Question 1

Which of the following is NOT an example of a natural barrier to entry?

Accepted Answer

A)  A software firm cannot get a loan to fund development of a new computer operating system. 
B)  A manufacturing firm has to buy a rare metal from the one company that controls most of the worldwide supply. 
C)  A small soft-drink company struggles to produce its product as cheaply as its much larger competitor can. 
D)  A single utility firm can deliver services to every home in an area more efficiently than a cluster of competing firms could. 
E)  A patent gives a pharmaceutical firm the exclusive right to manufacture and sell an anticancer drug. 
A)  A software firm cannot get a loan to fund development of a new computer operating system. 
B)  A manufacturing firm has to buy a rare metal from the one company that controls most of the worldwide supply. 
C)  A small soft-drink company struggles to produce its product as cheaply as its much larger competitor can. 
D)  A single utility firm can deliver services to every home in an area more efficiently than a cluster of competing firms could. 
E)  A patent gives a pharmaceutical firm the exclusive right to manufacture and sell an anticancer drug.

Question 2

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 3

When the government passes antitrust laws in an industry,we see

Accepted Answer

A)  higher prices,lower output,and more choices. 
B)  lower prices,higher output,and fewer choices. 
C)  lower prices,higher output,and more choices. 
D)  higher prices,lower output,and fewer choices. 
E)  higher prices,higher output,and more choices. 
A)  higher prices,lower output,and more choices. 
B)  lower prices,higher output,and fewer choices. 
C)  lower prices,higher output,and more choices. 
D)  higher prices,lower output,and fewer choices. 
E)  higher prices,higher output,and more choices.

Question 4

Which of the following can fall below the x axis when graphing price and cost against quantity?

Accepted Answer

A)  demand curve 
B)  marginal cost curve 
C)  total cost curve 
D)  fixed cost curve 
E)  marginal revenue curve 
A)  demand curve 
B)  marginal cost curve 
C)  total cost curve 
D)  fixed cost curve 
E)  marginal revenue curve

Question 5

Refer to the accompanying figure to answer the following questions.
  
-If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm 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 6

A monopolist's marginal revenue

Accepted Answer

A)  is constant with respect to the quantity produced. 
B)  increases with the quantity produced. 
C)  decreases with the quantity produced. 
D)  is unrelated to the quantity produced. 
E)  is inversely proportional to the quantity produced. 
A)  is constant with respect to the quantity produced. 
B)  increases with the quantity produced. 
C)  decreases with the quantity produced. 
D)  is unrelated to the quantity produced. 
E)  is inversely proportional to the quantity produced.

Question 7

Using a graph,show a situation in which a monopolist is incurring short-run losses.Explain how this is possible.

Accepted Answer

@#IMG-DLM& A monopolist can earn a loss if the dem

Question 8

Explain why problems raising capital constitute a natural barrier and not a government-created one.

Accepted Answer

A firm trying to borrow money has to con

Question 9

When a competitive market becomes controlled by a monopoly,the price ________ and the output ________.

Accepted Answer

A)  increases; stays the same 
B)  increases; increases 
C)  decreases; stays the same 
D)  increases; decreases 
E)  decreases; decreases 
A)  increases; stays the same 
B)  increases; increases 
C)  decreases; stays the same 
D)  increases; decreases 
E)  decreases; decreases

Question 10

When marginal revenue intersects marginal cost on a graph,

Accepted Answer

A)  profits are maximized for a monopolist but not for a competitive firm. 
B)  profits are maximized for a competitive firm but not for a monopolist. 
C)  a monopolist prices the good at that point. 
D)  a monopolist always makes an economic profit. 
E)  a monopolist must go up to the demand curve to find the price. 
A)  profits are maximized for a monopolist but not for a competitive firm. 
B)  profits are maximized for a competitive firm but not for a monopolist. 
C)  a monopolist prices the good at that point. 
D)  a monopolist always makes an economic profit. 
E)  a monopolist must go up to the demand curve to find the price.

Question 11

Refer to the accompanying figure to answer the following questions.
  
-The profit-maximizing price and quantity are ________,respectively.

Accepted Answer

A)  $25 and 1,000 
B)  $40 and 1,500 
C)  $45 and 1,500 
D)  $50 and 1,000 
E)  $70 and 1,000 
A)  $25 and 1,000 
B)  $40 and 1,500 
C)  $45 and 1,500 
D)  $50 and 1,000 
E)  $70 and 1,000

Question 12

Refer to the accompanying figure to answer the following questions.
  
-When the price changes from $50 to $30,the price effect leads to a loss of ________ in revenue.

Accepted Answer

A)  $20 
B)  $15 
C)  $900 
D)  $600 
E)  $450 
A)  $20 
B)  $15 
C)  $900 
D)  $600 
E)  $450

Question 13

Control of resources,problems raising capital,and economies of scale are all examples of

Accepted Answer

A)  government-created barriers. 
B)  market structures. 
C)  patents and copyright laws. 
D)  price makers. 
E)  natural barriers. 
A)  government-created barriers. 
B)  market structures. 
C)  patents and copyright laws. 
D)  price makers. 
E)  natural barriers.

Question 14

How did AT&T's position in the market for telephone service evolve from 1980 to the present?

Accepted Answer

In 1980,AT&T enjoyed monopoly power.Howe

Question 15

In the year 2576,intergalactic travel is possible.A firm on Earth,Plantorium,produces 95 percent of Earth's jetpacks.A planet with easy access to Earth,Xerckyia,is coming out with new technology that will allow it to produce jetpacks at a lower cost.Describe a scenario in which Plantorium will engage in rent seeking.

Accepted Answer

Plantorium has three options once Xercky

Question 16

It is unrealistic to regulate a natural monopoly at marginal cost pricing because

Accepted Answer

A)  the government is not allowed to regulate markets. 
B)  marginal cost pricing ends up having the natural monopoly firm earn zero economic profits. 
C)  with this type of regulation,the firm will want to shut down,and that outcome is not desirable for society. 
D)  regulating a market causes more deadweight loss. 
E)  firms do not need to follow regulations from the government. 
A)  the government is not allowed to regulate markets. 
B)  marginal cost pricing ends up having the natural monopoly firm earn zero economic profits. 
C)  with this type of regulation,the firm will want to shut down,and that outcome is not desirable for society. 
D)  regulating a market causes more deadweight loss. 
E)  firms do not need to follow regulations from the government.

Question 17

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

Accepted Answer

A)  A monopoly contains many firms. 
B)  A monopoly produces an efficient level of output. 
C)  A producer in a monopoly may earn long-run economic profits. 
D)  A producer in a monopoly has no market power. 
E)  A producer in a monopoly is a price taker. 
A)  A monopoly contains many firms. 
B)  A monopoly produces an efficient level of output. 
C)  A producer in a monopoly may earn long-run economic profits. 
D)  A producer in a monopoly has no market power. 
E)  A producer in a monopoly is a price taker.

Question 18

Julee has estimated the demand and marginal revenue for her product.They are P = 100 - 2Q (quantity)and MR = 100 - 4Q,respectively.She also experiences constant marginal cost of $16.
a.Does Julee have any market power? How can you tell?
b.What is Julee's profit-maximizing quantity?
c.What price should Julee charge at that profit-maximizing quantity?

Accepted Answer

a.Yes.Julee has market power because the

Question 19

Refer to the accompanying figure to answer the following questions.
  
-The profit when a firm is profit maximizing is

Accepted Answer

A)  $70,000. 
B)  $50,000. 
C)  $20,500. 
D)  $20,000. 
E)  $25,000. 
A)  $70,000. 
B)  $50,000. 
C)  $20,500. 
D)  $20,000. 
E)  $25,000.

Question 20

Lobbying the government to place harsh tariffs on imports is a form of

Accepted Answer

A)  beneficial competition. 
B)  market failure. 
C)  deregulation. 
D)  rent seeking. 
E)  natural monopoly. 
A)  beneficial competition. 
B)  market failure. 
C)  deregulation. 
D)  rent seeking. 
E)  natural monopoly.

Which of the following is NOT an example of a natural barrier to entry?

Monopolists

When the government passes antitrust laws in an industry,we see

Which of the following can fall below the x axis when graphing price and cost against quantity?

Refer to the accompanying figure to answer the following questions. -If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm would make ________ in profits.

A monopolist's marginal revenue

Using a graph,show a situation in which a monopolist is incurring short-run losses.Explain how this is possible.

Explain why problems raising capital constitute a natural barrier and not a government-created one.

When a competitive market becomes controlled by a monopoly,the price and the output .

When marginal revenue intersects marginal cost on a graph,

Refer to the accompanying figure to answer the following questions. -The profit-maximizing price and quantity are ________,respectively.

Refer to the accompanying figure to answer the following questions. -When the price changes from $50 to $30,the price effect leads to a loss of ________ in revenue.

Control of resources,problems raising capital,and economies of scale are all examples of

How did AT&T's position in the market for telephone service evolve from 1980 to the present?

It is unrealistic to regulate a natural monopoly at marginal cost pricing because

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

Refer to the accompanying figure to answer the following questions. -The profit when a firm is profit maximizing is

Lobbying the government to place harsh tariffs on imports is a form of

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

Which of the following is NOT an example of a natural barrier to entry?

Monopolists

When the government passes antitrust laws in an industry,we see

Which of the following can fall below the x axis when graphing price and cost against quantity?

Refer to the accompanying figure to answer the following questions. -If the government forces a firm to produce at the point that generates the greatest welfare for society,that firm would make ________ in profits.

A monopolist's marginal revenue

Using a graph,show a situation in which a monopolist is incurring short-run losses.Explain how this is possible.

Explain why problems raising capital constitute a natural barrier and not a government-created one.

When a competitive market becomes controlled by a monopoly,the price ________ and the output ________.

When marginal revenue intersects marginal cost on a graph,

Refer to the accompanying figure to answer the following questions. -The profit-maximizing price and quantity are ________,respectively.

Refer to the accompanying figure to answer the following questions. -When the price changes from $50 to $30,the price effect leads to a loss of ________ in revenue.

Control of resources,problems raising capital,and economies of scale are all examples of

How did AT&T's position in the market for telephone service evolve from 1980 to the present?

It is unrealistic to regulate a natural monopoly at marginal cost pricing because

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

Refer to the accompanying figure to answer the following questions. -The profit when a firm is profit maximizing is

Lobbying the government to place harsh tariffs on imports is a form of

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

When a competitive market becomes controlled by a monopoly,the price and the output .