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Need help with the following sets of multiple choice questions
PREVIEW OF HOMEWORK # 4 ON CHAPTERS 6 AND 7
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PREVIEW OF HOMEWORK # 5, ECO 157
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1. Monopoly is at the other end of the spectrum from: A) monopolistic competition
2. Barriers that prevent the entry of new firms may arise because: A) economies of scale exist over a substantial range of industry demand. Correct answer(s): E
3. Pure monopoly: A) is characterized by single supplier. Correct answer(s): D
4. Why does the government allow some markets to be monopolized by granting patents? A) to promote a more equal distribution of income Correct answer(s): C
5. Many communities have granted monopoly rights to cable companies. This is an example of a monopoly created through: A) government licensing. Correct answer(s): A
6. When a single firm can produce output over the relevant range of demand more efficiently than two or more firms can, because of the existence of economies of scale, we have: A) perfect competition. Correct answer(s): C
7. Which of these contributes to the existence of monopoly power? A) the control of critical resources
8. The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade. This market power was obtained through: A) illegal means. Correct answer(s): B
9. Based on the table below what is the marginal revenue of the 14th unit of output? Quantity Price 13 $50.00 14 $49.75 15 $49.50 A) $0.25 Correct answer(s): C
10. Graphically which of the following is true for a monopoly? A) The marginal revenue curve lies below the demand curve and is steeper than the demand curve. Correct answer(s): A
11. Which of the following best explains why a monopolist’s marginal revenue is less than the sale price? A) To sell more units, monopolist must increase the price on all units sold. Correct answer(s): D
12. A profit-maximizing monopolist will never produce at an output level where: A) demand is elastic. Correct answer(s): C
13. If a firm seeks to maximize total revenue, it should produce the quantity where: A) marginal revenue equals zero. Correct answer(s): A
14. A price-taking firm and a monopoly firm are alike in that: A) price equals marginal revenue for both. Correct answer(s): B
15. In the long run, economic profits are: A) possible both for a monopolist and for a perfectly competitive firm. Correct answer(s): B
16. In the short run, a monopolist: A) always suffers an economic loss. Correct answer(s): D
17. A monopolist will shut down in the short run if: A) price exceeds marginal revenue. Correct answer(s): D
18. A monopoly is inefficient because: A) consumers are forced to pay higher prices for products. Correct answer(s): C
19. If an unregulated monopolist operates in a market, then: A) customers will pay higher prices than if the market were competitive. Correct answer(s): D
20. The aim of antitrust policy is to: A) provide adequate incentives for inventors and entrepreneurs. Correct answer(s): B 21. What was the first important law regulating monopoly that prohibited “restraint of trade”? MACROBUTTON HTMLDirect Correct answer(s): A 22. Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition? MACROBUTTON HTMLDirect Correct answer(s): D 23. Which piece of legislation forbids most forms of price discrimination? MACROBUTTON HTMLDirect Correct answer(s): B 24. U. S. public utilities are often: MACROBUTTON HTMLDirect Correct answer(s): C 25. What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry? MACROBUTTON HTMLDirect Correct answer(s): C 26. Which of the following is a problem with government regulation of natural monopolies? MACROBUTTON HTMLDirect Correct answer(s): B 27. If a regulatory commission wishes to allow a firm to earn a normal rate of return, it should set price equal to: MACROBUTTON HTMLDirect Correct answer(s): C 28. Price discrimination refers to: MACROBUTTON HTMLDirect Correct answer(s): B 29. When setting prices, the monopolist may choose to charge alternative customers different prices based on: MACROBUTTON HTMLDirect Correct answer(s): D 30. A price-discriminating monopolist will tend to charge a lower price to students if it believes that students: MACROBUTTON HTMLDirect Correct answer(s): A 31. Monopolistic competition is more similar to monopoly than any other industry model.
MACROBUTTON HTMLDirect Correct answer(s): False 32. Monopolistic competition, like perfect competition, is a market structure in which firms can easily enter and leave the industry. MACROBUTTON HTMLDirect
Correct answer(s): True 33. By differentiating their products and promoting brand name loyalty, monopolistically competitive firms can raise prices without losing all their customers. MACROBUTTON HTMLDirect Correct answer(s): True 34. Monopolistically competitive sellers have some ability to influence the price of their products. MACROBUTTON HTMLDirect Correct answer(s): True 35. Monopolistically competitive sellers are price takers. MACROBUTTON HTMLDirect Correct answer(s): False 36. Monopolistic competitors in long-run equilibrium will generally find that they are earning economic profits. MACROBUTTON HTMLDirect Correct answer(s): False 37. In long-run equilibrium, a monopolistically competitive firm’s demand curve will be tangent to its average cost curve. MACROBUTTON HTMLDirect Correct answer(s): True 38. Unlike purely competitive firms, firms in monopolistic competition will operate with excess capacity even in long-run equilibrium. MACROBUTTON HTMLDirect Correct answer(s): True 39. In the long run, monopolistically competitive firms typically produce with allocative efficiency. MACROBUTTON HTMLDirect Correct answer(s): False 40. Although there are certain inefficiencies associated with monopolistic competition, society receives a benefit from monopolistic competition in the form of product variety. MACROBUTTON HTMLDirect Correct answer(s): True 41. Oligopoly is an industry with a small number of firms producing homogeneous or differentiated goods with minimal barriers to entry. MACROBUTTON HTMLDirect Correct answer(s): False 42. When making decisions on pricing and other behaviors, oligopolistic firms must take into account the actions of other firms. MACROBUTTON HTMLDirect Correct answer(s): True 43. The U. S. commercial airline industry is a good example of an oligopolistic market. MACROBUTTON HTMLDirect Correct answer(s): True 44. Economists consider the breakfast food industry to be an oligopolistic market. MACROBUTTON HTMLDirect Correct answer(s): True 45. There are significant technological barriers to entry that help make the automobile industry oligopolistic. MACROBUTTON HTMLDirect Correct answer(s): True 46. The key difference between oligopoly and other market structures is the interdependence among producers. MACROBUTTON HTMLDirect Correct answer(s): True 47. Large oligopoly firms are often able to take advantage of significant economies of scale. As a result, they can often produce at a lower average total cost than can smaller firms. MACROBUTTON HTMLDirect Correct answer(s): True 48. A cartel is a group of firms that attempt to collude by coordinating price and output decisions. MACROBUTTON HTMLDirect Correct answer(s): True 49. Cartels are legal in many countries, including the United States. MACROBUTTON HTMLDirect Correct answer(s): False 50. Oligopolists may charge a price lower than the profit maximizing price to discourage new firms from entering a market. MACROBUTTON HTMLDirect Correct answer(s): True |
