Question 1

Economies of scale is an example of:

Accepted Answer

A) rent-seeking 
B) consumer surplus. 
C) a government-created barrier. 
D) an externality. 
E) a natural barrier. 
A) rent-seeking 
B) consumer surplus. 
C) a government-created barrier. 
D) an externality. 
E) a natural barrier. E

Question 2

Refer to the accompanying figure to answer the questions that follow.
  
-A profit-maximizing firm without any price regulations would make __________ in profits.

Accepted Answer

A) $1,500 
B) -$720 
C) $720 
D) -$240 
E) $240 
A) $1,500 
B) -$720 
C) $720 
D) -$240 
E) $240 E

Question 3

When marginal revenue is negative,the:

Accepted Answer

A) lost revenues associated with the price effect outweigh the revenue gains created by the output effect. 
B) lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect. 
C) output effect is relatively small compared to the price effect. 
D) firm is maximizing revenues. 
E) firm cannot be maximizing profits. 
A) lost revenues associated with the price effect outweigh the revenue gains created by the output effect. 
B) lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect. 
C) output effect is relatively small compared to the price effect. 
D) firm is maximizing revenues. 
E) firm cannot be maximizing profits. A

Question 4

Refer to the accompanying figure to answer the questions that follow.
  
-The profit-maximizing price and quantity are:

Accepted Answer

A) $25 and 100,respectively. 
B) $25 and 150,respectively. 
C) $13 and 100,respectively. 
D) $10 and 100,respectively. 
E) $10 and 150,respectively. 
A) $25 and 100,respectively. 
B) $25 and 150,respectively. 
C) $13 and 100,respectively. 
D) $10 and 100,respectively. 
E) $10 and 150,respectively.

Question 5

Thomas has developed a new social media site that he feels can compete heavily with Facebook.Unfortunately he cannot find someone to lend him enough money to market his product to consumers.Thomas is facing which kind of barrier to entry?

Accepted Answer

A) control of resources 
B) problems raising capital 
C) economies of scale 
D) licensing 
E) patents and copyright law 
A) control of resources 
B) problems raising capital 
C) economies of scale 
D) licensing 
E) patents and copyright law

Question 6

Economies of scale exist:

Accepted Answer

A) only for monopolists. 
B) when long-run average total costs increase. 
C) when long-run average total costs decrease. 
D) when long-run average total costs are constant. 
E) when governments create barriers to entry. 
A) only for monopolists. 
B) when long-run average total costs increase. 
C) when long-run average total costs decrease. 
D) when long-run average total costs are constant. 
E) when governments create barriers to entry.

Question 7

Which of the following can fall below the x axis when graphing price/cost against quantity?

Accepted Answer

A) demand curve 
B) marginal cost curve 
C) total cost curve 
D) fixed cost curve 
E) marginal revenue curve 
A) demand curve 
B) marginal cost curve 
C) total cost curve 
D) fixed cost curve 
E) marginal revenue curve

Question 8

The government oversight and management of monopolies:

Accepted Answer

A) is illegal in most cases. 
B) never increases efficiency. 
C) always increases efficiency. 
D) is problematic because government agencies do not care about deadweight loss. 
E) is problematic because there are no incentives to keep costs in check. 
A) is illegal in most cases. 
B) never increases efficiency. 
C) always increases efficiency. 
D) is problematic because government agencies do not care about deadweight loss. 
E) is problematic because there are no incentives to keep costs in check.

Question 9

A tariff is a(n):

Accepted Answer

A) tax on an import. 
B) tax on domestically produced and sold products. 
C) natural barrier to entry. 
D) example of a market structure. 
E) way to promote competition. 
A) tax on an import. 
B) tax on domestically produced and sold products. 
C) natural barrier to entry. 
D) example of a market structure. 
E) way to promote competition.

Question 10

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17,the monopolist should:

Accepted Answer

A) increase production and lower the price to maximize profits. 
B) decrease production and increase the price to maximize profits. 
C) continue producing at the current price to maximize profits. 
D) increase production and increase the price to maximize profits. 
E) decrease production and decrease the price to maximize profits. 
A) increase production and lower the price to maximize profits. 
B) decrease production and increase the price to maximize profits. 
C) continue producing at the current price to maximize profits. 
D) increase production and increase the price to maximize profits. 
E) decrease production and decrease the price to maximize profits.

Question 11

Rent-seeking occurs when:

Accepted Answer

A) resources are used to deregulate a market through the political process. 
B) resources are used to maximize profits. 
C) resources are used to secure monopoly rights through the political process. 
D) two firms try to enter the same market. 
E) landlords attempt to raise the rent on tenants. 
A) resources are used to deregulate a market through the political process. 
B) resources are used to maximize profits. 
C) resources are used to secure monopoly rights through the political process. 
D) two firms try to enter the same market. 
E) landlords attempt to raise the rent on tenants.

Question 12

The equation of a firm's marginal revenue curve is estimated to be P = 50 - Q (quantity),and the equations of their marginal cost curve is estimated to be P = 10 + 3Q.The profit-maximizing price for this firm is:

Accepted Answer

A) $5. 
B) $10. 
C) $15. 
D) $50. 
E) $40. 
A) $5. 
B) $10. 
C) $15. 
D) $50. 
E) $40.

Question 13

At low price levels,demand tends to be _________ and the price effect is _________,relative to the output effect.

Accepted Answer

A) inelastic; small 
B) inelastic; large 
C) elastic; small 
D) elastic; large 
E) elastic; insignificant 
A) inelastic; small 
B) inelastic; large 
C) elastic; small 
D) elastic; large 
E) elastic; insignificant

Question 14

Licensing:

Accepted Answer

A) is a natural barrier. 
B) creates more competition. 
C) causes more varieties of goods and services at different price levels. 
D) creates an opportunity for corruption. 
E) always results in zero economic profits. 
A) is a natural barrier. 
B) creates more competition. 
C) causes more varieties of goods and services at different price levels. 
D) creates an opportunity for corruption. 
E) always results in zero economic profits.

Question 15

Two government-created barriers to entry are:

Accepted Answer

A) licensing and economies of scale. 
B) economies of scale and patent system/copyright law. 
C) licensing and patent system/copyright law. 
D) economies of scale and control of resources. 
E) licensing and control of resources. 
A) licensing and economies of scale. 
B) economies of scale and patent system/copyright law. 
C) licensing and patent system/copyright law. 
D) economies of scale and control of resources. 
E) licensing and control of resources.

Question 16

Refer to the accompanying figure to answer the questions that follow.
  
-Deadweight loss results in a monopoly because:

Accepted Answer

A) the monopolist charges a price equal to marginal cost,which is higher than the price charged in a competitive market. 
B) the monopolist produces a quantity that is higher than the quantity produced in a competitive market. 
C) the monopolist makes a positive economic profit in the short run. 
D) the monopolist charges a price below marginal cost. 
E) some consumers who would benefit from a competitive market lose out. 
A) the monopolist charges a price equal to marginal cost,which is higher than the price charged in a competitive market. 
B) the monopolist produces a quantity that is higher than the quantity produced in a competitive market. 
C) the monopolist makes a positive economic profit in the short run. 
D) the monopolist charges a price below marginal cost. 
E) some consumers who would benefit from a competitive market lose out.

Question 17

The best way to limit competition is to:

Accepted Answer

A) lobby for a government-created barrier. 
B) charge a low price. 
C) produce a high quantity. 
D) control a resource that is essential in the production process. 
E) minimize costs. 
A) lobby for a government-created barrier. 
B) charge a low price. 
C) produce a high quantity. 
D) control a resource that is essential in the production process. 
E) minimize costs.

Question 18

After a patent on a product expires,

Accepted Answer

A) other firms must wait to mimic the product. 
B) all negative and positive externalities are internalized. 
C) rivals can start to mimic the product. 
D) no other firms can mimic the product. 
E) no further profits are able to be made by the original producer of the good. 
A) other firms must wait to mimic the product. 
B) all negative and positive externalities are internalized. 
C) rivals can start to mimic the product. 
D) no other firms can mimic the product. 
E) no further profits are able to be made by the original producer of the good.

Question 19

Apple and Google apply for hundreds of patents every year.These patents:

Accepted Answer

A) allow Apple and Google to produce goods with no risk of monetary loss. 
B) provide incentives for Apple and Google to spend large amounts of money up front on research and development of new products. 
C) create more competition among Apple,Google,and other tech firms than would occur without government intervention. 
D) make it easy for Apple and Google products to be similar. 
E) make it easy for other firms to compete with Apple and Google. 
A) allow Apple and Google to produce goods with no risk of monetary loss. 
B) provide incentives for Apple and Google to spend large amounts of money up front on research and development of new products. 
C) create more competition among Apple,Google,and other tech firms than would occur without government intervention. 
D) make it easy for Apple and Google products to be similar. 
E) make it easy for other firms to compete with Apple and Google.

Question 20

Rent-seeking:

Accepted Answer

A) is desired by consumers. 
B) is not a type of competition. 
C) is a type of competition that leads to a market price and output. 
D) is a type of competition that leads to an undesirable outcome. 
E) occurs when resources are used to deregulate a market though the political process. 
A) is desired by consumers. 
B) is not a type of competition. 
C) is a type of competition that leads to a market price and output. 
D) is a type of competition that leads to an undesirable outcome. 
E) occurs when resources are used to deregulate a market though the political process.

Economies of scale is an example of:

Refer to the accompanying figure to answer the questions that follow. -A profit-maximizing firm without any price regulations would make __________ in profits.

When marginal revenue is negative,the:

Refer to the accompanying figure to answer the questions that follow. -The profit-maximizing price and quantity are:

Thomas has developed a new social media site that he feels can compete heavily with Facebook.Unfortunately he cannot find someone to lend him enough money to market his product to consumers.Thomas is facing which kind of barrier to entry?

Economies of scale exist:

Which of the following can fall below the x axis when graphing price/cost against quantity?

The government oversight and management of monopolies:

A tariff is a(n):

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17,the monopolist should:

Rent-seeking occurs when:

The equation of a firm's marginal revenue curve is estimated to be P = 50 - Q (quantity),and the equations of their marginal cost curve is estimated to be P = 10 + 3Q.The profit-maximizing price for this firm is:

At low price levels,demand tends to be _ and the price effect is _,relative to the output effect.

Licensing:

Two government-created barriers to entry are:

Refer to the accompanying figure to answer the questions that follow. -Deadweight loss results in a monopoly because:

The best way to limit competition is to:

After a patent on a product expires,

Apple and Google apply for hundreds of patents every year.These patents:

Rent-seeking:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Exam 10: Understanding Monopoly

Economies of scale is an example of:

Refer to the accompanying figure to answer the questions that follow. -A profit-maximizing firm without any price regulations would make __________ in profits.

When marginal revenue is negative,the:

Refer to the accompanying figure to answer the questions that follow. -The profit-maximizing price and quantity are:

Thomas has developed a new social media site that he feels can compete heavily with Facebook.Unfortunately he cannot find someone to lend him enough money to market his product to consumers.Thomas is facing which kind of barrier to entry?

Economies of scale exist:

Which of the following can fall below the x axis when graphing price/cost against quantity?

The government oversight and management of monopolies:

A tariff is a(n):

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17,the monopolist should:

Rent-seeking occurs when:

The equation of a firm's marginal revenue curve is estimated to be P = 50 - Q (quantity),and the equations of their marginal cost curve is estimated to be P = 10 + 3Q.The profit-maximizing price for this firm is:

At low price levels,demand tends to be _________ and the price effect is _________,relative to the output effect.

Licensing:

Two government-created barriers to entry are:

Refer to the accompanying figure to answer the questions that follow. -Deadweight loss results in a monopoly because:

The best way to limit competition is to:

After a patent on a product expires,

Apple and Google apply for hundreds of patents every year.These patents:

Rent-seeking:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

At low price levels,demand tends to be _ and the price effect is _,relative to the output effect.