Question 1

Although some economists believe network externalities are important barriers to entry,other economists disagree because

Accepted Answer

A)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences. 
B)  they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource. 
C)  network externalities are really negative externalities. 
D)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale. 
A)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences. 
B)  they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource. 
C)  network externalities are really negative externalities. 
D)  they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale.

Question 2

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

If a perfectly competitive ind

Question 3

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is -.

Accepted Answer

A)  network externalities 
B)  public franchise 
C)  economies of scale 
D)  control of a key resource 
A)  network externalities 
B)  public franchise 
C)  economies of scale 
D)  control of a key resource

Question 4

A monopoly is a firm that is the only seller of a good or service that does not have a close substitute.

Accepted Answer

A) True 
 B)False

Question 5

A patent or copyright is a barrier to entry based on

Accepted Answer

A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities. 
A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities.

Question 6

Table 8.2
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity per } & \text { Price per } & \text { Total Cost } \
\text { Day (cases) } & \text { Case } \
\hline 1 &\$16& \$ 7.00 \
\hline 2 & 15 & 9.50 \
\hline 3 & 14 & 11.00 \
\hline 4 & 13 & 12.00 \
\hline 5 & 12 & 14.50 \
\hline 6 & 11 & 17.50 \
\hline 7 & 10 & 21.00 \
\hline 8 & 9 & 25.00 \
\hline 9 & 8 & 30.00 \
\hline 10 & 7 & 35.50 \
\hline
\end{array}$$ The government of a small developing country has granted exclusive rights to Linden Enterprises for the production of plastic syringes. Table 8.2 shows the cost and demand data for this government-protected monopolist.
-Refer to Table 8.2.What is the profit-maximising quantity and price for the monopolist?

Accepted Answer

A)  Quantity = 8 cases, Price = $9 
B)  Quantity = 7 cases, Price = $10 
C)  Quantity = 9 cases, Price = $8 
D)  Quantity = 10 cases, Price = $7 
A)  Quantity = 8 cases, Price = $9 
B)  Quantity = 7 cases, Price = $10 
C)  Quantity = 9 cases, Price = $8 
D)  Quantity = 10 cases, Price = $7

Question 7

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 8

A profit-maximising monopoly's price is

Accepted Answer

A)  the same as the price that would prevail if the industry was perfectly competitive. 
B)  less than the price that would prevail if the industry was perfectly competitive. 
C)  greater than the price that would prevail if the industry was perfectly competitive. 
D)  not consistently related to price that would prevail if the market was perfectly competitive. 
A)  the same as the price that would prevail if the industry was perfectly competitive. 
B)  less than the price that would prevail if the industry was perfectly competitive. 
C)  greater than the price that would prevail if the industry was perfectly competitive. 
D)  not consistently related to price that would prevail if the market was perfectly competitive.

Question 9

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week,he will sell six motor homes.The marginal revenue of the sixth motor home is -.

Accepted Answer

A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $22 000 
A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $22 000

Question 10

Explain why the monopolist has no supply curve?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A supply curve shows the relationship be

Question 11

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

Accepted Answer

A)  Because Microsoft is large enough to hire the best people in the field 
B)  Because Microsoft could potentially lose sales if it sets prices indiscriminately 
C)  Because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D)  Because unlike Microsoft, the wealthy corn farmer is probably a monopolist 
A)  Because Microsoft is large enough to hire the best people in the field 
B)  Because Microsoft could potentially lose sales if it sets prices indiscriminately 
C)  Because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D)  Because unlike Microsoft, the wealthy corn farmer is probably a monopolist

Question 12

To have a monopoly in an industry there must be

Accepted Answer

A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service. 
A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service.

Question 13

A natural monopoly is most likely to occur in which of the following industries?

Accepted Answer

A)  The pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  The diamond mining and marketing industry because one firm can control a key resource 
C)  The software industry because of the importance of network externalities 
D)  An industry where fixed costs are very large relative to variable costs 
A)  The pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  The diamond mining and marketing industry because one firm can control a key resource 
C)  The software industry because of the importance of network externalities 
D)  An industry where fixed costs are very large relative to variable costs

Question 14

a.What is the difference between a horizontal merger and a vertical merger?
b.Give an example of each type of merger.
c.Could a horizontal merger be welfare improving?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.A horizontal merger is a merger betwee

Question 15

A natural monopoly is characterised by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

Question 16

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A natural monopoly arises when the produ

Question 17

A monopoly firm's demand curve

Accepted Answer

A)  is the same as the market demand curve. 
B)  is perfectly inelastic. 
C)  is more inelastic than the demand curve for the product. 
D)  is inelastic at high prices and elastic at lower prices. 
A)  is the same as the market demand curve. 
B)  is perfectly inelastic. 
C)  is more inelastic than the demand curve for the product. 
D)  is inelastic at high prices and elastic at lower prices.

Question 18

Figure 8.9   Figure 8.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 8.9.At the profit-maximising quantity,the difference between the monopoly's price and the marginal cost of production is -.

Accepted Answer

A)  $8 
B)  $11.50 
C)  $21 
D)  There is no difference. 
A)  $8 
B)  $11.50 
C)  $21 
D)  There is no difference.

Question 19

Compared to perfect competition,the consumer surplus in a monopoly

Accepted Answer

A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated. 
A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated.

Question 20

Figure 8.9   Figure 8.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 8.9.The difference between the monopoly's price and the perfectly competitive industry's price is:

Accepted Answer

A)  The monopoly's price is higher by $9.50. 
B)  The monopoly's price is higher by $13. 
C)  The monopoly's price is higher by $3.50. 
D)  The monopoly's price is higher by $21. 
A)  The monopoly's price is higher by $9.50. 
B)  The monopoly's price is higher by $13. 
C)  The monopoly's price is higher by $3.50. 
D)  The monopoly's price is higher by $21.

Although some economists believe network externalities are important barriers to entry,other economists disagree because

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is -.

A monopoly is a firm that is the only seller of a good or service that does not have a close substitute.

A patent or copyright is a barrier to entry based on

A monopolist's demand curve is the same as the marginal revenue curve for the product.

A profit-maximising monopoly's price is

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week,he will sell six motor homes.The marginal revenue of the sixth motor home is -.

Explain why the monopolist has no supply curve? __________________________________________________________________________________________________________________________________________________________________________________________

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

To have a monopoly in an industry there must be

A natural monopoly is most likely to occur in which of the following industries?

A natural monopoly is characterised by large fixed costs relative to variable costs.

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly? __________________________________________________________________________________________________________________________________________________________________________________________

A monopoly firm's demand curve

Figure 8.9 Figure 8.9 shows the demand and cost curves for a monopolist. -Refer to Figure 8.9.At the profit-maximising quantity,the difference between the monopoly's price and the marginal cost of production is -.

Compared to perfect competition,the consumer surplus in a monopoly

Figure 8.9 Figure 8.9 shows the demand and cost curves for a monopolist. -Refer to Figure 8.9.The difference between the monopoly's price and the perfectly competitive industry's price is:

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

Although some economists believe network externalities are important barriers to entry,other economists disagree because

There are several types of barriers to entry that can create a monopoly.The barrier to entry that is the result of government action is -.

A monopoly is a firm that is the only seller of a good or service that does not have a close substitute.

A patent or copyright is a barrier to entry based on

A monopolist's demand curve is the same as the marginal revenue curve for the product.

A profit-maximising monopoly's price is

Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week,he will sell six motor homes.The marginal revenue of the sixth motor home is -.

Explain why the monopolist has no supply curve? __________________________________________________________________________________________________________________________________________________________________________________________

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

To have a monopoly in an industry there must be

A natural monopoly is most likely to occur in which of the following industries?

A natural monopoly is characterised by large fixed costs relative to variable costs.

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly? __________________________________________________________________________________________________________________________________________________________________________________________

A monopoly firm's demand curve

Figure 8.9 Figure 8.9 shows the demand and cost curves for a monopolist. -Refer to Figure 8.9.At the profit-maximising quantity,the difference between the monopoly's price and the marginal cost of production is -.

Compared to perfect competition,the consumer surplus in a monopoly

Figure 8.9 Figure 8.9 shows the demand and cost curves for a monopolist. -Refer to Figure 8.9.The difference between the monopoly's price and the perfectly competitive industry's price is:

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