Question 1

Refer to the accompanying figure to answer the questions that follow.
  
-If a firm is producing a quantity of 150 and charging a price of $13,it:

Accepted Answer

A) should continue to produce 150 units but lower the price to $10 to maximize profits. 
B) should continue to produce 150 units but raise the price to $25 to maximize profits. 
C) should lower production to 100 units but keep charging $13 to maximize profits. 
D) should lower production to 100 units and raise the price to $25 to maximize profits. 
E) is already maximizing profits and should not change the price or quantity produced. 
A) should continue to produce 150 units but lower the price to $10 to maximize profits. 
B) should continue to produce 150 units but raise the price to $25 to maximize profits. 
C) should lower production to 100 units but keep charging $13 to maximize profits. 
D) should lower production to 100 units and raise the price to $25 to maximize profits. 
E) is already maximizing profits and should not change the price or quantity produced.

Question 2

Refer to the accompanying figure to answer the questions that follow.
  
-If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm 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

Question 3

A monopoly:

Accepted Answer

A) always makes a profit. 
B) can force consumers to purchase what it is selling. 
C) is characterized by a single seller who produces a well-defined product for which there are no good substitutes. 
D) always has naturally created barriers. 
E) always has government-created barriers. 
A) always makes a profit. 
B) can force consumers to purchase what it is selling. 
C) is characterized by a single seller who produces a well-defined product for which there are no good substitutes. 
D) always has naturally created barriers. 
E) always has government-created barriers.

Question 4

The output effect refers to how:

Accepted Answer

A) lower prices affect the quantity sold. 
B) firms can set their prices. 
C) firms choose their quantity. 
D) lower prices affect revenue. 
E) lower output affects the price. 
A) lower prices affect the quantity sold. 
B) firms can set their prices. 
C) firms choose their quantity. 
D) lower prices affect revenue. 
E) lower output affects the price.

Question 5

Refer to the accompanying figure to answer the questions that follow.
  
-The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

Accepted Answer

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

Question 6

The price effect refers to how:

Accepted Answer

A) lower prices affect the quantity sold. 
B) firms can set their prices. 
C) firms choose their quantity. 
D) lower prices affect revenue. 
E) lower output affects the price. 
A) lower prices affect the quantity sold. 
B) firms can set their prices. 
C) firms choose their quantity. 
D) lower prices affect revenue. 
E) lower output affects the price.

Question 7

When a competitive market becomes controlled by a monopoly,the price _________ and the output _________.

Accepted Answer

A) increases; stays the same 
B) increases; increases 
C) decreases; stays the same 
D) increases; decreases 
E) decreases; decreases 
A) increases; stays the same 
B) increases; increases 
C) decreases; stays the same 
D) increases; decreases 
E) decreases; decreases

Question 8

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

Accepted Answer

A) $70,000. 
B) $50,000. 
C) $20,500. 
D) $20,000. 
E) $25,000. 
A) $70,000. 
B) $50,000. 
C) $20,500. 
D) $20,000. 
E) $25,000.

Question 9

It is unrealistic to regulate a natural monopoly at marginal cost pricing because:

Accepted Answer

A) the government is not allowed to regulate markets. 
B) marginal cost pricing ends up having the natural monopoly firm earn zero economic profits. 
C) with this type of regulation,the firm will want to shut down,and that outcome is not desirable for society. 
D) regulating a market causes more deadweight loss. 
E) firms do not need to follow regulations from the government. 
A) the government is not allowed to regulate markets. 
B) marginal cost pricing ends up having the natural monopoly firm earn zero economic profits. 
C) with this type of regulation,the firm will want to shut down,and that outcome is not desirable for society. 
D) regulating a market causes more deadweight loss. 
E) firms do not need to follow regulations from the government.

Question 10

Compare and contrast natural barriers to entry and government-created barriers to entry.

Accepted Answer

Natural barriers and government-created

Question 11

Refer to the accompanying figure to answer the questions that follow.
  
-The demand curve for Angel's Airport Shuttle is downward-sloping.With only this information,it can be concluded that Angel's Airport Shuttle:

Accepted Answer

A) is the only firm in the market for airport shuttles. 
B) is currently maximizing profits. 
C) is a price-maker. 
D) makes economic profits. 
E) should produce where the demand curve crosses marginal cost. 
A) is the only firm in the market for airport shuttles. 
B) is currently maximizing profits. 
C) is a price-maker. 
D) makes economic profits. 
E) should produce where the demand curve crosses marginal cost.

Question 12

Explain a situation in which,when holding costs constant,a monopoly that was earning economic profits in the past can later incur an economic loss.

Accepted Answer

A lot of people think that just because

Question 13

When resources are used to secure monopoly rights through the political process:

Accepted Answer

A) firms are rent-seeking. 
B) consumers are profit-maximizing. 
C) total surplus is maximized. 
D) the government is deregulating. 
E) prices decrease. 
A) firms are rent-seeking. 
B) consumers are profit-maximizing. 
C) total surplus is maximized. 
D) the government is deregulating. 
E) prices decrease.

Question 14

Antitrust laws are designed to:

Accepted Answer

A) promote monopoly practices. 
B) promote competition. 
C) increase prices. 
D) decrease output. 
E) promote awareness of government programs. 
A) promote monopoly practices. 
B) promote competition. 
C) increase prices. 
D) decrease output. 
E) promote awareness of government programs.

Question 15

When a monopolist lowers a price from $80 to $70,the quantity that the firm is able to sell increases from 100 to 150.The change in revenue associated with the price effect is equal to:

Accepted Answer

A) $3,500. 
B) -$3,500. 
C) $1,000. 
D) -$1,000. 
E) $4,000. 
A) $3,500. 
B) -$3,500. 
C) $1,000. 
D) -$1,000. 
E) $4,000.

Question 16

When a monopolist lowers its price from $80 to $70,the quantity it is able to sell increases from 100 to 150.The change in revenue associated with the output effect is equal to:

Accepted Answer

A) $3,500. 
B) -$3,500. 
C) $500. 
D) -$500. 
E) $4,000. 
A) $3,500. 
B) -$3,500. 
C) $500. 
D) -$500. 
E) $4,000.

Question 17

Some economists argue that a government-created monopoly in the medical field can be good for the overall growth of an economy,even though it does create deadweight loss.Support this argument.

Accepted Answer

A government-created monopoly gives mono

Question 18

Stephen's Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost them less than trying to modernize its facility to compete with foreign steel prices.Stephen's Steel Mill will:

Accepted Answer

A) decide that lobbying is wrong and modernize its facility. 
B) participate in rent-seeking and lobby Congress for the tariff. 
C) lobby Congress for the tariff and modernize its facility. 
D) produce more steel to attract more customers. 
E) lower its price to compete with the imported foreign steel. 
A) decide that lobbying is wrong and modernize its facility. 
B) participate in rent-seeking and lobby Congress for the tariff. 
C) lobby Congress for the tariff and modernize its facility. 
D) produce more steel to attract more customers. 
E) lower its price to compete with the imported foreign steel.

Question 19

If cable companies were in a highly competitive market,you would expect:

Accepted Answer

A) cable companies to make profits in the long run. 
B) customers to be unhappy about their cable package options. 
C) a company to be willing to sell specific channels as well as packaged options. 
D) cable companies to force you to choose between buying a little more cable than you really need or going without cable altogether. 
E) deadweight loss in the market. 
A) cable companies to make profits in the long run. 
B) customers to be unhappy about their cable package options. 
C) a company to be willing to sell specific channels as well as packaged options. 
D) cable companies to force you to choose between buying a little more cable than you really need or going without cable altogether. 
E) deadweight loss in the market.

Question 20

In Alabama,it is illegal to hunt alligators without a license.The government controls the number of licenses that can be purchased each year; thus,there is a limit on the number that can be purchased.Assuming there is an unlimited supply of alligators in Alabama,what would happen to the price and quantity of alligator sausage if the government stopped controlling the number of these hunting licenses?

Accepted Answer

By controlling the number of licenses th

Refer to the accompanying figure to answer the questions that follow. -If a firm is producing a quantity of 150 and charging a price of $13,it:

Refer to the accompanying figure to answer the questions that follow. -If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm would make _________ in profits.

A monopoly:

The output effect refers to how:

Refer to the accompanying figure to answer the questions that follow. -The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

The price effect refers to how:

When a competitive market becomes controlled by a monopoly,the price _ and the output _.

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

It is unrealistic to regulate a natural monopoly at marginal cost pricing because:

Compare and contrast natural barriers to entry and government-created barriers to entry.

Refer to the accompanying figure to answer the questions that follow. -The demand curve for Angel's Airport Shuttle is downward-sloping.With only this information,it can be concluded that Angel's Airport Shuttle:

Explain a situation in which,when holding costs constant,a monopoly that was earning economic profits in the past can later incur an economic loss.

When resources are used to secure monopoly rights through the political process:

Antitrust laws are designed to:

When a monopolist lowers a price from $80 to $70,the quantity that the firm is able to sell increases from 100 to 150.The change in revenue associated with the price effect is equal to:

When a monopolist lowers its price from $80 to $70,the quantity it is able to sell increases from 100 to 150.The change in revenue associated with the output effect is equal to:

Some economists argue that a government-created monopoly in the medical field can be good for the overall growth of an economy,even though it does create deadweight loss.Support this argument.

Stephen's Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost them less than trying to modernize its facility to compete with foreign steel prices.Stephen's Steel Mill will:

If cable companies were in a highly competitive market,you would expect:

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. -If a firm is producing a quantity of 150 and charging a price of $13,it:

Refer to the accompanying figure to answer the questions that follow. -If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm would make _________ in profits.

A monopoly:

The output effect refers to how:

Refer to the accompanying figure to answer the questions that follow. -The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

The price effect refers to how:

When a competitive market becomes controlled by a monopoly,the price _________ and the output _________.

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

It is unrealistic to regulate a natural monopoly at marginal cost pricing because:

Compare and contrast natural barriers to entry and government-created barriers to entry.

Refer to the accompanying figure to answer the questions that follow. -The demand curve for Angel's Airport Shuttle is downward-sloping.With only this information,it can be concluded that Angel's Airport Shuttle:

Explain a situation in which,when holding costs constant,a monopoly that was earning economic profits in the past can later incur an economic loss.

When resources are used to secure monopoly rights through the political process:

Antitrust laws are designed to:

When a monopolist lowers a price from $80 to $70,the quantity that the firm is able to sell increases from 100 to 150.The change in revenue associated with the price effect is equal to:

When a monopolist lowers its price from $80 to $70,the quantity it is able to sell increases from 100 to 150.The change in revenue associated with the output effect is equal to:

Some economists argue that a government-created monopoly in the medical field can be good for the overall growth of an economy,even though it does create deadweight loss.Support this argument.

Stephen's Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost them less than trying to modernize its facility to compete with foreign steel prices.Stephen's Steel Mill will:

If cable companies were in a highly competitive market,you would expect:

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

When a competitive market becomes controlled by a monopoly,the price _ and the output _.