Question 1

Monopolists

Accepted Answer

A)  enjoy market power for their specific product. 
B)  have no market power for their specific product. 
C)  will never experience a loss. 
D)  always experience economies of scale. 
E)  exist in all markets. 
A)  enjoy market power for their specific product. 
B)  have no market power for their specific product. 
C)  will never experience a loss. 
D)  always experience economies of scale. 
E)  exist in all markets.

Question 2

Monopoly power is a measure of

Accepted Answer

A)  a firm's ability to set prices. 
B)  the uniqueness of a firm's product. 
C)  the existence of close substitutes for a firm's product. 
D)  a firm's ability to overcome barriers to entry in its market. 
E)  a firm's profitability. 
A)  a firm's ability to set prices. 
B)  the uniqueness of a firm's product. 
C)  the existence of close substitutes for a firm's product. 
D)  a firm's ability to overcome barriers to entry in its market. 
E)  a firm's profitability.

Question 3

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 ________ 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

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 5

When marginal revenue is positive,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.

Question 6

The ________ cost pricing rule means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

Accepted Answer

A)  marginal 
B)  average 
C)  total 
D)  fixed 
E)  variable 
A)  marginal 
B)  average 
C)  total 
D)  fixed 
E)  variable

Question 7

Refer to the accompanying figure to answer the following questions.  
-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

Question 8

In the movie Forrest Gump,the title character's Bubba Gump Shrimp Company is able to gain monopoly power in its market because of

Accepted Answer

A)  control of an essential resource. 
B)  high barriers to entry. 
C)  a unique product. 
D)  economies of scale. 
E)  Forrest's good luck. 
A)  control of an essential resource. 
B)  high barriers to entry. 
C)  a unique product. 
D)  economies of scale. 
E)  Forrest's good luck.

Question 9

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the following questions.  
-As production increases,the price consumers pay for the good

Accepted Answer

A)  increases and then decreases. 
B)  decreases and then increases. 
C)  stays the same. 
D)  increases. 
E)  decreases. 
A)  increases and then decreases. 
B)  decreases and then increases. 
C)  stays the same. 
D)  increases. 
E)  decreases.

Question 10

Refer to the accompanying figure to answer the following questions.  
-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 11

In the case of a natural monopoly,which government response is LEAST practical?

Accepted Answer

A)  leave the monopolist firm free to maximize its profits 
B)  buy the monopolist firm and operate it as a government-owned entity 
C)  force the monopolist to break up into firms that compete with one another 
D)  subsidize the monopoly,so it can operate at the socially optimal production level 
E)  regulate the monopolist firm's price,to equal average total cost 
A)  leave the monopolist firm free to maximize its profits 
B)  buy the monopolist firm and operate it as a government-owned entity 
C)  force the monopolist to break up into firms that compete with one another 
D)  subsidize the monopoly,so it can operate at the socially optimal production level 
E)  regulate the monopolist firm's price,to equal average total cost

Question 12

Inefficient output and price,few choices for consumers,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 13

Answer the following questions based on the accompanying graph.
   
a.What area(s)of the graph represent(s)total revenue for this firm if it was profit maximizing?
b.What area(s)of the graph represent(s)total cost for this firm if it was profit maximizing?
c.What area(s)of the graph represent(s)profits for this firm if it was profit maximizing?
d.What area(s)of the graph represent(s)deadweight loss if the firm was profit maximizing?

Accepted Answer

a.The area that represents total revenue

Question 14

Answer the following questions based on the accompanying graph.
   
a.What are the profit-maximizing price and quantity?
b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

Accepted Answer

a.The profit-maximizing price and quanti

Question 15

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 16

Refer to the accompanying figure to answer the following questions.  
-Which of the following is the most efficient price and quantity combination 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 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  $\gt$marginal cost 
C)  price $\lt$ marginal cost 
D)  price = marginal cost 
E)  A firm in a monopoly is a price taker. 
A)  A monopoly contains many firms. 
B)  price  $\gt$marginal cost 
C)  price $\lt$ marginal cost 
D)  price = marginal cost 
E)  A firm in a monopoly is a price taker.

Question 18

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

Question 19

Three examples of solutions to the problems of a monopoly are harnessing the benefits of ________,________ trade barriers,and ________ markets.

Accepted Answer

A)  competition; reducing; regulating 
B)  monopolies; reducing; regulating 
C)  competition; increasing; regulating 
D)  monopolies; increasing; regulating 
E)  competition; increasing; deregulating 
A)  competition; reducing; regulating 
B)  monopolies; reducing; regulating 
C)  competition; increasing; regulating 
D)  monopolies; increasing; regulating 
E)  competition; increasing; deregulating

Question 20

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.

Exam 10: Understanding Monopoly

Monopolists

Monopoly power is a measure of

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 ________ to maximize profits.

Raising capital to compete against an entrenched monopolist

When marginal revenue is positive,the

The ________ cost pricing rule means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

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

In the movie Forrest Gump,the title character's Bubba Gump Shrimp Company is able to gain monopoly power in its market because of

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the following questions. -As production increases,the price consumers pay for the good

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

In the case of a natural monopoly,which government response is LEAST practical?

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

Answer the following questions based on the accompanying graph. a.What are the profit-maximizing price and quantity? b.At the profit-maximizing price and quantity,what are the total profits or losses made by this firm?

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

Refer to the accompanying figure to answer the following questions. -Which of the following is the most efficient price and quantity combination for society?

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

Three examples of solutions to the problems of a monopoly are harnessing the benefits of ________,________ trade barriers,and ________ markets.

Licensing

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

Three examples of solutions to the problems of a monopoly are harnessing the benefits of , trade barriers,and markets.