Barriers to entry might include all of the following EXCEPTA) patents and copyrights.B) ownership of essential resources...
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Barriers to entry might include all of the following EXCEPT
A) patents and copyrights.
B) ownership of essential resources.
C) government franchise.
D) positive economic profits.
2.
Economies of scale may be a barrier to entry in a situation in which
A) only small-scale production can lower the average cost of production.
B) only small-scale production can meet the constantly changing market demand.
C) only large-scale production can lower the average cost of production.
D) large-scale production is inefficient.
3.
Which of the following is not true about the demand curve faced by a monopolist?
A) The demand curve is downward sloping.
B) The firm's demand curve is the same as the market demand curve.
C) The marginal revenue curve is below the market demand curve.
D) The demand curve is perfectly elastic.
4.
Successive downward movements along the demand curve for the product of a monopolist always generate successive
A) increases in the monopolist's marginal revenue.
B) increases in the monopolist's average total costs.
C) decreases in the additional per-unit costs incurred by the monopolist.
D) decreases in the additional per-unit revenues earned by the monopolist.
5.
An important difference between a perfectly competitive firm and a monopolist is
A) a monopolist usually uses more capital (K) compared to perfect competition
B) the shape of the demand curve each faces
C) the goals of the owners of the firms
D) a monopolist normally produces a service, while a perfect competitor normally produces a good
6.
To sell more units, a single-price monopolist must
A) merely produce more units.
B) advertise more.
C) produce the profit maximizing rate of production.
D) lower price.
7.
If a monopolist can sell 2 units at price of $200 per unit and 3 units at a price of $180 per unit, its marginal revenue at an output of 3 is
A) $-20
B) $20
C) $140
D) $180
E) $60
8.
Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?
A) MR = P
B) MC = ATC
C) MC = P
D) MR = MC
9.
Which of the following is FALSE about a comparison between a perfectly competitive firm and a monopolistically competitive firm?
A) A perfectly competitive firm has a horizontal demand curve, while a monopolistically competitive firm has a downward sloping demand curve.
B) Both the perfectly competitive and monopolistically competitive firm will earn economic profits equal to zero in the long-run.
C) In the long run, the perfectly competitive firm will produce at the minimum of the average total cost curve, while the monopolistically competitive firm will produce to the left of the minimum of the average total cost curve.
D) In the short run, a perfectly competitive firm must earn zero economic profits, while a monopolistically competitive firm will earn positive economic profits.
10.
Which of the following conditions is not necessary for a firm to be able to engage in price discrimination by market segmentation?
I. The firm must be able to produce to the point at which price equals marginal cost.
II. The firm must be able to identify consumers with different demand for the product.
III. The firm must be able to prevent resale of the item it produces and sells.
A) I only
B) III only
C) Both I and II only
D) Both II and III only
11.
For the next two problems, it may help to refer the graphs that we drew in the class notes. Suppose a market is monopolized. Suppose the demand function is P = 120 â 2Q. (This is an inverse demand function, meaning we have solved for P instead of Q). The resulting Marginal Revenue function is MR = 120 â 4Q. If the Marginal Cost function for this monopoly is MC = 2Q, find the optimal quantity Q* that this profit-maximizing monopoly should produce.
A) Q = 5
B) Q = 8
C) Q = 10
D) Q = 15
E) Q = 20
F) Q = 60
G) Q = 120
12.
Using your answer from the previous question, find the price the monopolist will charge.
A) P = $20
B) P = $40
C) P = $60
D) P = $80
E) P = $100
F) P = $120
A single-price monopolist is maximizing profit at an output rate of 1,500 units per month. At this output rate, the price that its customers are willing and able to pay is $12 per unit, average total cost is $8 per unit, and marginal cost is $7 per unit. It may be concluded that at this monthly output rate, marginal revenue is
A) $7 per unit, and the monopolist earns economic profits of $6,000 per month
B) $7 per unit, and the monopolist earns economic profits of $7,500 per month
C) $8 per unit, and the monopolist earns economic losses of $6,000 per month
D) $8 per unit, and the monopolist earns economic profits of $7,500 per month
E) $12 per unit, and the monopolist earns economic profits of $6,000 per month
F) $12 per unit, and the monopolist earns economic profits of $7,500 per month
16.
Suppose a monopoly is going to engage in a two-part-tariff pricing strategy. The monopoly wants to charge an entry fee (E) which will cover the fixed costs of production. Suppose also that the monopolist is going to set a price so that the market will be allocatively efficient. Suppose that the market has N = 200 consumers, fixed costs are FC = $4,000, and marginal costs are constant at MC = $8. What entry fee (E) and price (P) should this monopolist charge in its two-part-tariff pricing strategy? Hint: Look in your notes to find out what price needs to be set such that the market will be allocatively efficient.
A) E = $4000, P = $8
B) E = $4000, P = $25
C) E = $20, P = $8
D) E = $20, P = $25
17.
Which of the following regarding a monopolist is INCORRECT?
A) The monopolist is the single supplier of a good or service
B) The monopolist constitutes the entire industry
C) Only expensive products are produced by monopolies
D) There are barriers to entry that allow monopoly
18.
The model of perfect competition and the model of monopolistic competition differ in that
A) perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers.
B) perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition.
C) perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes firms make positive profits.
D) perfect competition assumes the product is homogeneous and monopolistic competition assumes the product is differentiated.
19.
The key feature of monopolistic competition is
A) strong interdependence and collusion of the firms.
B) lack of advertisement.
C) product differentiation.
D) the small number of firms in the industry.
20.
Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is
A) more elastic.
B) more inelastic.
C) perfectly elastic.
D) perfectly inelastic.
21.
In a long-run monopolistically competitive equilibrium,
A) P = ATC, and ATC is not at its minimum value.
B) P = ATC, and ATC is at its minimum value.
C) P > ATC, and ATC is at its minimum value.
D) P > ATC, and ATC is not at its minimum value.
22.
The demand curve for the product of a firm in monopolistic competition
A) is the same as the market demand curve.
B) is horizontal.
C) is vertical.
D) slopes downward.
23.
Compared with a perfectly competitive firm facing the same costs, long-run equilibrium for a monopolistically competitive firm will result in
A) a higher price and greater output.
B) a lower price and less output.
C) a higher price and less output.
D) a lower price and greater output.
24.
Which of the following products would most likely be produced in a monopolistically competitive market?
A) wheat
B) electricity
C) diamonds
D) fast food
27.
In a monopolistically competitive market there are
A) many firms producing an identical product
B) many firms producing similar but not identical products
C) many firms producing totally different products
D) few firms producing identical products
28.
Oligopoly is a situation when there
A) is one firm in the industry that is fairly large.
B) are a few large firms in the industry.
C) are too many firms in the industry and there is excess capacity.
D) is one giant firm and many smaller firms forming a competitive fringe.
29.
A market structure characteristic that is generally unique to oligopoly is
A) a large number of competing firms which offer similar but not identical products
B) perfectly inelastic demand faced by firms
C) strong interdependence among competing firms
D) firms not maximizing profits
30.
In general, horizontal mergers will
A) increase the number of firms in an industry.
B) decrease the number of firms in an industry.
C) increase competition in an industry.
D) reduce economic profits in an industry.
31.
If the United States' largest bakery buys an agricultural firm that specializes in growing wheat, we would have an example of
A) a horizontal merger.
B) a vertical merger.
C) a monopoly.
D) excessive product differentiation.
A) patents and copyrights.
B) ownership of essential resources.
C) government franchise.
D) positive economic profits.
2.
Economies of scale may be a barrier to entry in a situation in which
A) only small-scale production can lower the average cost of production.
B) only small-scale production can meet the constantly changing market demand.
C) only large-scale production can lower the average cost of production.
D) large-scale production is inefficient.
3.
Which of the following is not true about the demand curve faced by a monopolist?
A) The demand curve is downward sloping.
B) The firm's demand curve is the same as the market demand curve.
C) The marginal revenue curve is below the market demand curve.
D) The demand curve is perfectly elastic.
4.
Successive downward movements along the demand curve for the product of a monopolist always generate successive
A) increases in the monopolist's marginal revenue.
B) increases in the monopolist's average total costs.
C) decreases in the additional per-unit costs incurred by the monopolist.
D) decreases in the additional per-unit revenues earned by the monopolist.
5.
An important difference between a perfectly competitive firm and a monopolist is
A) a monopolist usually uses more capital (K) compared to perfect competition
B) the shape of the demand curve each faces
C) the goals of the owners of the firms
D) a monopolist normally produces a service, while a perfect competitor normally produces a good
6.
To sell more units, a single-price monopolist must
A) merely produce more units.
B) advertise more.
C) produce the profit maximizing rate of production.
D) lower price.
7.
If a monopolist can sell 2 units at price of $200 per unit and 3 units at a price of $180 per unit, its marginal revenue at an output of 3 is
A) $-20
B) $20
C) $140
D) $180
E) $60
8.
Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?
A) MR = P
B) MC = ATC
C) MC = P
D) MR = MC
9.
Which of the following is FALSE about a comparison between a perfectly competitive firm and a monopolistically competitive firm?
A) A perfectly competitive firm has a horizontal demand curve, while a monopolistically competitive firm has a downward sloping demand curve.
B) Both the perfectly competitive and monopolistically competitive firm will earn economic profits equal to zero in the long-run.
C) In the long run, the perfectly competitive firm will produce at the minimum of the average total cost curve, while the monopolistically competitive firm will produce to the left of the minimum of the average total cost curve.
D) In the short run, a perfectly competitive firm must earn zero economic profits, while a monopolistically competitive firm will earn positive economic profits.
10.
Which of the following conditions is not necessary for a firm to be able to engage in price discrimination by market segmentation?
I. The firm must be able to produce to the point at which price equals marginal cost.
II. The firm must be able to identify consumers with different demand for the product.
III. The firm must be able to prevent resale of the item it produces and sells.
A) I only
B) III only
C) Both I and II only
D) Both II and III only
11.
For the next two problems, it may help to refer the graphs that we drew in the class notes. Suppose a market is monopolized. Suppose the demand function is P = 120 â 2Q. (This is an inverse demand function, meaning we have solved for P instead of Q). The resulting Marginal Revenue function is MR = 120 â 4Q. If the Marginal Cost function for this monopoly is MC = 2Q, find the optimal quantity Q* that this profit-maximizing monopoly should produce.
A) Q = 5
B) Q = 8
C) Q = 10
D) Q = 15
E) Q = 20
F) Q = 60
G) Q = 120
12.
Using your answer from the previous question, find the price the monopolist will charge.
A) P = $20
B) P = $40
C) P = $60
D) P = $80
E) P = $100
F) P = $120
A single-price monopolist is maximizing profit at an output rate of 1,500 units per month. At this output rate, the price that its customers are willing and able to pay is $12 per unit, average total cost is $8 per unit, and marginal cost is $7 per unit. It may be concluded that at this monthly output rate, marginal revenue is
A) $7 per unit, and the monopolist earns economic profits of $6,000 per month
B) $7 per unit, and the monopolist earns economic profits of $7,500 per month
C) $8 per unit, and the monopolist earns economic losses of $6,000 per month
D) $8 per unit, and the monopolist earns economic profits of $7,500 per month
E) $12 per unit, and the monopolist earns economic profits of $6,000 per month
F) $12 per unit, and the monopolist earns economic profits of $7,500 per month
16.
Suppose a monopoly is going to engage in a two-part-tariff pricing strategy. The monopoly wants to charge an entry fee (E) which will cover the fixed costs of production. Suppose also that the monopolist is going to set a price so that the market will be allocatively efficient. Suppose that the market has N = 200 consumers, fixed costs are FC = $4,000, and marginal costs are constant at MC = $8. What entry fee (E) and price (P) should this monopolist charge in its two-part-tariff pricing strategy? Hint: Look in your notes to find out what price needs to be set such that the market will be allocatively efficient.
A) E = $4000, P = $8
B) E = $4000, P = $25
C) E = $20, P = $8
D) E = $20, P = $25
17.
Which of the following regarding a monopolist is INCORRECT?
A) The monopolist is the single supplier of a good or service
B) The monopolist constitutes the entire industry
C) Only expensive products are produced by monopolies
D) There are barriers to entry that allow monopoly
18.
The model of perfect competition and the model of monopolistic competition differ in that
A) perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers.
B) perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition.
C) perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes firms make positive profits.
D) perfect competition assumes the product is homogeneous and monopolistic competition assumes the product is differentiated.
19.
The key feature of monopolistic competition is
A) strong interdependence and collusion of the firms.
B) lack of advertisement.
C) product differentiation.
D) the small number of firms in the industry.
20.
Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is
A) more elastic.
B) more inelastic.
C) perfectly elastic.
D) perfectly inelastic.
21.
In a long-run monopolistically competitive equilibrium,
A) P = ATC, and ATC is not at its minimum value.
B) P = ATC, and ATC is at its minimum value.
C) P > ATC, and ATC is at its minimum value.
D) P > ATC, and ATC is not at its minimum value.
22.
The demand curve for the product of a firm in monopolistic competition
A) is the same as the market demand curve.
B) is horizontal.
C) is vertical.
D) slopes downward.
23.
Compared with a perfectly competitive firm facing the same costs, long-run equilibrium for a monopolistically competitive firm will result in
A) a higher price and greater output.
B) a lower price and less output.
C) a higher price and less output.
D) a lower price and greater output.
24.
Which of the following products would most likely be produced in a monopolistically competitive market?
A) wheat
B) electricity
C) diamonds
D) fast food
27.
In a monopolistically competitive market there are
A) many firms producing an identical product
B) many firms producing similar but not identical products
C) many firms producing totally different products
D) few firms producing identical products
28.
Oligopoly is a situation when there
A) is one firm in the industry that is fairly large.
B) are a few large firms in the industry.
C) are too many firms in the industry and there is excess capacity.
D) is one giant firm and many smaller firms forming a competitive fringe.
29.
A market structure characteristic that is generally unique to oligopoly is
A) a large number of competing firms which offer similar but not identical products
B) perfectly inelastic demand faced by firms
C) strong interdependence among competing firms
D) firms not maximizing profits
30.
In general, horizontal mergers will
A) increase the number of firms in an industry.
B) decrease the number of firms in an industry.
C) increase competition in an industry.
D) reduce economic profits in an industry.
31.
If the United States' largest bakery buys an agricultural firm that specializes in growing wheat, we would have an example of
A) a horizontal merger.
B) a vertical merger.
C) a monopoly.
D) excessive product differentiation.
