Econ

38) Refer to Figure 13.5. The profit-maximizing price for this firm is A) $5. B) $7. C) $9. D) $11.

D

True or False: A market where there is only one buyer for a good or service is called a monopoly.

False

True or False: Assuming a perfectly competitive market implies that households have perfect knowledge of qualities and prices of everything available in the market.

True

10) When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. When the monopolist sells three units of output, the price per unit is A) $210. B) $230. C) $300. D) $630.

A

52) A monopolist suffers a loss if its ________ schedule is everywhere above its ________ schedule. A) ATC, MC B) MC, AVC C) ATC, Demand D) Demand, ATC

C

28) A non-discriminating monopolistʹs price equals its marginal revenue only when A) output is zero. B) total revenue is a maximum. C) marginal revenue is zero. D) the monopolistʹs demand schedule intersects the horizontal (quantity) axis..

A

43) Ameritech® has a monopoly over local telephone service. If Ameritech® is producing where marginal revenue is less than marginal cost, the firm A) could increase profits by reducing output. B) could increase profits by increasing output. C) is maximizing profits. D) must be earning a zero profit.

A

47) A monopolistʹs supply of a good is A) dependent on the monopolistʹs demand curve and its marginal cost curve. B) given by the portion of the monopolistʹs marginal cost curve that lies above the average variable cost curve. C) independent of the monopolistʹs demand curve. D) given by the portion of the monopolistʹs average variable cost curve that lies above the marginal cost curve.

A

5) In a monopoly, the market demand curve is A) the same as the demand curve facing the firm. B) the summation of all the individual firmʹs cost curves. C) nonexistent. D) the marginal cost curve above minimum average variable cost.

A

6) For a monopoly, the marginal revenue curve has ________ point(s) in common with the firmʹs linear demand curve. A) one B) no C) all D) Indeterminate from the given information.

A

A monopoly is an industry with A) a single firm in which the entry of new firms is blocked. B) a small number of firms each large enough to impact the market price of its output.. C) many firms each able to differentiate their product. D) many firms each too small to impact the market price of its output.

A

Assume that an industry is currently a monopoly. If the government breaks this monopoly up into a large number of small perfectly competitive firms, we would expect which one of the following to occur? A) Price will fall and industry output will increase. B) Price will increase and industry output will decrease. C) Both price and industry output will increase. D) Both price and industry output will decrease.

A

In perfect competition, the marginal revenue curve A) and the demand curve facing the firm are identical. B) is always above the demand curve facing the firm. C) is always below the demand curve facing the firm. D) intersects the demand curve when marginal revenue is minimized.

A

In perfect competition, when firms are maximizing profits and households are maximizing utility, A) Pareto optimality has been obtained. B) voluntary exchange can be used to make both firms and households better off. C) the outcome is inefficient. D) individual welfare is maximized, but social welfare is not.

A

Monopolistic competition differs from perfect competition primarily because in A) monopolistic competition, firms can differentiate their products. B) perfect competition, firms can differentiate their products. C) monopolistic competition, entry into the industry is blocked. D) monopolistic competition, there are relatively few barriers to entry.

A

27) A non-discriminating monopolist maximizes total revenue when its marginal revenue is ________. A) positive B) zero C) negative D) equal to price

B

3) For a monopolist to sell more units of output, A) the price must be increased. B) the price must be reduced. C) demand must become more elastic. D) the other competing firms must sell fewer units.

B

45) A monopolist is currently maximizing profits. In addition, if P > ATC > MC, then the monopolist A) just breaks even. B) earns positive economic profits. C) is covering total variable costs but not total fixed costs. D) is covering total fixed costs but not total variable costs.

B

50) In the long run, a monopoly A) will always earn zero economic profits. B) may earn positive economic profits due to entry barriers. C) will never exit the industry. D) will yield an efficient outcome.

B

An oligopoly is an industry market structure with A) a single firm in which the entry of new firms is blocked. B) a small number of firms each large enough to impact the market price of its output. C) many firms each able to differentiate their product. D) many firms each too small to impact the market price.

B

In perfect competition, the condition that ensures that the right things are produced is A) MUX = PX. B) P = MC. C) P = ATC. D) MRPL = ATC.

B

Monopolies, oligopolies, and monopolistic competitive industries all A) earn positive profits in the long run. B) have market power. C) are completely unconstrained in their pricing. D) raise price and quantity over what would occur in perfect competition in order to maximize their profits.

B

Refer to the information provided in Figure 13.5 below to answer the questions that follow. Figure 13.5 37) Refer to Figure 13.5. The profit-maximizing level of output for this monopolist is ________ units of output. A) 20 B) 22 C) 24 D) 26

B

The fast-food industry is not considered perfectly competitive because: A) entry and exit are strictly regulated by the government. B) the firmʹs products are not homogeneous. C) there are a small number of dominant firms. D) there are a very large number of firms.

B

1) Monopolists differ from perfectly competitive firms A) on the cost and demand sides of the profit equation. B) on the cost side of the profit equation alone. C) on the demand side of the profit equation alone. D) on neither the cost nor demand sides of the profit equation.

C

30) For a monopolist, price A) equals marginal revenue at all output levels. B) is less than marginal revenue. C) is greater than marginal revenue. D) can be greater than or less than marginal revenue.

C

35) A monopolist will not produce A) a positive level of output when its marginal revenue is declining. B) a positive level of output when its price is less than average total cost but greater than average variable cost. C) in the inelastic portion of its demand curve, where marginal revenue is negative. D) in the perfectly competitive level of output when it engages in perfect price discrimination.

C

4) An important distinction between perfect competition and monopoly is that in A) perfect competition there is no distinction between the firm and the industry. B) perfect competition the firm is the industry. C) monopoly the firm faces the market demand curve. D) monopoly the firm produces less than the total quantity supplied.

C

44) A monopolist sets both price and quantity simultaneously, and the amount of output that it supplies depends A) only on the marginal cost curve. B) only on the demand curve. C) on both its marginal cost curve and the demand curve that it faces. D) on both its average cost curve and the demand curve that it faces.

C

49) In the short run, when a monopolist incurs a loss it will A) always shut down. B) always produce where marginal cost equals marginal revenue. C) produce as long as total revenue is sufficient to cover variable costs. D) produce as long as total revenue is sufficient to cover fixed costs.

C

7) For a perfectly competitive firm, the marginal revenue curve has ________ point(s) in common with the firmʹs demand curve. A) one B) no C) all D) Indeterminate from the given information.

C

8) Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $600, and if it sells three calculators its total revenue is $750. The marginal revenue of the third calculator sold is A) $50. B) $75. C) $150. D) $250.

C

9) When a monopolist sells two units of output its total revenue is $150. When a monopolist sells three units of output its total revenue, is $210. When the monopolist sells three units of output, the price per unit is A) $50. B) $60. C) $70. D) $75.

C

Imperfect competition occurs A) when firms are not profit maximizers. B) whenever firms are losing money. C) when firms have some control over price and competition. D) when the consumption of the good involves an external benefit.

C

Imperfect information on the part of buyers and sellers A) will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold. B) is no longer a problem because theʺtruth-in-advertisingʺregulations have been instituted. C) remains a barrier to achieving market efficiency, at least in some industries. D) cannot persist in a market economy.

C

Monopolistic competition is an industry market structure with A) a single firm in which the entry of new firms is blocked. B) a small number of firms each large enough to impact the market price of its output. C) many firms each able to differentiate their product. D) many firms each too small to impact the market price of its output.

C

Under perfect competition the person that ends up with the marginal unit is the person that values it A) at an amount above its price. B) at an amount lower than its price. C) exactly at its price. D) above its marginal cost.

C

29) Assuming demand is linear, the shape of a monopolistʹs total revenue schedule is a A) straight line passing through the origin. B) straight line with negative slope. C) curve from the origin with increasing slope. D) curve from the origin with decreasing slope.

D

34) For a monopolist, if total revenue increases as output decreases, then marginal revenue is A) equal to price. B) zero. C) positive. D) negative.

D

36) Suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has A) maximized its total revenue. B) set price equal to its average cost. C) maximized the difference between marginal revenue and marginal cost. D) equated marginal revenue and marginal cost.

D

42) A profit-maximizing monopolist will produce the level of output where A) marginal revenue is zero. B) marginal cost is minimized. C) price equals marginal cost. D) marginal revenue equals marginal cost.

D

46) When the addition to a monopolistʹs total profit is negative from selling another unit, then it follows that A) MR>ATC. B) MR =MC. C) MR>MC. D) MR<MC.

D

51) If a monopolist earns positive economic profits in the long run, A) new firms will enter the market. B) the monopolist expands production. C) the industry supply curve shifts to the right. D) the monopolist will not change its behavior.

D

In a monopolistic industry there is(are) ________ firm(s) and ________. A) many; free entry of new firms B) many; entry of new firms is blocked C) a single; free entry of new firms D) a single; entry of new firms is blocked

D

Perfectly competitive firms A) sell homogeneous products. B) are price takers. C) are small relative to the size of the market. D) All of the above are correct.

D

Products may be homogeneous or differentiated in the ________ market structure. A) perfectly competitive B) monopolistic C) monopolistically competitive D) oligopolistic

D

Under perfect competition, the efficient level of output is produced because A) government regulates the output level that must be produced. B) firms earn only a normal profit in the long run. C) firms can earn an economic profit in the long run. D) price equals marginal cost.

D

When all the conditions for perfect competition are met, A) resources are allocated among firms efficiently. B) final products are distributed among households efficiently. C) the system produces the goods and services consumers want. D) All of the above are correct.

D

Which of the following statements regarding perfect price discrimination is FALSE? A) Perfect price discrimination is charging different prices to different buyers. B) Perfect price discrimination is an attempt by monopolists to capture consumer surplus as profit. C) Perfect price discrimination can eliminate the deadweight loss to society of a monopoly. D) Perfect price discrimination yields the same market price and output result as perfect competition.

D

________ is an example of an imperfectly competitive market structure. A) Monopoly B) Oligopoly C) Monopolistic competition D) All of the above are correct.

D

True or False: A firm with market power will be able to sell all of their output at any price they desire.

False

True or False: Homogeneous products are distinguishable from each other.

False

True or False: Imperfect competition results in inefficiency but greater equity.

False

True or False: It is because firms consciously try to balance social costs and benefits that efficiency conditions of perfect competition come about.

False

True or False: There are a few firms selling differentiated products in a monopolistically competitive industry.

False

True or False: In imperfect competition, competition may take place in more levels than in perfect competition.

True

True or False: In perfect competition, price is equal to marginal revenue while in monopoly price is greater than marginal revenue.

True

True or False: Perfectly competitive industries are characterized by a homogeneous product.

True