Question 1

By reducing trade barriers,the government

Accepted Answer

A)  reduces imports. 
B)  increases the price of the imported good. 
C)  reduces exports. 
D)  decreases efficiency. 
E)  decreases deadweight loss. 
A)  reduces imports. 
B)  increases the price of the imported good. 
C)  reduces exports. 
D)  decreases efficiency. 
E)  decreases deadweight loss.

Question 2

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must

Accepted Answer

A)  have something unique to sell and it must be able to estimate its demand curve. 
B)  have something unique to sell and it must have a way to prevent potential competitors from entering the market. 
C)  be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market. 
D)  be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market. 
E)  have something unique to sell and it must be able to segregate its consumers. 
A)  have something unique to sell and it must be able to estimate its demand curve. 
B)  have something unique to sell and it must have a way to prevent potential competitors from entering the market. 
C)  be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market. 
D)  be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market. 
E)  have something unique to sell and it must be able to segregate its consumers.

Question 3

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 4

Refer to the accompanying figure to answer the following questions.
  
-Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

Accepted Answer

A)  A + B 
B)  B + D + G+ E + H 
C)  C+ D 
D)  A + B + C + D + E 
E)  E + H 
A)  A + B 
B)  B + D + G+ E + H 
C)  C+ D 
D)  A + B + C + D + E 
E)  E + H

Question 5

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 6

Refer to the accompanying figure to answer the following questions.
  
-A profit-maximizing firm without any price regulations would make ________ in profits.

Accepted Answer

A)  $1,500 
B)  -$720 
C)  $720 
D)  -$240 
E)  $240 
A)  $1,500 
B)  -$720 
C)  $720 
D)  -$240 
E)  $240

Question 7

A big difference between a competitive firm and a monopolist is that a monopolist

Accepted Answer

A)  does not charge a price equal to marginal revenue. 
B)  does not set marginal revenue equal to marginal cost to maximize profits. 
C)  does not try to maximize profits. 
D)  can always make positive economic profits. 
E)  cannot set its price at the market price. 
A)  does not charge a price equal to marginal revenue. 
B)  does not set marginal revenue equal to marginal cost to maximize profits. 
C)  does not try to maximize profits. 
D)  can always make positive economic profits. 
E)  cannot set its price at the market price.

Question 8

Why do governments issue patents?

Accepted Answer

A)  Patents foster economies of scale. 
B)  Inventors have a moral right to control their inventions. 
C)  Patents ensure that socially beneficial goods are affordable. 
D)  Firms benefit from the publicity associated with patents. 
E)  The prospect of large profits is an incentive to innovation. 
A)  Patents foster economies of scale. 
B)  Inventors have a moral right to control their inventions. 
C)  Patents ensure that socially beneficial goods are affordable. 
D)  Firms benefit from the publicity associated with patents. 
E)  The prospect of large profits is an incentive to innovation.

Question 9

Refer to the accompanying figure to answer the following questions.
For a firm in a competitive market,the demand curve is horizontal,as shown.
  
-What will happen if the firm offers its product at a price slightly below price PC?

Accepted Answer

A)  The sales volume will plummet to essentially zero. 
B)  The number of units sold will slightly decrease. 
C)  The average total cost will slightly increase. 
D)  The firm will run into high barriers to exit from the market. 
E)  The firm will lose money on each unit sold. 
A)  The sales volume will plummet to essentially zero. 
B)  The number of units sold will slightly decrease. 
C)  The average total cost will slightly increase. 
D)  The firm will run into high barriers to exit from the market. 
E)  The firm will lose money on each unit sold.

Question 10

Rent seeking

Accepted Answer

A)  is desired by consumers. 
B)  is not a type of competition. 
C)  is a type of competition that leads to a market price and output. 
D)  is a type of competition that leads to an undesirable outcome. 
E)  occurs when resources are used to deregulate a market through the political process. 
A)  is desired by consumers. 
B)  is not a type of competition. 
C)  is a type of competition that leads to a market price and output. 
D)  is a type of competition that leads to an undesirable outcome. 
E)  occurs when resources are used to deregulate a market through the political process.

Question 11

Under what circumstances will a manufacturing firm facing foreign competition generally lobby for trade barriers rather than improve its production and delivery processes?

Accepted Answer

A)  when the foreign goods are more expensive than the firm's 
B)  when no improvement is possible 
C)  when the foreign goods are of inferior quality 
D)  when lobbying is cheaper 
E)  when rent seeking is illegal 
A)  when the foreign goods are more expensive than the firm's 
B)  when no improvement is possible 
C)  when the foreign goods are of inferior quality 
D)  when lobbying is cheaper 
E)  when rent seeking is illegal

Question 12

Antitrust laws are designed to

Accepted Answer

A)  promote monopoly practices. 
B)  promote competition. 
C)  increase prices. 
D)  decrease output. 
E)  promote awareness of government programs. 
A)  promote monopoly practices. 
B)  promote competition. 
C)  increase prices. 
D)  decrease output. 
E)  promote awareness of government programs.

Question 13

Refer to the accompanying figure to answer the following questions.
  
-The deadweight loss associated with this profit-maximizing monopoly is equal to

Accepted Answer

A)  $900. 
B)  $600. 
C)  $300. 
D)  $100. 
E)  $450. 
A)  $900. 
B)  $600. 
C)  $300. 
D)  $100. 
E)  $450.

Question 14

We cannot purchase a cable subscription for single channels like the Food Network or Cartoon Network because cable companies

Accepted Answer

A)  act like perfectly competitive firms. 
B)  are not interested in maximizing their profits. 
C)  have no market power to sell individual channels. 
D)  act like monopolies. 
E)  are pressured by the government to provide channel packages. 
A)  act like perfectly competitive firms. 
B)  are not interested in maximizing their profits. 
C)  have no market power to sell individual channels. 
D)  act like monopolies. 
E)  are pressured by the government to provide channel packages.

Question 15

One possible outcome of promoting competition is

Accepted Answer

A)  higher prices. 
B)  lower output. 
C)  eliminating deadweight loss. 
D)  regulated markets. 
E)  less efficiency. 
A)  higher prices. 
B)  lower output. 
C)  eliminating deadweight loss. 
D)  regulated markets. 
E)  less efficiency.

Question 16

Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant.This is mainly because

Accepted Answer

A)  it costs the owners of the baseball teams more money to buy the beer from distributors. 
B)  demand is much higher at a baseball game than at a bar. 
C)  baseball team owners have market power and can charge a higher price when they are the only sellers of the beer. 
D)  the government forces the owners of baseball teams to charge a high price. 
E)  the owners' baseball teams are not profit maximizing. 
A)  it costs the owners of the baseball teams more money to buy the beer from distributors. 
B)  demand is much higher at a baseball game than at a bar. 
C)  baseball team owners have market power and can charge a higher price when they are the only sellers of the beer. 
D)  the government forces the owners of baseball teams to charge a high price. 
E)  the owners' baseball teams are not profit maximizing.

Question 17

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely

Accepted Answer

A)  never changes. 
B)  is lower than in the big cities in Texas. 
C)  is determined by competitive market forces. 
D)  is higher than in the big cities in Texas. 
E)  produces a surplus of gasoline. 
A)  never changes. 
B)  is lower than in the big cities in Texas. 
C)  is determined by competitive market forces. 
D)  is higher than in the big cities in Texas. 
E)  produces a surplus of gasoline.

Question 18

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 19

A price maker

Accepted Answer

A)  is a characteristic held by a perfectly competitive firm. 
B)  must set the price at the market price. 
C)  has some control over the price it charges. 
D)  can sell its product at any price. 
E)  will always make economic profits. 
A)  is a characteristic held by a perfectly competitive firm. 
B)  must set the price at the market price. 
C)  has some control over the price it charges. 
D)  can sell its product at any price. 
E)  will always make economic profits.

Question 20

Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions.
  
-The profit made by this profit-maximizing firm is

Accepted Answer

A)  $8. 
B)  $4. 
C)  $3. 
D)  $7. 
E)  $9. 
A)  $8. 
B)  $4. 
C)  $3. 
D)  $7. 
E)  $9.

By reducing trade barriers,the government

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must

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

Refer to the accompanying figure to answer the following questions. -Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

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

Refer to the accompanying figure to answer the following questions. -A profit-maximizing firm without any price regulations would make ________ in profits.

A big difference between a competitive firm and a monopolist is that a monopolist

Why do governments issue patents?

Refer to the accompanying figure to answer the following questions. For a firm in a competitive market,the demand curve is horizontal,as shown. -What will happen if the firm offers its product at a price slightly below price P_C?

Rent seeking

Under what circumstances will a manufacturing firm facing foreign competition generally lobby for trade barriers rather than improve its production and delivery processes?

Antitrust laws are designed to

Refer to the accompanying figure to answer the following questions. -The deadweight loss associated with this profit-maximizing monopoly is equal to

We cannot purchase a cable subscription for single channels like the Food Network or Cartoon Network because cable companies

One possible outcome of promoting competition is

Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant.This is mainly because

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely

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

A price maker

Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions. -The profit made by this profit-maximizing firm is

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

International Trade

Filters

Exam 10: Understanding Monopoly

By reducing trade barriers,the government

Two conditions allow a single seller to become a monopolist.Those two conditions are that the firm must

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

Refer to the accompanying figure to answer the following questions. -Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

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

Refer to the accompanying figure to answer the following questions. -A profit-maximizing firm without any price regulations would make ________ in profits.

A big difference between a competitive firm and a monopolist is that a monopolist

Why do governments issue patents?

Refer to the accompanying figure to answer the following questions. For a firm in a competitive market,the demand curve is horizontal,as shown. -What will happen if the firm offers its product at a price slightly below price PC?

Rent seeking

Under what circumstances will a manufacturing firm facing foreign competition generally lobby for trade barriers rather than improve its production and delivery processes?

Antitrust laws are designed to

Refer to the accompanying figure to answer the following questions. -The deadweight loss associated with this profit-maximizing monopoly is equal to

We cannot purchase a cable subscription for single channels like the Food Network or Cartoon Network because cable companies

One possible outcome of promoting competition is

Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant.This is mainly because

Willow Park is a small community in Texas with only one gas station.The price of gasoline in Willow Park most likely

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

A price maker

Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions. -The profit made by this profit-maximizing firm is

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

International Trade

Filters

Refer to the accompanying figure to answer the following questions. For a firm in a competitive market,the demand curve is horizontal,as shown. -What will happen if the firm offers its product at a price slightly below price P_C?