Question 1

What do economists call firms that face downward-sloping demand curves for their output in the product market?

Accepted Answer

A)  Price takers 
B)  Price dictators 
C)  Monopolists 
D)  Price makers 
A)  Price takers 
B)  Price dictators 
C)  Monopolists 
D)  Price makers

Question 2

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following about a monopoly is false?

Accepted Answer

A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary. 
A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary.

Question 4

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

Accepted Answer

A) True 
 B)False

Question 5

A firm that has the ability to control to some degree the price of the product it sells

Accepted Answer

A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve. 
A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve.

Question 6

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Accepted Answer

A)  Control of a key resource 
B)  Network externalities 
C)  Entry blocked by government action 
D)  Economies of scale creating a natural monopoly 
A)  Control of a key resource 
B)  Network externalities 
C)  Entry blocked by government action 
D)  Economies of scale creating a natural monopoly

Question 7

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Accepted Answer

A)  A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B)  A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C)  A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D)  A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. 
A)  A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B)  A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C)  A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D)  A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good.

Question 8

The 10-year protection period from generic competition for drug manufacturers is a form of -.

Accepted Answer

A)  copyright 
B)  trademark 
C)  hallmark 
D)  patent 
A)  copyright 
B)  trademark 
C)  hallmark 
D)  patent

Question 9

If you own the only bookstore in a small town,do you have a monopoly?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Because consumers in your town could buy

Question 10

What does the government grant a firm when it makes the firm the exclusive legal provider of a good or service?

Accepted Answer

A)  A copyright 
B)  A network externality 
C)  A quota 
D)  A public franchise 
A)  A copyright 
B)  A network externality 
C)  A quota 
D)  A public franchise

Question 11

Why does a monopoly cause a deadweight loss?

Accepted Answer

A)  Because it does not produce some output for which marginal benefit exceeds marginal cost 
B)  Because it appropriates a portion of consumer surplus for itself 
C)  Because it increases producer surplus at the expense of consumer surplus 
D)  Because it does not produce some output for which demand exceeds supply 
A)  Because it does not produce some output for which marginal benefit exceeds marginal cost 
B)  Because it appropriates a portion of consumer surplus for itself 
C)  Because it increases producer surplus at the expense of consumer surplus 
D)  Because it does not produce some output for which demand exceeds supply

Question 12

Figure 8.2   Figure 8.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8.2.If the firm's average total cost curve is ATC2,the firm will

Accepted Answer

A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition. 
A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition.

Question 13

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is:

Accepted Answer

A)  After 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B)  Firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C)  The quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D)  After 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug. 
A)  After 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B)  Firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C)  The quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D)  After 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.

Question 14

Identify two ways by which the government controls monopolies.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The government control monopol

Question 15

What happens to a monopoly's revenue when it sells more units of its product?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The monopolist must lower its price to s

Question 16

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Accepted Answer

A)  to maximise profit the firm should increase output. 
B)  to maximise profit the firm should decrease output. 
C)  to maximise profit the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit. 
A)  to maximise profit the firm should increase output. 
B)  to maximise profit the firm should decrease output. 
C)  to maximise profit the firm should continue to produce the output it is producing. 
D)  Not enough information is given to say what the firm should do to maximise profit.

Question 17

Figure 8.11   Figure 8.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 8.11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

Accepted Answer

A)  $21 
B)  $124 
C)  $186 
D)  $332 
A)  $21 
B)  $124 
C)  $186 
D)  $332

Question 18

Figure 8.6   Figure 8.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 8.6.What amount of profit does the monopolist earn?

Accepted Answer

A)  $0 
B)  $170 
C)  $248 
D)  $372 
A)  $0 
B)  $170 
C)  $248 
D)  $372

Question 19

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 20

Figure 8.11   Figure 8.11 shows the cost and demand curves for a monopolist.
-Refer to Figure 8.11.If this industry was organised as a perfectly competitive industry,the market output and market price would be:

Accepted Answer

A)  Output = 62; price = $24. 
B)  Output = 83; price = $22. 
C)  Output = 62; price = $18. 
D)  Output = 104; price = $20.80. 
A)  Output = 62; price = $24. 
B)  Output = 83; price = $22. 
C)  Output = 62; price = $18. 
D)  Output = 104; price = $20.80.

What do economists call firms that face downward-sloping demand curves for their output in the product market?

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Which one of the following about a monopoly is false?

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

A firm that has the ability to control to some degree the price of the product it sells

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

The 10-year protection period from generic competition for drug manufacturers is a form of -.

If you own the only bookstore in a small town,do you have a monopoly? __________________________________________________________________________________________________________________________________________________________________________________________

What does the government grant a firm when it makes the firm the exclusive legal provider of a good or service?

Why does a monopoly cause a deadweight loss?

Figure 8.2 Figure 8.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8.2.If the firm's average total cost curve is ATC₂,the firm will

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is:

Identify two ways by which the government controls monopolies. __________________________________________________________________________________________________________________________________________________________________________________________

What happens to a monopoly's revenue when it sells more units of its product? __________________________________________________________________________________________________________________________________________________________________________________________

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Figure 8.11 Figure 8.11 shows the cost and demand curves for a monopolist. -Refer to Figure 8.11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

Figure 8.6 Figure 8.6 shows the cost and demand curves for a monopolist. -Refer to Figure 8.6.What amount of profit does the monopolist earn?

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Figure 8.11 Figure 8.11 shows the cost and demand curves for a monopolist. -Refer to Figure 8.11.If this industry was organised as a perfectly competitive industry,the market output and market price would be:

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 8: Monopoly Markets

What do economists call firms that face downward-sloping demand curves for their output in the product market?

A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Which one of the following about a monopoly is false?

The term 'trust' in antitrust refers to a board of trustees that has collusive control over different companies.

A firm that has the ability to control to some degree the price of the product it sells

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

The 10-year protection period from generic competition for drug manufacturers is a form of -.

If you own the only bookstore in a small town,do you have a monopoly? __________________________________________________________________________________________________________________________________________________________________________________________

What does the government grant a firm when it makes the firm the exclusive legal provider of a good or service?

Why does a monopoly cause a deadweight loss?

Figure 8.2 Figure 8.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8.2.If the firm's average total cost curve is ATC2,the firm will

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is:

Identify two ways by which the government controls monopolies. __________________________________________________________________________________________________________________________________________________________________________________________

What happens to a monopoly's revenue when it sells more units of its product? __________________________________________________________________________________________________________________________________________________________________________________________

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Figure 8.11 Figure 8.11 shows the cost and demand curves for a monopolist. -Refer to Figure 8.11.What is the amount of consumer surplus if,instead of monopoly,the industry was organised as a perfectly competitive industry?

Figure 8.6 Figure 8.6 shows the cost and demand curves for a monopolist. -Refer to Figure 8.6.What amount of profit does the monopolist earn?

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximise profit the firm should decrease output.

Figure 8.11 Figure 8.11 shows the cost and demand curves for a monopolist. -Refer to Figure 8.11.If this industry was organised as a perfectly competitive industry,the market output and market price would be:

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Figure 8.2 Figure 8.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 8.2.If the firm's average total cost curve is ATC₂,the firm will