Question 1

One benefit from tariffs would be

Accepted Answer

A)  the increase in efficiency. 
B)  the elimination of deadweight loss. 
C)  the increase in consumer surplus. 
D)  the protection of domestic businesses. 
E)  more imports into the country. 
A)  the increase in efficiency. 
B)  the elimination of deadweight loss. 
C)  the increase in consumer surplus. 
D)  the protection of domestic businesses. 
E)  more imports into the country.

Question 2

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 3

If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125,the monopolist should ________ to maximize profits.

Accepted Answer

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

Question 4

Explain why problems raising capital constitute a natural barrier and not a government-created one.

Accepted Answer

A firm trying to borrow money has to con

Question 5

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 6

For movement along the demand curve,from an old position to a new one,the price effect is quantifiable as

Accepted Answer

A)  the old quantity times the change in price. 
B)  the new price times the change in quantity. 
C)  the new quantity divided by the change in price. 
D)  the old price times the change in quantity. 
E)  the old price times the new quantity. 
A)  the old quantity times the change in price. 
B)  the new price times the change in quantity. 
C)  the new quantity divided by the change in price. 
D)  the old price times the change in quantity. 
E)  the old price times the new quantity.

Question 7

Using a graph,show a situation in which a monopolist is incurring short-run losses.Explain how this is possible.

Accepted Answer

@#IMG-DLM& A monopolist can earn a loss if the dem

Question 8

In the soda industry,production costs per unit continue to fall as the firm expands.In this type of industry,smaller rivals trying to enter the industry

Accepted Answer

A)  will easily be able to gain market power. 
B)  have lower average costs. 
C)  do not have high fixed costs. 
D)  will have much higher average costs. 
E)  experience a government-created barrier. 
A)  will easily be able to gain market power. 
B)  have lower average costs. 
C)  do not have high fixed costs. 
D)  will have much higher average costs. 
E)  experience a government-created barrier.

Question 9

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

Accepted Answer

Barriers to entry make it difficult for

Question 10

Why do copyrights expire after a set period of time?

Accepted Answer

A)  so that creative industries will operate as efficiently as possible 
B)  to provide an incentive for artists and other creators of original work 
C)  to ensure that creative activity gets the publicity it deserves 
D)  so that in the long run,creative works are readily and cheaply available 
E)  to help writers and musicians become price makers 
A)  so that creative industries will operate as efficiently as possible 
B)  to provide an incentive for artists and other creators of original work 
C)  to ensure that creative activity gets the publicity it deserves 
D)  so that in the long run,creative works are readily and cheaply available 
E)  to help writers and musicians become price makers

Question 11

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 12

Julee has estimated the demand and marginal revenue for her product.They are P = 100-2Q (quantity)and MR = 100 - 4Q,respectively.She also experiences constant marginal cost of $16.
a.Does Julee have any market power? How can you tell?
b.What is Julee's profit-maximizing quantity?
c.What price should Julee charge at that profit-maximizing quantity?

Accepted Answer

a.Yes.Julee has market power because the

Question 13

Which of the following is characteristic of a firm in a competitive market?

Accepted Answer

A)  It cannot earn long-run economic profits. 
B)  It cannot control its costs. 
C)  It does not operate at a socially efficient output level. 
D)  It cannot control output quantity. 
E)  It can set the price at which its product sells. 
A)  It cannot earn long-run economic profits. 
B)  It cannot control its costs. 
C)  It does not operate at a socially efficient output level. 
D)  It cannot control output quantity. 
E)  It can set the price at which its product sells.

Question 14

If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30,the monopolist should ________ to maximize profits.

Accepted Answer

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

Question 15

For movement along the demand curve,from an old position to a new one,the output effect is quantified as

Accepted Answer

A)  the old quantity times the change in price. 
B)  the new price times the change in quantity. 
C)  the old price divided by the change in quantity. 
D)  the new quantity times the change in price. 
E)  the new price times the old quantity. 
A)  the old quantity times the change in price. 
B)  the new price times the change in quantity. 
C)  the old price divided by the change in quantity. 
D)  the new quantity times the change in price. 
E)  the new price times the old quantity.

Question 16

The equation of a firm's marginal revenue curve is estimated to be P = 50 - Q (quantity),and the equation of its 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 17

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 18

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 19

The monopolist's preferred production level,for maximum profit,is determined by the intersection of which two curves?

Accepted Answer

A)  demand and marginal cost 
B)  demand and marginal revenue 
C)  marginal revenue and marginal cost 
D)  marginal cost and average total cost 
E)  demand and average total cost 
A)  demand and marginal cost 
B)  demand and marginal revenue 
C)  marginal revenue and marginal cost 
D)  marginal cost and average total cost 
E)  demand and average total cost

Question 20

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

Exam 10: Understanding Monopoly

One benefit from tariffs would be

The government oversight and management of monopolies

If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125,the monopolist should ________ to maximize profits.

Explain why problems raising capital constitute a natural barrier and not a government-created one.

Taxi medallions are an example of

For movement along the demand curve,from an old position to a new one,the price effect is quantifiable as

Using a graph,show a situation in which a monopolist is incurring short-run losses.Explain how this is possible.

In the soda industry,production costs per unit continue to fall as the firm expands.In this type of industry,smaller rivals trying to enter the industry

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

Why do copyrights expire after a set period of time?

Two government-created barriers to entry are

Which of the following is characteristic of a firm in a competitive market?

If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30,the monopolist should ________ to maximize profits.

For movement along the demand curve,from an old position to a new one,the output effect is quantified as

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

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

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

The monopolist's preferred production level,for maximum profit,is determined by the intersection of which two curves?

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

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

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

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings,interest Rates,and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

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

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