marginal cost.

Which of the following helps to keep potential competitors out of a monopoly market?

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,profit maximization is achieved at a production rate of:

Which of the following is not a barrier to entry into a monopoly market?

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,at an output rate of 5 submarines per year,marginal revenue is equal to:

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _ and marginal revenue is equal to _.

Which of the following is not consistent with a monopoly industry?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 7: Monopoly

Temporary price reductions designed to drive out competition are called:

If a seafood restaurant can raise the price of its fried shrimp without losing all of its customers,then the restaurant definitely:

In monopolistic competition there is more price-setting power than in perfect competition.

Which of the following practices is Microsoft accused of using to restrict competition?

The change in total revenue that results from a one-unit increase in quantity sold is:

If American Airlines engages in predatory pricing,it might:

List some of the barriers to entry for a monopolist.Explain how each barrier can preserve a monopoly.

Since a monopoly has market power:

A text NEWSWIRE article about Microsoft reported: "Microsoft mounted a deliberate assault upon entrepreneurial efforts that…could well have prevented the introduction of competition…" This passage suggests that Microsoft was able to erect barriers to entry and behave like:

Which of the following does not have the power to set prices?

A natural monopoly uses legal harassment and bundling of products to keep others out of the market.

For a monopoly,profits are maximized at the output level where price and marginal cost are equal.

A monopolist:

According to the profit-maximization rule,a firm should produce at the rate of output where marginal revenue equals marginal cost.

Which of the following helps to keep potential competitors out of a monopoly market?

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,profit maximization is achieved at a production rate of:

Which of the following is not a barrier to entry into a monopoly market?

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,at an output rate of 5 submarines per year,marginal revenue is equal to:

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _____ and marginal revenue is equal to _____.

Which of the following is not consistent with a monopoly industry?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

The following table shows some costs and prices faced by a company that produces submarines. Table 7.3 -In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _ and marginal revenue is equal to _.