Question 1

Which of the following is not considered a barrier to entry?

Accepted Answer

A) large economies of scale 
B) control of inputs used in production 
C) a homogeneous product 
D) patents 
E) copyrights

Question 2

-Figure 10-17 shows a single-price monopolist.In order to maximize its economic profit in the short run,the firm should produce

Accepted Answer

A) the output level associated with point F 
B) the output level associated with point G 
C) the output level associated with point H 
D) the output level associated with point I 
E) zero

Question 3

Monopolies differ from perfectly competitive firms in the long run because

Accepted Answer

A) perfectly competitive firms can earn economic profit 
B) monopolies can earn economic profit 
C) monopolies produce a smaller share of the industry output 
D) patents and copyright laws protect monopolists for as long as they desire 
E) monopolists have long-run average cost curves

Question 4

Which of the following products would be most difficult to resell?

Accepted Answer

A) Girl Scout cookies 
B) suitcases 
C) automobiles 
D) pencils 
E) medical exams

Question 5

Which of the following conditions does not need to be satisfied in order to practice price discrimination?

Accepted Answer

A) a perfectly elastic demand curve 
B) a negatively-sloped demand curve for the firm's output 
C) the ability to identify customers who are willing to pay more for the good 
D) the ability to identify customers who are not willing to pay more 
E) the ability to prevent resale of the good

Question 6

The extent to which a firm is viewed by consumers as being a monopoly depends primarily on

Accepted Answer

A) how the government defines a monopoly 
B) whether they believe there are close substitutes for the good it produces 
C) the level of profits earned by the firm 
D) the difference between price and marginal cost of the good it produces 
E) the size of the firm

Question 7

Costly actions that a firm undertakes to gain monopoly status are called

Accepted Answer

A) monopolization. 
B) rent-seeking activity. 
C) monopoly-profit seeking. 
D) collusion.

Question 8

Any costly activity firms undertake to protect their monopoly status is referred to as

Accepted Answer

A) market power 
B) price-setting behavior 
C) rent seeking 
D) economies of scale 
E) legal intervention

Question 9

-Assuming no price discrimination,the firm represented by Figure 10-16 will have a(n)

Accepted Answer

A) economic profit of approximately $7,500 
B) economic profit of approximately $4,375 
C) economic profit of approximately $2,500 
D) economic loss of approximately $15,625 
E) break-even situation with neither economic profit nor economic loss

Question 10

For a monopoly,profit per unit of output is

Accepted Answer

A) marginal revenue minus marginal cost 
B) price minus average total cost 
C) average total cost minus marginal revenue 
D) price minus marginal revenue 
E) total revenue minus total cost

Question 11

-In Figure 10-28,the monopolist's profit-maximizing output level is

Accepted Answer

A) 50. 
B) 55. 
C) 60. 
D) 65.

Question 12

Monopolies are characterized by all of the following,except one.Which is the exception?

Accepted Answer

A) a downward-sloping demand curve 
B) potential for long-run profits 
C) a perfectly elastic demand curve 
D) barriers to entry 
E) no close substitutes for the good produced

Question 13

Economic rent is

Accepted Answer

A) the same thing as economic profit 
B) the difference between accounting profit and economic profit 
C) the amount a firm pays to lease its factory or machinery 
D) any earnings in excess of the minimum needed for a good or service to be produced 
E) any earnings in excess of the maximum necessary for a good or service to be produced

Question 14

In the short run,a monopoly may

Accepted Answer

A) only earn positive economic profits. 
B) only earn zero economic profit, 
C) earn positive economic profits or economic losses. 
D) only earn economic losses.

Question 15

Patents grant

Accepted Answer

A) permanent monopoly status to creators of scientific inventions 
B) permanent monopoly status to creators of any intellectual property 
C) temporary monopoly status to creators of scientific inventions 
D) temporary monopoly status to creators of any intellectual property 
E) permanent monopoly status to natural monopolies

Question 16

-Figure 10-23 illustrates the market supply and market demand for an industry that is constituted initially of many identical and perfectly competitive firms.If all the firms merge to form a single-price monopoly,then market output will

Accepted Answer

A) drop from 750 to 500 units,and the price will rise from L to K 
B) drop from 750 to 500 units,and the price will fall from K to L 
C) rise from 500 to 750 units,and the price will rise from L to K 
D) rise from 500 to 750 units,and the price will fall from K to L 
E) remain unchanged while the price rises from L to K

Question 17

The demand curve for a monopolist's output is

Accepted Answer

A) horizontal. 
B) shallower than the market demand curve. 
C) steeper than the market demand curve. 
D) identical to the market demand curve.

Question 18

A market that involves only one seller of a good or service is known as

Accepted Answer

A) a monopoly 
B) perfect competition 
C) monopolistic competition 
D) an oligopoly 
E) perfect monopolistic competition

Question 19

A network externality exists

Accepted Answer

A) in the television industry 
B) outside the television industry 
C) whenever an increase in the size of a network increases its value to current and potential members 
D) whenever an increase in the size of a network increases its average total cost of production 
E) whenever an increase in the size of a network increases its total cost of production

Question 20

A pure monopoly

Accepted Answer

A) is the only firm that produces all of the products its competitors produce 
B) is the single seller of a unique product 
C) is bigger than all its competitors combined 
D) has only one customer 
E) is always profitable in the short run

Exam 11: Monopoly