Question 1

A notable movement in the direction of deregulation of industry in the United States occurred during

Accepted Answer

A)  the 1930s. 
B)  World War II. 
C)  the late 1940s and early 1950s. 
D)  the early 1960s. 
E)  the late 1970s and early 1980s. 
A)  the 1930s. 
B)  World War II. 
C)  the late 1940s and early 1950s. 
D)  the early 1960s. 
E)  the late 1970s and early 1980s.

Question 2

Schumpeter and Galbraith argue that,in a dynamic sense,innovation is less likely in

Accepted Answer

A)  monopoly. 
B)  pure oligopoly. 
C)  monopolistic competition. 
D)  perfect competition. 
E)  differentiated oligopoly. 
A)  monopoly. 
B)  pure oligopoly. 
C)  monopolistic competition. 
D)  perfect competition. 
E)  differentiated oligopoly.

Question 3

The following question are based on the following diagram of a monopolist:
  
-If the product demand curve and cost functions of a perfectly competitive industry and a monopolist are the same,then compared to a monopoly,the perfectly competitive industry's output and price tend to be,respectively

Accepted Answer

A)  larger and higher. 
B)  smaller and higher. 
C)  larger and lower. 
D)  smaller and lower. 
E)  the same and lower. 
A)  larger and higher. 
B)  smaller and higher. 
C)  larger and lower. 
D)  smaller and lower. 
E)  the same and lower.

Question 4

How many sellers constitute a monopoly market?

Accepted Answer

A)  1 
B)  2 or 3 
C)  between 5 and 10 
D)  between 10 and 50 
E)  many 
A)  1 
B)  2 or 3 
C)  between 5 and 10 
D)  between 10 and 50 
E)  many

Question 5

Natural monopoly is common in the ________ industry.

Accepted Answer

A)  trucking 
B)  agricultural 
C)  electric power 
D)  automobile 
E)  health care 
A)  trucking 
B)  agricultural 
C)  electric power 
D)  automobile 
E)  health care

Question 6

If a firm's demand curve slopes downward,the firm's

Accepted Answer

A)  marginal revenue will rise as price is cut. 
B)  marginal revenue will always be less than price. 
C)  total revenue will fall steadily as price is cut. 
D)  demand will be less than marginal revenue. 
E)  price will exceed total revenue. 
A)  marginal revenue will rise as price is cut. 
B)  marginal revenue will always be less than price. 
C)  total revenue will fall steadily as price is cut. 
D)  demand will be less than marginal revenue. 
E)  price will exceed total revenue.

Question 7

In general,the social value of an extra unit of a good can be measured by its

Accepted Answer

A)  availability. 
B)  labor content. 
C)  durability. 
D)  total cost. 
E)  price. 
A)  availability. 
B)  labor content. 
C)  durability. 
D)  total cost. 
E)  price.

Question 8

Which of the following conditions would most likely permit a monopolist to continue earning economic profits even in the long run?

Accepted Answer

A)  a price below average variable cost for all levels of output 
B)  loss of patent protection 
C)  a total revenue that is lower than fixed cost for all levels of output 
D)  significant barriers to entry 
E)  loss of control over a basic input 
A)  a price below average variable cost for all levels of output 
B)  loss of patent protection 
C)  a total revenue that is lower than fixed cost for all levels of output 
D)  significant barriers to entry 
E)  loss of control over a basic input

Question 9

The following question are based on the following diagram of a monopolist:
  
-To maximize profits,the firm will charge a price of

Accepted Answer

A)  0A. 
B)  0B. 
C)  0C. 
D)  0D. 
E)  0E. 
A)  0A. 
B)  0B. 
C)  0C. 
D)  0D. 
E)  0E.

Question 10

For purposes of public regulation,when computing a fair rate of return,a firm's assets are generally valued at ________ cost.

Accepted Answer

A)  marginal 
B)  variable 
C)  either implicit or opportunity 
D)  declining 
E)  either historic or reproduction 
A)  marginal 
B)  variable 
C)  either implicit or opportunity 
D)  declining 
E)  either historic or reproduction

Question 11

Resources are considered to be misallocated when

Accepted Answer

A)  the market is perfectly competitive. 
B)  price exceeds marginal cost. 
C)  the social value of an extra unit equals its social cost. 
D)  price is equal to average total cost at its lowest value. 
E)  economic profits are zero. 
A)  the market is perfectly competitive. 
B)  price exceeds marginal cost. 
C)  the social value of an extra unit equals its social cost. 
D)  price is equal to average total cost at its lowest value. 
E)  economic profits are zero.

Question 12

When marginal cost exceeds marginal revenue,a monopolist should reduce

Accepted Answer

A)  output. 
B)  price. 
C)  demand. 
D)  revenue. 
E)  profit. 
A)  output. 
B)  price. 
C)  demand. 
D)  revenue. 
E)  profit.

Question 13

According to the video on Monopolies,one of the major forces that weakens monopoly power over the long run is

Accepted Answer

A)  government ownership of large firms. 
B)  regulation by federal, state, and local governments. 
C)  a rapid pace of technological change and innovation. 
D)  significant economies of scale. 
E)  high taxes on profits in excess of normal returns. 
A)  government ownership of large firms. 
B)  regulation by federal, state, and local governments. 
C)  a rapid pace of technological change and innovation. 
D)  significant economies of scale. 
E)  high taxes on profits in excess of normal returns.

Question 14

The following question are based on the following demand schedule for a monopolist:
  
-If the monopolist wished to sell 4 units,the marginal revenue of the fourth unit would be

Accepted Answer

A)  greater than the marginal revenue of the third unit. 
B)  less than the price necessary to sell 4 units. 
C)  greater than the total revenue earned by selling 4 units. 
D)  equal to the demand curve for selling 4 units. 
E)  impossible to calculate. 
A)  greater than the marginal revenue of the third unit. 
B)  less than the price necessary to sell 4 units. 
C)  greater than the total revenue earned by selling 4 units. 
D)  equal to the demand curve for selling 4 units. 
E)  impossible to calculate.

Question 15

To earn economic profit,a monopolist must charge a price that

Accepted Answer

A)  maximizes total output. 
B)  equals marginal revenue. 
C)  is above average cost. 
D)  is below marginal cost. 
E)  is greater than demand. 
A)  maximizes total output. 
B)  equals marginal revenue. 
C)  is above average cost. 
D)  is below marginal cost. 
E)  is greater than demand.

Question 16

In the long run,a monopolist incurring short-run losses is likely to

Accepted Answer

A)  charge the highest price possible. 
B)  increase the demand. 
C)  do nothing unless demand conditions change. 
D)  change the scale of operations. 
E)  do nothing unless cost conditions change. 
A)  charge the highest price possible. 
B)  increase the demand. 
C)  do nothing unless demand conditions change. 
D)  change the scale of operations. 
E)  do nothing unless cost conditions change.

Question 17

The following question are based on the following graph showing the demand and cost curves of a regulated monopolist. Assume the cost curves include provisions for "fair" rates of return.
  
-The regulatory agency typically establishes a price of

Accepted Answer

A)  0A. 
B)  0B. 
C)  0C. 
D)  0D. 
E)  0E. 
A)  0A. 
B)  0B. 
C)  0C. 
D)  0D. 
E)  0E.

Exam 7: Monopoly and Its Regulation

A notable movement in the direction of deregulation of industry in the United States occurred during

Schumpeter and Galbraith argue that,in a dynamic sense,innovation is less likely in

The following question are based on the following diagram of a monopolist: -If the product demand curve and cost functions of a perfectly competitive industry and a monopolist are the same,then compared to a monopoly,the perfectly competitive industry's output and price tend to be,respectively

How many sellers constitute a monopoly market?

Natural monopoly is common in the ________ industry.

If a firm's demand curve slopes downward,the firm's

In general,the social value of an extra unit of a good can be measured by its

Which of the following conditions would most likely permit a monopolist to continue earning economic profits even in the long run?

The following question are based on the following diagram of a monopolist: -To maximize profits,the firm will charge a price of

For purposes of public regulation,when computing a fair rate of return,a firm's assets are generally valued at ________ cost.

Resources are considered to be misallocated when

When marginal cost exceeds marginal revenue,a monopolist should reduce

According to the video on Monopolies,one of the major forces that weakens monopoly power over the long run is

The following question are based on the following demand schedule for a monopolist: -If the monopolist wished to sell 4 units,the marginal revenue of the fourth unit would be

To earn economic profit,a monopolist must charge a price that

In the long run,a monopolist incurring short-run losses is likely to

The following question are based on the following graph showing the demand and cost curves of a regulated monopolist. Assume the cost curves include provisions for "fair" rates of return. -The regulatory agency typically establishes a price of

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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