Question 1

Monopolists set prices

Accepted Answer

A)   On the marginal revenue curve.
B)   Without constraints since there is no competition.
C)   At the output where marginal revenue equals marginal cost.
D)   At the minimum of the long-run average total cost curve.

Question 2

A monopolist has market power because it

Accepted Answer

A)   Faces a downward-sloping demand curve for its own output.
B)   Can raise price as much as it wishes and not lose any customers.
C)   Is a price taker.
D)   Is regulated by the government.

Question 3

The major focus of the Clayton Act is to prevent the development of monopolies.

Accepted Answer

A) True 
 B)False

Question 4

The Sherman Act prohibits price discrimination.

Accepted Answer

A) True 
 B)False

Question 5

A monopoly

Accepted Answer

A)   Maximizes profits at the output level where MR > MC.
B)   Produces less output than a competitive industry, ceteris paribus.
C)   Charges the same price as a competitive industry, ceteris paribus.
D)   Maximizes profits at the output where P = MR.

Question 6

A profit-maximizing monopolist produces the rate of output where

Accepted Answer

A)   MR = MC and determines price based on the demand curve.
B)   Price = MC.
C)   MR = MC and can set price at any amount it chooses.
D)   MR = MC and determines price based on ATC.

Question 7

The marginal revenue curve is below the demand curve

Accepted Answer

A)   If a firm must lower its price to sell additional output.
B)   For a competitive firm.
C)   When a market is characterized by economies of scale.
D)   For all firms.

Question 8

Economies of scale occur when the long-run average cost curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 9

The Federal Trade Commission was created to study industry structures and behavior and identify anticompetitive practices.

Accepted Answer

A) True 
 B)False

Question 10

A barrier to entry is

Accepted Answer

A)   A law established by the government to protect new industries.
B)   A commitment on the part of big business to allow smaller companies to compete.
C)   An obstacle that prevents additional workers from entering an industry, such as a union.
D)   An obstacle that makes it difficult for new firms to enter a market.

Question 11

In Figure 24.2, total revenue at the profit-maximizing rate of output is

Accepted Answer

A)   $22.00.
B)   $6.40.
C)   $4.00.
D)   $16.00.

Question 12

The World View article "Foxy Soviets Pelt the West: Sable Monopoly Traps Hard Currency, Coats Capitalists" provides evidence that the Soviets would

Accepted Answer

A)   Experience zero long-run profits in the sable market.
B)   Practice marginal cost pricing.
C)   Charge a price greater than marginal revenue.
D)   Practice price discrimination.

Question 13

Which of the following markets best illustrates the practice of price discrimination?

Accepted Answer

A)   The airline market.
B)   The fast-food market.
C)   Wheat farming.
D)   The personal computer market.

Question 14

If a firm can raise market price by reducing its output, then

Accepted Answer

A)   It has no market power.
B)   It faces a downward-sloping demand curve.
C)   It is a price taker.
D)   It engages in marginal cost pricing.

Question 15

If a monopolist is producing a level of output where MR exceeds MC, then it should

Accepted Answer

A)   Raise its price.
B)   Increase its output.
C)   Lower its output.
D)   Shift its marginal cost curve upward.

Question 16

In Table 24.1, using the profit maximization rule, a monopolist will produce

Accepted Answer

A)   1 unit.
B)   3 units.
C)   4 units.
D)   5 units.

Question 17

Price-discriminating firms charge higher prices to those who

Accepted Answer

A)   Have greater incomes.
B)   Have lower price elasticities of demand.
C)   Have many substitutes available to them.
D)   Want the product less.

Question 18

An In the News article titled "Jury Rules Magnetek Unit Is Liable for Keeping Technology off Market" reported, "A county superior court jury in Oakland ordered a unit of Magnetek Inc. to pay $25.8 million to two California entrepreneurs . . . the unit had failed to bring the pair's energy-saving fluorescent-light technology to market in a profitable manner . . . in favor of an outmoded technology." The most correct implication of this quotation is that Magnetek

Accepted Answer

A)   Attempted to suppress R&D.
B)   Is a highly efficient, high-tech industry.
C)   Makes zero economic profits.
D)   Charges lower prices than might be expected in a competitive market.

Question 19

State and evaluate the arguments made for concentration of market power.

Accepted Answer

(1) Monopolies have greater ability to p...

Question 20

Assume a monopoly confronts the same costs and demand as a competitive industry. In this case, the monopolist produces

Accepted Answer

A)   The same output and charges the same price as the competitive industry.
B)   More output and charges a higher price than the competitive industry.
C)   Less output and charges a lower price than the competitive industry.
D)   Less output and charges a higher price than the competitive industry.

Exam 10: Self-Adjustment or Instability

Economies of scale occur when the long-run average cost curve slopes downward.

Correct Answer
verified

If a firm can raise market price by reducing its output, then

Correct Answer
verified

Assume a monopoly confronts the same costs and demand as a competitive industry. In this case, the monopolist produces

Correct Answer
verified

Price-discriminating firms charge higher prices to those who

Correct Answer
verified

Correct Answer
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The marginal revenue curve is below the demand curve

Correct Answer
verified

The major focus of the Clayton Act is to prevent the development of monopolies.

Correct Answer
verified

In Table 24.1, using the profit maximization rule, a monopolist will produce

Correct Answer
verified

A profit-maximizing monopolist produces the rate of output where

Correct Answer
verified

The Sherman Act prohibits price discrimination.

Correct Answer
verified

A monopolist has market power because it

Correct Answer
verified

State and evaluate the arguments made for concentration of market power.

Correct Answer
verified
(1) Monopolies have greater ability to p...
View Answer

If a monopolist is producing a level of output where MR exceeds MC, then it should

Correct Answer
verified

A monopoly

Correct Answer
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The World View article "Foxy Soviets Pelt the West: Sable Monopoly Traps Hard Currency, Coats Capitalists" provides evidence that the Soviets would

Correct Answer
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A barrier to entry is

Correct Answer
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Which of the following markets best illustrates the practice of price discrimination?

Correct Answer
verified

In Figure 24.2, total revenue at the profit-maximizing rate of output is

Correct Answer
verified

Monopolists set prices

Correct Answer
verified

The Federal Trade Commission was created to study industry structures and behavior and identify anticompetitive practices.

Correct Answer
verified

Exam 10: Self-Adjustment or Instability

Economies of scale occur when the long-run average cost curve slopes downward.

Correct AnswerverifiedShow Answer

If a firm can raise market price by reducing its output, then

Correct AnswerverifiedShow Answer

Assume a monopoly confronts the same costs and demand as a competitive industry. In this case, the monopolist produces

Correct AnswerverifiedShow Answer

Price-discriminating firms charge higher prices to those who

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal revenue curve is below the demand curve

Correct AnswerverifiedShow Answer

The major focus of the Clayton Act is to prevent the development of monopolies.

Correct AnswerverifiedShow Answer

In Table 24.1, using the profit maximization rule, a monopolist will produce

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist produces the rate of output where

Correct AnswerverifiedShow Answer

The Sherman Act prohibits price discrimination.

Correct AnswerverifiedShow Answer

A monopolist has market power because it

Correct AnswerverifiedShow Answer

State and evaluate the arguments made for concentration of market power.

Correct Answerverified(1) Monopolies have greater ability to p...View AnswerShow Answer

If a monopolist is producing a level of output where MR exceeds MC, then it should

Correct AnswerverifiedShow Answer

A monopoly

Correct AnswerverifiedShow Answer

The World View article "Foxy Soviets Pelt the West: Sable Monopoly Traps Hard Currency, Coats Capitalists" provides evidence that the Soviets would

Correct AnswerverifiedShow Answer

A barrier to entry is

Correct AnswerverifiedShow Answer

Which of the following markets best illustrates the practice of price discrimination?

Correct AnswerverifiedShow Answer

In Figure 24.2, total revenue at the profit-maximizing rate of output is

Correct AnswerverifiedShow Answer

Monopolists set prices

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The Federal Trade Commission was created to study industry structures and behavior and identify anticompetitive practices.

Correct AnswerverifiedShow Answer

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(1) Monopolies have greater ability to p...
View Answer

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