Question 1

What distinguishes a natural monopoly from a monopoly?

Accepted Answer

A)  One firm can supply the entire range of demand (picture a downward-sloping industry demand curve) at a lower ATC than can any number of firms. 
B)  One firm has exclusive access to raw materials. 
C)  The firm has been issued a patent on a cost-saving technology. 
D)  The government regulates the industry, allowing only one firm to produce. 
E)  The market contained two firms that merged to become one. 
A)  One firm can supply the entire range of demand (picture a downward-sloping industry demand curve) at a lower ATC than can any number of firms. 
B)  One firm has exclusive access to raw materials. 
C)  The firm has been issued a patent on a cost-saving technology. 
D)  The government regulates the industry, allowing only one firm to produce. 
E)  The market contained two firms that merged to become one.

Question 2

Lawn-care services in Dallas, Texas, charge $20 to mow an average-sized yard. Explain why there is little deviation from this rate.

Accepted Answer

This is an example of perfect competitio

Question 3

A monopolist has a strong incentive to advertise.

Accepted Answer

A) True 
 B)False

Question 4

LISA BETH Mustard Company undertakes an advertising campaign and finds that within the industry's relevant price range, the price elasticity of demand for its own mustard fell from 3.5 to 0.94. As a result, we would expect that LISA BETH

Accepted Answer

A)  would raise its price to increase total revenue 
B)  would cut its price to increase total revenue 
C)  would increase output to increase total revenue 
D)  would increase output to reduce average total cost 
E)  operates in a perfectly competitive market 
A)  would raise its price to increase total revenue 
B)  would cut its price to increase total revenue 
C)  would increase output to increase total revenue 
D)  would increase output to reduce average total cost 
E)  operates in a perfectly competitive market

Question 5

The New York Times reported in August 1997 that over one-third of all bottled water sold in the United States is simply filtered tap water. For example, the Everest brand of water comes from the municipal water supply of Corpus Christi, Texas. Explain why consumers will pay more than $1 for a quart of water, whenthey could get basically the same quart directly from the tap for the smallest fraction of a penny.

Accepted Answer

Successful marketing campaigns have conv

Question 6

If people cannot distinguish between goods A and B, then economists describe the goodsas

Accepted Answer

A)  having a zero cross elasticity 
B)  being perfect substitutes 
C)  belonging to an oligopolistic industry 
D)  belonging in different markets 
E)  having a cross elasticity of one 
A)  having a zero cross elasticity 
B)  being perfect substitutes 
C)  belonging to an oligopolistic industry 
D)  belonging in different markets 
E)  having a cross elasticity of one

Question 7

If one firm in a perfectly competitive market doubled its output, market

Accepted Answer

A)  demand would double 
B)  demand would increase by 50 percent 
C)  supply would double 
D)  supply would increase by 50 percent 
E)  supply would not be appreciably affected 
A)  demand would double 
B)  demand would increase by 50 percent 
C)  supply would double 
D)  supply would increase by 50 percent 
E)  supply would not be appreciably affected

Question 8

In a monopoly market structure, the industry demand

Accepted Answer

A)  is horizontal and the firm's demand is vertical 
B)  is downward sloping and the firm's demand is horizontal 
C)  is vertical and the firm's demand is horizontal 
D)  and the firm's demand are identical 
E)  is downward sloping and the firm's demand is vertical 
A)  is horizontal and the firm's demand is vertical 
B)  is downward sloping and the firm's demand is horizontal 
C)  is vertical and the firm's demand is horizontal 
D)  and the firm's demand are identical 
E)  is downward sloping and the firm's demand is vertical

Question 9

Barriers to entry are

Accepted Answer

A)  not too difficult to overcome in a monopoly market structure 
B)  very high in a perfectly competitive market structure 
C)  nonexistent in an oligopoly market structure 
D)  not too difficult to overcome in a monopolistically competitive industry structure 
E)  nonexistent in a monopoly market structure 
A)  not too difficult to overcome in a monopoly market structure 
B)  very high in a perfectly competitive market structure 
C)  nonexistent in an oligopoly market structure 
D)  not too difficult to overcome in a monopolistically competitive industry structure 
E)  nonexistent in a monopoly market structure

Question 10

If there are 40 firms in a monopolistic competitive industry, the oldest (or first) firm will have ___________ market share to qualify as the oldest (or first) firm.

Accepted Answer

A)  no less than 50 percent 
B)  no less than 10 percent 
C)  no more than 5 percent 
D)  no more than 1 percent 
E)  there is no specific percentage 
A)  no less than 50 percent 
B)  no less than 10 percent 
C)  no more than 5 percent 
D)  no more than 1 percent 
E)  there is no specific percentage

Question 11

Which of the following could explain why a firm that is not a monopoly becomes one?

Accepted Answer

A)  patent 
B)  increasing ease of access to resources 
C)  mutual interdependence 
D)  the number of substitute goods falls from many to few 
E)  a perfectly horizontal firm demand curve 
A)  patent 
B)  increasing ease of access to resources 
C)  mutual interdependence 
D)  the number of substitute goods falls from many to few 
E)  a perfectly horizontal firm demand curve

Question 12

Which of the following could be threatening to an existing monopoly structure?

Accepted Answer

A)  impossible-to-overcome barriers to entry 
B)  the depletion of alternative resources that could be used to produce the good that is being produced by the monopolist 
C)  the extension of years enforcing a patent right 
D)  mergers 
E)  technological innovation that makes the old techniques of producing a good obsolete 
A)  impossible-to-overcome barriers to entry 
B)  the depletion of alternative resources that could be used to produce the good that is being produced by the monopolist 
C)  the extension of years enforcing a patent right 
D)  mergers 
E)  technological innovation that makes the old techniques of producing a good obsolete

Question 13

The demand faced by firms within which of the following industries is most nearly horizontal?

Accepted Answer

A)  steel 
B)  computer operating systems 
C)  vegetables 
D)  automobiles 
E)  books 
A)  steel 
B)  computer operating systems 
C)  vegetables 
D)  automobiles 
E)  books

Question 14

Entry into a monopolistic industry is

Accepted Answer

A)  easy, but exiting is difficult 
B)  impossible 
C)  difficult, but not impossible 
D)  difficult, but exiting is easy 
E)  easier than entry into oligopoly 
A)  easy, but exiting is difficult 
B)  impossible 
C)  difficult, but not impossible 
D)  difficult, but exiting is easy 
E)  easier than entry into oligopoly

Question 15

In perfect competition, the buyers are usually looking for

Accepted Answer

A)  easy entry 
B)  familiar brands 
C)  higher-quality goods 
D)  volume discounts 
E)  the lowest price 
A)  easy entry 
B)  familiar brands 
C)  higher-quality goods 
D)  volume discounts 
E)  the lowest price

Question 16

In the real world, perfectly competitive markets are very few. Most markets are monopolistically competitive or oligopolistic.

Accepted Answer

A) True 
 B)False

Question 17

The physical or perceived differences between goods in a market that makes them close, but not perfect, substitutes are called

Accepted Answer

A)  complementary goods 
B)  substitute goods 
C)  natural differentiation 
D)  oligopolistic differentiation 
E)  product differentiation 
A)  complementary goods 
B)  substitute goods 
C)  natural differentiation 
D)  oligopolistic differentiation 
E)  product differentiation

Question 18

Which of the following would undermine a firm's product differentiation?

Accepted Answer

A)  duplicating another firm's good 
B)  advertising 
C)  being awarded a patent 
D)  developing brand loyalty 
E)  having fewer close substitutes 
A)  duplicating another firm's good 
B)  advertising 
C)  being awarded a patent 
D)  developing brand loyalty 
E)  having fewer close substitutes

Question 19

In order to be a firm in monopolistic competition, it must have at least ___________market share

Accepted Answer

A)  50 percent 
B)  10 percent 
C)  5 percent 
D)  1 percent 
E)  there is no specific percentage 
A)  50 percent 
B)  10 percent 
C)  5 percent 
D)  1 percent 
E)  there is no specific percentage

Question 20

Natural monopolies have all of the following characteristics except

Accepted Answer

A)  relatively high fixed cost 
B)  relatively low average variable cost 
C)  low levels of production 
D)  difficulty for new firms to enter 
E)  only one firm can produce profitably 
A)  relatively high fixed cost 
B)  relatively low average variable cost 
C)  low levels of production 
D)  difficulty for new firms to enter 
E)  only one firm can produce profitably

What distinguishes a natural monopoly from a monopoly?

Lawn-care services in Dallas, Texas, charge $20 to mow an average-sized yard. Explain why there is little deviation from this rate.

A monopolist has a strong incentive to advertise.

LISA BETH Mustard Company undertakes an advertising campaign and finds that within the industry's relevant price range, the price elasticity of demand for its own mustard fell from 3.5 to 0.94. As a result, we would expect that LISA BETH

If people cannot distinguish between goods A and B, then economists describe the goodsas

If one firm in a perfectly competitive market doubled its output, market

In a monopoly market structure, the industry demand

Barriers to entry are

If there are 40 firms in a monopolistic competitive industry, the oldest (or first) firm will have ___________ market share to qualify as the oldest (or first) firm.

Which of the following could explain why a firm that is not a monopoly becomes one?

Which of the following could be threatening to an existing monopoly structure?

The demand faced by firms within which of the following industries is most nearly horizontal?

Entry into a monopolistic industry is

In perfect competition, the buyers are usually looking for

In the real world, perfectly competitive markets are very few. Most markets are monopolistically competitive or oligopolistic.

The physical or perceived differences between goods in a market that makes them close, but not perfect, substitutes are called

Which of the following would undermine a firm's product differentiation?

In order to be a firm in monopolistic competition, it must have at least ___________market share

Natural monopolies have all of the following characteristics except

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 10: Identifying Markets and Market Structures

What distinguishes a natural monopoly from a monopoly?

Lawn-care services in Dallas, Texas, charge $20 to mow an average-sized yard. Explain why there is little deviation from this rate.

A monopolist has a strong incentive to advertise.

LISA BETH Mustard Company undertakes an advertising campaign and finds that within the industry's relevant price range, the price elasticity of demand for its own mustard fell from 3.5 to 0.94. As a result, we would expect that LISA BETH

If people cannot distinguish between goods A and B, then economists describe the goodsas

If one firm in a perfectly competitive market doubled its output, market

In a monopoly market structure, the industry demand

Barriers to entry are

If there are 40 firms in a monopolistic competitive industry, the oldest (or first) firm will have ___________ market share to qualify as the oldest (or first) firm.

Which of the following could explain why a firm that is not a monopoly becomes one?

Which of the following could be threatening to an existing monopoly structure?

The demand faced by firms within which of the following industries is most nearly horizontal?

Entry into a monopolistic industry is

In perfect competition, the buyers are usually looking for

In the real world, perfectly competitive markets are very few. Most markets are monopolistically competitive or oligopolistic.

The physical or perceived differences between goods in a market that makes them close, but not perfect, substitutes are called

Which of the following would undermine a firm's product differentiation?

In order to be a firm in monopolistic competition, it must have at least ___________market share

Natural monopolies have all of the following characteristics except

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters