Question 1

Refer to the accompanying figure to answer the questions that follow.
  
-The total cost when a firm is profit-maximizing is:

Accepted Answer

A) $70,000. 
B) $50,000. 
C) $67,500. 
D) $60,000. 
E) $25,000. 
A) $70,000. 
B) $50,000. 
C) $67,500. 
D) $60,000. 
E) $25,000.

Question 2

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely:

Accepted Answer

A) never changes. 
B) is lower than in the big cities in Texas. 
C) is determined by competitive market forces. 
D) is higher than in the big cities in Texas. 
E) produces a surplus of gasoline. 
A) never changes. 
B) is lower than in the big cities in Texas. 
C) is determined by competitive market forces. 
D) is higher than in the big cities in Texas. 
E) produces a surplus of gasoline.

Question 3

Refer to the accompanying figure to answer the questions that follow.
  
-This firm:

Accepted Answer

A) is in a competitive market. 
B) can make a profit. 
C) does not want to maximize profit. 
D) cannot make a profit. 
E) is not a monopoly because it is incurring a loss. 
A) is in a competitive market. 
B) can make a profit. 
C) does not want to maximize profit. 
D) cannot make a profit. 
E) is not a monopoly because it is incurring a loss.

Question 4

At the profit-maximizing output in a monopoly-controlled market,the price a monopolist charges is:

Accepted Answer

A) below marginal cost. 
B) above marginal cost. 
C) above average total cost. 
D) below average total cost. 
E) equal to marginal cost. 
A) below marginal cost. 
B) above marginal cost. 
C) above average total cost. 
D) below average total cost. 
E) equal to marginal cost.

Question 5

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must:

Accepted Answer

A) have something unique to sell and it must be able to estimate its demand curve. 
B) have something unique to sell and it must have a way to prevent potential competitors from entering the market. 
C) be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market. 
D) be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market. 
E) have something unique to sell and it must be able to segregate its consumers. 
A) have something unique to sell and it must be able to estimate its demand curve. 
B) have something unique to sell and it must have a way to prevent potential competitors from entering the market. 
C) be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market. 
D) be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market. 
E) have something unique to sell and it must be able to segregate its consumers.

Question 6

Three natural barriers to entry are:

Accepted Answer

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

Question 7

A big difference between a competitive firm and a monopolist is that a monopolist:

Accepted Answer

A) does not charge a price equal to marginal revenue. 
B) does not set marginal revenue equal to marginal cost to maximize profits. 
C) does not try to maximize profits. 
D) can always make positive economic profits. 
E) cannot set its price at the market price. 
A) does not charge a price equal to marginal revenue. 
B) does not set marginal revenue equal to marginal cost to maximize profits. 
C) does not try to maximize profits. 
D) can always make positive economic profits. 
E) cannot set its price at the market price.

Question 8

Lobbying the government to place harsh tariffs on imports is a form of:

Accepted Answer

A) competition. 
B) market failure. 
C) deregulation. 
D) rent-seeking. 
E) natural monopoly. 
A) competition. 
B) market failure. 
C) deregulation. 
D) rent-seeking. 
E) natural monopoly.

Question 9

Refer to the accompanying figure to answer the questions that follow.
  
-Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

Accepted Answer

A) A + B 
B) B + D + G + E + H 
C) C + D 
D) A + B + C + D + E 
E) E + H 
A) A + B 
B) B + D + G + E + H 
C) C + D 
D) A + B + C + D + E 
E) E + H

Question 10

The marginal revenue lies _________ the demand curve because there is a(n)_________ effect whenever the price is lowered.

Accepted Answer

A) above; price 
B) below; price 
C) below; output 
D) above; output 
E) on; price 
A) above; price 
B) below; price 
C) below; output 
D) above; output 
E) on; price

Question 11

Explain why it is unrealistic to regulate a natural monopoly for a price and quantity that maximizes total economic surplus in society.

Accepted Answer

A natural monopoly occurs because of lar

Question 12

Refer to the accompanying figure to answer the questions that follow.
  
-If a firm is producing a quantity of 100 and charging a price of $10,it:

Accepted Answer

A) should continue to produce 100 units but raise the price to $13 to maximize profits. 
B) should increase production to 150 units but raise the price to $25 to maximize profits. 
C) should continue to produce 100 units but raise the price to $25 to maximize profits. 
D) should increase production to 100 units and raise the price to $13 to maximize profits. 
E) is already maximizing profits and should not change the price or quantity produced. 
A) should continue to produce 100 units but raise the price to $13 to maximize profits. 
B) should increase production to 150 units but raise the price to $25 to maximize profits. 
C) should continue to produce 100 units but raise the price to $25 to maximize profits. 
D) should increase production to 100 units and raise the price to $13 to maximize profits. 
E) is already maximizing profits and should not change the price or quantity produced.

Question 13

Most economists are against monopolies because:

Accepted Answer

A) monopolists do not maximize profits. 
B) monopolies produce too much of product. 
C) monopolies offer more choices than are needed. 
D) monopolies can never produce the quantity that a perfectly competitive market would produce. 
E) monopolies do not offer any choice. 
A) monopolists do not maximize profits. 
B) monopolies produce too much of product. 
C) monopolies offer more choices than are needed. 
D) monopolies can never produce the quantity that a perfectly competitive market would produce. 
E) monopolies do not offer any choice.

Question 14

Refer to the accompanying figure to answer the questions that follow.
  
-When a competitive market comes under the control of a monopoly,the quantity changes from:

Accepted Answer

A) D to E. 
B) E to D. 
C) C to A. 
D) B to A. 
E) A to B. 
A) D to E. 
B) E to D. 
C) C to A. 
D) B to A. 
E) A to B.

Question 15

Why are barriers to entry so important to obtaining monopoly power in a market?

Accepted Answer

Barriers to entry make it difficult for

Question 16

Because the demand curve for a monopolist is downward sloping:

Accepted Answer

A) there is no limit on the monopolist's ability to make a profit. 
B) the monopolist can sell its product at any price it wants. 
C) the monopolist can sell as many units of its product as it wants. 
D) the monopolist is a price-taker. 
E) the monopolist has many price-output combinations. 
A) there is no limit on the monopolist's ability to make a profit. 
B) the monopolist can sell its product at any price it wants. 
C) the monopolist can sell as many units of its product as it wants. 
D) the monopolist is a price-taker. 
E) the monopolist has many price-output combinations.

Question 17

A price-maker:

Accepted Answer

A) is a characteristic held by a perfectly competitive firm. 
B) must set the price at the market price. 
C) has some control over the price it charges. 
D) can sell its product at any price. 
E) will always make economic profits. 
A) is a characteristic held by a perfectly competitive firm. 
B) must set the price at the market price. 
C) has some control over the price it charges. 
D) can sell its product at any price. 
E) will always make economic profits.

Question 18

Refer to the accompanying figure to answer the questions that follow.
  
-When a town has a single cable provider:

Accepted Answer

A) the cable company usually offers many different cable packages to satisfy customers' wants. 
B) customers must buy some cable channels that they don't want in order to get the channels that they do want. 
C) the government regulates the cable provider's offerings. 
D) the cable provider is a price-taker. 
E) the consumers experience no consumer surplus. 
A) the cable company usually offers many different cable packages to satisfy customers' wants. 
B) customers must buy some cable channels that they don't want in order to get the channels that they do want. 
C) the government regulates the cable provider's offerings. 
D) the cable provider is a price-taker. 
E) the consumers experience no consumer surplus.

Question 19

One way the government can restore competitiveness in a market is through:

Accepted Answer

A) patents. 
B) copyrights. 
C) tariffs. 
D) taxes. 
E) antitrust laws. 
A) patents. 
B) copyrights. 
C) tariffs. 
D) taxes. 
E) antitrust laws.

Question 20

Breaking up a company that has a natural monopoly would:

Accepted Answer

A) result in higher production costs. 
B) result in lower production costs. 
C) benefit society. 
D) result in lower prices for consumers. 
E) increase government tax revenue. 
A) result in higher production costs. 
B) result in lower production costs. 
C) benefit society. 
D) result in lower prices for consumers. 
E) increase government tax revenue.

Refer to the accompanying figure to answer the questions that follow. -The total cost when a firm is profit-maximizing is:

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely:

Refer to the accompanying figure to answer the questions that follow. -This firm:

At the profit-maximizing output in a monopoly-controlled market,the price a monopolist charges is:

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must:

Three natural barriers to entry are:

A big difference between a competitive firm and a monopolist is that a monopolist:

Lobbying the government to place harsh tariffs on imports is a form of:

Refer to the accompanying figure to answer the questions that follow. -Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

The marginal revenue lies _ the demand curve because there is a(n)_ effect whenever the price is lowered.

Explain why it is unrealistic to regulate a natural monopoly for a price and quantity that maximizes total economic surplus in society.

Refer to the accompanying figure to answer the questions that follow. -If a firm is producing a quantity of 100 and charging a price of $10,it:

Most economists are against monopolies because:

Refer to the accompanying figure to answer the questions that follow. -When a competitive market comes under the control of a monopoly,the quantity changes from:

Why are barriers to entry so important to obtaining monopoly power in a market?

Because the demand curve for a monopolist is downward sloping:

A price-maker:

Refer to the accompanying figure to answer the questions that follow. -When a town has a single cable provider:

One way the government can restore competitiveness in a market is through:

Breaking up a company that has a natural monopoly would:

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

Refer to the accompanying figure to answer the questions that follow. -The total cost when a firm is profit-maximizing is:

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely:

Refer to the accompanying figure to answer the questions that follow. -This firm:

At the profit-maximizing output in a monopoly-controlled market,the price a monopolist charges is:

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must:

Three natural barriers to entry are:

A big difference between a competitive firm and a monopolist is that a monopolist:

Lobbying the government to place harsh tariffs on imports is a form of:

Refer to the accompanying figure to answer the questions that follow. -Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

The marginal revenue lies _________ the demand curve because there is a(n)_________ effect whenever the price is lowered.

Explain why it is unrealistic to regulate a natural monopoly for a price and quantity that maximizes total economic surplus in society.

Refer to the accompanying figure to answer the questions that follow. -If a firm is producing a quantity of 100 and charging a price of $10,it:

Most economists are against monopolies because:

Refer to the accompanying figure to answer the questions that follow. -When a competitive market comes under the control of a monopoly,the quantity changes from:

Why are barriers to entry so important to obtaining monopoly power in a market?

Because the demand curve for a monopolist is downward sloping:

A price-maker:

Refer to the accompanying figure to answer the questions that follow. -When a town has a single cable provider:

One way the government can restore competitiveness in a market is through:

Breaking up a company that has a natural monopoly would:

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

The marginal revenue lies _ the demand curve because there is a(n)_ effect whenever the price is lowered.