Question 1

A natural monopoly:

Accepted Answer

A) exists when many sellers experience lower average total costs than potential competitors do. 
B) exists when a firm has sole ownership of a natural resource. 
C) is an example of a government-created barrier. 
D) is needed to make a profit in the long run. 
E) exists when a single seller experiences lower average total costs than any potential competitor. 
A) exists when many sellers experience lower average total costs than potential competitors do. 
B) exists when a firm has sole ownership of a natural resource. 
C) is an example of a government-created barrier. 
D) is needed to make a profit in the long run. 
E) exists when a single seller experiences lower average total costs than any potential competitor.

Question 2

To maximize profits,a monopolist chooses the quantity where:

Accepted Answer

A) revenues are maximized. 
B) marginal revenue equals zero. 
C) marginal cost equals zero. 
D) marginal revenue equals marginal cost. 
E) costs are minimized. 
A) revenues are maximized. 
B) marginal revenue equals zero. 
C) marginal cost equals zero. 
D) marginal revenue equals marginal cost. 
E) costs are minimized.

Question 3

Inefficient output and price,few choices,and rent seeking are all problems associated with:

Accepted Answer

A) externalities. 
B) competitive markets. 
C) monopolies. 
D) scarcity. 
E) trade. 
A) externalities. 
B) competitive markets. 
C) monopolies. 
D) scarcity. 
E) trade.

Question 4

In instances when having a single firm in the market makes sense,governments _________ to minimize negative externalities.

Accepted Answer

A) will grant a patent or copyright 
B) require licenses 
C) deregulate industries 
D) hand out subsidies 
E) break down barriers to entry 
A) will grant a patent or copyright 
B) require licenses 
C) deregulate industries 
D) hand out subsidies 
E) break down barriers to entry

Question 5

Reducing trade barriers creates _________ competition,_________ the influence of monopoly,and _________ the efficient use of resources.

Accepted Answer

A) less; reduces; promotes 
B) more; reduces; promotes 
C) less; increases; promotes 
D) more; reduces; hinders 
E) more; increases; hinders 
A) less; reduces; promotes 
B) more; reduces; promotes 
C) less; increases; promotes 
D) more; reduces; hinders 
E) more; increases; hinders

Question 6

The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

Accepted Answer

A) lower; lower 
B) higher; higher 
C) higher; lower 
D) lower; higher 
E) higher; the same 
A) lower; lower 
B) higher; higher 
C) higher; lower 
D) lower; higher 
E) higher; the same

Question 7

Refer to the accompanying figure to answer the questions that follow.
  
-At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?

Accepted Answer

A) A and E 
B) B and F 
C) C and G 
D) D and H 
E) D and E 
A) A and E 
B) B and F 
C) C and G 
D) D and H 
E) D and E

Question 8

Refer to the accompanying figure to answer the questions that follow.
  
-The deadweight loss associated with this profit-maximizing monopoly is equal to:

Accepted Answer

A) $900. 
B) $600. 
C) $300. 
D) $100. 
E) $450. 
A) $900. 
B) $600. 
C) $300. 
D) $100. 
E) $450.

Question 9

Taxi medallions are an example of:

Accepted Answer

A) perfect competition. 
B) a naturally created barrier to entry. 
C) a government-created barrier to entry. 
D) rent-seeking. 
E) economies of scale. 
A) perfect competition. 
B) a naturally created barrier to entry. 
C) a government-created barrier to entry. 
D) rent-seeking. 
E) economies of scale.

Question 10

Refer to the accompanying figure to answer the questions that follow.
  
-When marginal revenue intersects marginal cost on a graph:

Accepted Answer

A) profits are maximized for a monopoly but not for a competitive firm. 
B) profits are maximized for a competitive firm but not for a monopoly. 
C) a monopolist prices the good at that point. 
D) a monopolist always makes an economic profit. 
E) a monopolist must go up to the demand curve to find the price. 
A) profits are maximized for a monopoly but not for a competitive firm. 
B) profits are maximized for a competitive firm but not for a monopoly. 
C) a monopolist prices the good at that point. 
D) a monopolist always makes an economic profit. 
E) a monopolist must go up to the demand curve to find the price.

Question 11

Explain the price effect and the output effect as it pertains to the marginal revenue of a monopolist.

Accepted Answer

The price effect refers to how lower pri

Question 12

Refer to the accompanying figure to answer the questions that follow.
  
-Consumer surplus associated with a profit-maximizing monopoly is equal to:

Accepted Answer

A) $900. 
B) $600. 
C) $300. 
D) $100. 
E) $450. 
A) $900. 
B) $600. 
C) $300. 
D) $100. 
E) $450.

Question 13

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

Question 14

Monopolies result in a(n)__________ level of output and provide __________ choice to consumers.

Accepted Answer

A) inefficient; less 
B) inefficient; more 
C) efficient; less 
D) efficient; more 
E) high; more 
A) inefficient; less 
B) inefficient; more 
C) efficient; less 
D) efficient; more 
E) high; more

Question 15

Control of resources is an example of:

Accepted Answer

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

Question 16

The demand curve for the product of a firm in a competitive market is _________,and the demand curve for the product of a monopolist is _________.

Accepted Answer

A) perfectly inelastic; downward-sloping 
B) horizontal; perfectly inelastic 
C) downward-sloping; perfectly elastic 
D) downward-sloping; horizontal 
E) perfectly elastic; downward-sloping 
A) perfectly inelastic; downward-sloping 
B) horizontal; perfectly inelastic 
C) downward-sloping; perfectly elastic 
D) downward-sloping; horizontal 
E) perfectly elastic; downward-sloping

Question 17

Which of the following is a characteristic of a monopoly but not of a competitive market?

Accepted Answer

A) A monopoly contains many firms. B) price > marginal cost C) price < marginal cost D) price = marginal cost E) A monopoly is a price-taker. A) A monopoly contains many firms. B) price > marginal cost C) price < marginal cost D) price = marginal cost E) A monopoly is a price-taker.

Question 18

Refer to the accompanying figure to answer the questions that follow.
  
-The total revenue 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 19

Raising capital to compete against an entrenched monopolist:

Accepted Answer

A) is very easy. 
B) is unnecessary. 
C) can be done only through private investors. 
D) is very difficult. 
E) can be done only through banks. 
A) is very easy. 
B) is unnecessary. 
C) can be done only through private investors. 
D) is very difficult. 
E) can be done only through banks.

Question 20

Refer to the accompanying figure to answer the questions that follow.
  
-Which of the following is the profit-maximizing price and quantity combination?

Accepted Answer

A) A and E 
B) B and F 
C) C and G 
D) D and H 
E) A and H 
A) A and E 
B) B and F 
C) C and G 
D) D and H 
E) A and H

A natural monopoly:

To maximize profits,a monopolist chooses the quantity where:

Inefficient output and price,few choices,and rent seeking are all problems associated with:

In instances when having a single firm in the market makes sense,governments _________ to minimize negative externalities.

Reducing trade barriers creates _____ competition,_ the influence of monopoly,and _____ the efficient use of resources.

The typical result of monopoly is prices and output than we find in a competitive market.

Refer to the accompanying figure to answer the questions that follow. -At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?

Refer to the accompanying figure to answer the questions that follow. -The deadweight loss associated with this profit-maximizing monopoly is equal to:

Taxi medallions are an example of:

Refer to the accompanying figure to answer the questions that follow. -When marginal revenue intersects marginal cost on a graph:

Explain the price effect and the output effect as it pertains to the marginal revenue of a monopolist.

Refer to the accompanying figure to answer the questions that follow. -Consumer surplus associated with a profit-maximizing monopoly is equal to:

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

Monopolies result in a(n) level of output and provide choice to consumers.

Control of resources is an example of:

The demand curve for the product of a firm in a competitive market is _,and the demand curve for the product of a monopolist is _.

Which of the following is a characteristic of a monopoly but not of a competitive market?

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

Raising capital to compete against an entrenched monopolist:

Refer to the accompanying figure to answer the questions that follow. -Which of the following is the profit-maximizing price and quantity combination?

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

A natural monopoly:

To maximize profits,a monopolist chooses the quantity where:

Inefficient output and price,few choices,and rent seeking are all problems associated with:

In instances when having a single firm in the market makes sense,governments _________ to minimize negative externalities.

Reducing trade barriers creates _________ competition,_________ the influence of monopoly,and _________ the efficient use of resources.

The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

Refer to the accompanying figure to answer the questions that follow. -At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?

Refer to the accompanying figure to answer the questions that follow. -The deadweight loss associated with this profit-maximizing monopoly is equal to:

Taxi medallions are an example of:

Refer to the accompanying figure to answer the questions that follow. -When marginal revenue intersects marginal cost on a graph:

Explain the price effect and the output effect as it pertains to the marginal revenue of a monopolist.

Refer to the accompanying figure to answer the questions that follow. -Consumer surplus associated with a profit-maximizing monopoly is equal to:

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

Monopolies result in a(n)__________ level of output and provide __________ choice to consumers.

Control of resources is an example of:

The demand curve for the product of a firm in a competitive market is _________,and the demand curve for the product of a monopolist is _________.

Which of the following is a characteristic of a monopoly but not of a competitive market?

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

Raising capital to compete against an entrenched monopolist:

Refer to the accompanying figure to answer the questions that follow. -Which of the following is the profit-maximizing price and quantity combination?

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

Reducing trade barriers creates _____ competition,_ the influence of monopoly,and _____ the efficient use of resources.

The typical result of monopoly is prices and output than we find in a competitive market.

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

Monopolies result in a(n) level of output and provide choice to consumers.

The demand curve for the product of a firm in a competitive market is _,and the demand curve for the product of a monopolist is _.