Question 1

Figure 11-18
  
-The firm in Figure 11-18, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Accepted Answer

A) $0 
B) $234 
C) $482 
D) $960 
E) $468 
A) $0 
B) $234 
C) $482 
D) $960 
E) $468 E

Question 2

Figure 11-1
  
-What price and output in Figure 11-1 would an unregulated profit-maximizing monopolist choose?

Accepted Answer

A) price A and output T 
B) price B and output S 
C) price B and output R 
D) price C and output R 
A) price A and output T 
B) price B and output S 
C) price B and output R 
D) price C and output R D

Question 3

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Accepted Answer

A) P = MR because there are no close substitutes for the monopolist's product. B) P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit. C) P < MR because the monopolist must decrease price on all units sold in order to sell an additional unit. D) P = MR only at the profit-maximizing quantity. A) P = MR because there are no close substitutes for the monopolist's product. B) P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit. C) P < MR because the monopolist must decrease price on all units sold in order to sell an additional unit. D) P = MR only at the profit-maximizing quantity. B

Question 4

Figure 11-7
  
-The demand and cost conditions in an industry are as depicted in Figure 11-7. In the viewpoint of economic efficiency, what would the ideal price and output be?

Accepted Answer

A) price, $7; quantity produced, 100 
B) price, $10; quantity produced, 170 
C) price, $14; quantity produced, 100 
D) price, $7; quantity produced, 200 
A) price, $7; quantity produced, 100 
B) price, $10; quantity produced, 170 
C) price, $14; quantity produced, 100 
D) price, $7; quantity produced, 200

Question 5

If the government wants a natural monopoly to earn a "fair return" or zero economic profit, it will set

Accepted Answer

A) price equal to marginal cost. 
B) price equal to average total cost. 
C) price equal to average revenue. 
D) marginal cost equal to marginal revenue. 
E) marginal cost equal to average total cost. 
A) price equal to marginal cost. 
B) price equal to average total cost. 
C) price equal to average revenue. 
D) marginal cost equal to marginal revenue. 
E) marginal cost equal to average total cost.

Question 6

Table 11-1
  
-Refer to Table 11-1. The maximum profit this monopolist can earn is

Accepted Answer

A) $5. 
B) $15. 
C) $16 
D) $28 
A) $5. 
B) $15. 
C) $16 
D) $28

Question 7

If the average total cost curve is always above the demand curve of a monopolist,

Accepted Answer

A) the profits of the monopolist will be large. 
B) the monopolist must be producing inefficiently. 
C) even a monopolist will suffer economic losses. 
D) entry will occur, forcing the monopolist to reduce price and expand output. 
A) the profits of the monopolist will be large. 
B) the monopolist must be producing inefficiently. 
C) even a monopolist will suffer economic losses. 
D) entry will occur, forcing the monopolist to reduce price and expand output.

Question 8

Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

Accepted Answer

A) If I alone cheat, I'm better off; if everyone cheats, I'm worse off. 
B) I can never do better for myself than by following agreed-upon cartel policies. 
C) If everyone cheats, I'm better off and so is everyone else in the cartel. 
D) If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat. 
A) If I alone cheat, I'm better off; if everyone cheats, I'm worse off. 
B) I can never do better for myself than by following agreed-upon cartel policies. 
C) If everyone cheats, I'm better off and so is everyone else in the cartel. 
D) If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat.

Question 9

Oligopolies would like to act like a

Accepted Answer

A) duopoly, but self-interest often drives them closer to the competitive outcome. 
B) competitive firm, but self-interest often drives them closer to the duopoly outcome. 
C) monopoly, but self-interest often drives them closer to the duopoly outcome. 
D) monopoly, but self-interest often drives them closer to the competitive outcome. 
A) duopoly, but self-interest often drives them closer to the competitive outcome. 
B) competitive firm, but self-interest often drives them closer to the duopoly outcome. 
C) monopoly, but self-interest often drives them closer to the duopoly outcome. 
D) monopoly, but self-interest often drives them closer to the competitive outcome.

Question 10

A firm that is a "pure monopoly" is

Accepted Answer

A) a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run. 
B) the only seller of a good for which there are no good substitutes in a market with high barriers to entry. 
C) the only buyer of a unique raw material. 
D) the producer of a product subsidized by the government. 
A) a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run. 
B) the only seller of a good for which there are no good substitutes in a market with high barriers to entry. 
C) the only buyer of a unique raw material. 
D) the producer of a product subsidized by the government.

Question 11

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

Accepted Answer

A) A monopolist will maximize profit, while firms in competitive price-searcher markets will maximize sales. 
B) A monopolist may be able to earn long-run economic profit, but firms in competitive price-searcher markets will not be able to do so. 
C) A monopolist will charge a price that is greater than its marginal cost, but competitive price searchers will charge prices that are just equal to their marginal cost. 
D) A monopolist will charge a price that is just equal to its marginal cost, but competitive price searchers will charge prices that are greater than their marginal cost. 
A) A monopolist will maximize profit, while firms in competitive price-searcher markets will maximize sales. 
B) A monopolist may be able to earn long-run economic profit, but firms in competitive price-searcher markets will not be able to do so. 
C) A monopolist will charge a price that is greater than its marginal cost, but competitive price searchers will charge prices that are just equal to their marginal cost. 
D) A monopolist will charge a price that is just equal to its marginal cost, but competitive price searchers will charge prices that are greater than their marginal cost.

Question 12

The U.S. Postal Service has a monopoly on the delivery of first-class mail due to

Accepted Answer

A) economies of scale. 
B) a lack of initiative on the part of competing firms. 
C) legal barriers limiting entry. 
D) control over an essential resource. 
A) economies of scale. 
B) a lack of initiative on the part of competing firms. 
C) legal barriers limiting entry. 
D) control over an essential resource.

Question 13

One key characteristic that is distinctive of an oligopoly market is that

Accepted Answer

A) the demand curve facing each firm is downward sloping, with a marginal revenue curve that lies below the firm's demand curve. 
B) the decisions of one seller often influence the price of products, the output, and the profits of rival firms. 
C) there is only one firm that produces a product for which there are no good substitutes. 
D) there are many sellers in the market and each is small relative to the total market. 
A) the demand curve facing each firm is downward sloping, with a marginal revenue curve that lies below the firm's demand curve. 
B) the decisions of one seller often influence the price of products, the output, and the profits of rival firms. 
C) there is only one firm that produces a product for which there are no good substitutes. 
D) there are many sellers in the market and each is small relative to the total market.

Question 14

Figure 11-19
  
-In the short run, the monopolist depicted in Figure 11-19 should

Accepted Answer

A) shut down because P  AVC at some output levels. 
D) continue producing because P > ATC at all output levels. 
E) continue producing because monopolists never shut down. 
A) shut down because P  AVC at some output levels. 
D) continue producing because P > ATC at all output levels. 
E) continue producing because monopolists never shut down.

Question 15

Figure 11-6
  
-If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-6?

Accepted Answer

A) price, P₁; quantity produced, Q₁ 
B) price, P₂; quantity produced, Q₂ 
C) price, P₃; quantity produced, Q₁ 
D) price, P₃; quantity produced, Q₂ 
A) price, P₁; quantity produced, Q₁ 
B) price, P₂; quantity produced, Q₂ 
C) price, P₃; quantity produced, Q₁ 
D) price, P₃; quantity produced, Q₂

Question 16

A major problem with regulatory agencies is that they

Accepted Answer

A) have no real legal power over the industries they are supposed to regulate. 
B) tend to be too tough on the firms they are regulating, forcing them into a loss position. 
C) often underestimate the firm's cost of production and consequently force regulated firms into a loss position. 
D) often come to represent the interests of established firms in the industry and use their power to limit competition. 
A) have no real legal power over the industries they are supposed to regulate. 
B) tend to be too tough on the firms they are regulating, forcing them into a loss position. 
C) often underestimate the firm's cost of production and consequently force regulated firms into a loss position. 
D) often come to represent the interests of established firms in the industry and use their power to limit competition.

Question 17

Figure 11-2
  
-What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

Accepted Answer

A) zero 
B) approximately $10,000 
C) approximately $20,000 
D) approximately $40,000 
A) zero 
B) approximately $10,000 
C) approximately $20,000 
D) approximately $40,000

Question 18

"Market power" is an expression used to indicate that a firm has

Accepted Answer

A) the power to sell a given output at whatever price it chooses. 
B) no freedom from the rigors of intense competition. 
C) a monopoly over the product it produces. 
D) enough market share to be somewhat insulated from competition. 
A) the power to sell a given output at whatever price it chooses. 
B) no freedom from the rigors of intense competition. 
C) a monopoly over the product it produces. 
D) enough market share to be somewhat insulated from competition.

Question 19

A market situation in which only a small number of mutually interdependent, rival sellers exists is known as a(n)

Accepted Answer

A) oligopoly market. 
B) monopoly market. 
C) open price-taker market. 
D) competitive price-searcher market. 
A) oligopoly market. 
B) monopoly market. 
C) open price-taker market. 
D) competitive price-searcher market.

Question 20

Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

Accepted Answer

A) a higher price. 
B) decreased consumer surplus. 
C) the elimination of economic profit. 
D) less output. 
A) a higher price. 
B) decreased consumer surplus. 
C) the elimination of economic profit. 
D) less output.

Exam 11: A: Price-Searcher Markets With High Entry Barriers

Figure 11-18 -The firm in Figure 11-18, a monopolist that maximizes profit by charging all customers the same price, is making a profit of

Figure 11-1 -What price and output in Figure 11-1 would an unregulated profit-maximizing monopolist choose?

Which of the following is true of marginal revenue for a monopolist that charges a single price?

Figure 11-7 -The demand and cost conditions in an industry are as depicted in Figure 11-7. In the viewpoint of economic efficiency, what would the ideal price and output be?

If the government wants a natural monopoly to earn a "fair return" or zero economic profit, it will set

Table 11-1 -Refer to Table 11-1. The maximum profit this monopolist can earn is

If the average total cost curve is always above the demand curve of a monopolist,

Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

Oligopolies would like to act like a

A firm that is a "pure monopoly" is

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

The U.S. Postal Service has a monopoly on the delivery of first-class mail due to

One key characteristic that is distinctive of an oligopoly market is that

Figure 11-19 -In the short run, the monopolist depicted in Figure 11-19 should

Figure 11-6 -If the output in the industry is produced by a monopolist, at what price will the good sell and what quantity will be produced in Figure 11-6?

A major problem with regulatory agencies is that they

Figure 11-2 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

"Market power" is an expression used to indicate that a firm has

A market situation in which only a small number of mutually interdependent, rival sellers exists is known as a(n)

Compared to the profit-maximizing outcome, average cost pricing in natural monopoly leads to

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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