Question 1

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
-Refer to Figure 11-17.The demand curve for a monopoly firm is depicted by curve

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D.

Question 2

The two conflicting tendencies that a firm has in an oligopolistic industry are the incentive to

Accepted Answer

A) cheat to maximize joint profits and the incentive to raise prices. 
B) cheat and avoid collusion and the incentive to raise price to maximize the firm's share of profits. 
C) increase output in order to minimize per-unit costs and the incentive to reduce price in order to maximize joint profit. 
D) cooperate to maximize joint profits and the incentive to cheat on the agreement in order to increase the firm's share of the profit.

Question 3

Why does the U.S.government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?

Accepted Answer

The answer of Why does the U.S.government maintain a monopoly...

Question 4

When a single firm has control over the market supply of a resource that is essential to the production of a good,

Accepted Answer

A) economies of scale are usually important. 
B) monopoly is frequently the result. 
C) diseconomies of scale are the usual cause. 
D) competition for the resource makes monopoly almost impossible

Question 5

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

Question 6

One of the effects of patents is to

Accepted Answer

A) reduce incentives for innovation. 
B) give firms incentives to worry less about minimizing production costs. 
C) temporarily provide the patent owner with monopoly power. 
D) reduce the degree of monopoly power in the short run.

Question 7

Figure 11-13
 
-Using Figure 11-13,determine the maximum joint monthly profit of the firms if they operate as a cartel.

Accepted Answer

A) zero 
B) $1,500 
C) $3,000 
D) $4,500

Question 8

In markets characterized by oligopoly,

Accepted Answer

A) the oligopolists earn the highest profit when they cooperate and behave like a monopolist. 
B) collusive agreements will always prevail. 
C) collective profits are always lower with cartel arrangements than they are without cartel arrangements. 
D) pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.

Question 9

Since its beginning,the cable television industry has been viewed as a natural monopoly.Typically,cities would grant individual firms local monopolies and then regulate them.Is this a valid approach from an economic perspective? What do you expect the future of the television-viewing market to hold?

Accepted Answer

The answer of Since its beginning,the cable television industry has...

Question 10

An expansion in the number of plumbers in a local area has resulted in lower profits.The local plumbing contractors have called a meeting to discuss ways to improve their long-run profitability.Of the four plans being discussed seriously,which would most likely increase their long-run profits?

Accepted Answer

A) passage of legislation requiring new contractors to be licensed,which would require passing a stiff licensing exam and paying a $5,000 fee 
B) an "off-the-record" agreement that each plumbing contractor would increase his or her prices by an average of 7 percent 
C) passage of legislation requiring the local government to share the cost of installing all private sewage systems 
D) repeal of the current tax on installations of plumbing units

Question 11

Suppose Ford,GM,and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price,and Ford offers a $2,000 rebate on new truck sales,what can Ford expect to see?

Accepted Answer

A) an unprecedented increase in truck sales 
B) an immediate response by GM and Dodge 
C) a visit from the antitrust authorities of the government 
D) a revolution from Ford stockholders 
E) announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years

Question 12

When significant economies of scale are present in the production process,an industry will tend naturally toward monopoly because

Accepted Answer

A) one firm will be able to produce the entire market output at a lower cost than several smaller firms. 
B) marginal revenue will be less than market price,giving firms the incentive to equate marginal cost with price instead of equating marginal cost and marginal revenue. 
C) economies of scale can only be present when firms produce identical products and there is no reason to have more than one firm producing the same exact product. 
D) consumers will be unwilling to compare the prices charged by several different firms.

Question 13

Which of the following is true of pure monopoly?

Accepted Answer

A) Monopoly expands the options available to consumers. 
B) Monopoly results in allocative inefficiency. 
C) Profits and losses induce firms to enter and exit from industries. 
D) Monopoly works well when governments regulate prices.

Question 14

Table 11-3
 
-The demand and total cost schedules of a monopolist are presented in Table 11-3.What price should a profit-maximizing monopolist charge?

Accepted Answer

A) $10 
B) $9 
C) $8 
D) $7

Exam 24: Aprice-Searcher Markets With High Entry Barriers

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 -Refer to Figure 11-17.The demand curve for a monopoly firm is depicted by curve