Econ Chapter 13 HW

Critics of the National Collegiate Athletic Association (NCAA) argue that the NCAA monopolizes college athletics and prevents student-athletes from earning money while in college. If this is true, what type of entry barrier does the NCAA have? a copyright economies of scale control of a scarce resource or input a patent

control of a scarce resource or input

A natural monopoly is one that: is based on control of something occurring in nature (such as diamonds). has increasing returns to scale over the entire relevant range of output. monopolizes a natural resource such as a mineral spring. typically has low fixed costs, making it easy and "natural" for it to shut out competitors.

has increasing returns to scale over the entire relevant range of output

Because of monopoly, consumers experience _____ than with perfect competition. larger quantities more choices higher quality higher prices

higher prices

An industry with a single producer that sells a single product with no substitutes is a: monopolistically competitive industry. perfectly competitive industry. oligopoly. monopoly.

monopoly

Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by: network externalities. patents and copyrights. natural monopolies. profit-maximizing behavior.

patents and copyrights

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge lower prices to _____ because their demand is _____. men; inelastic women; elastic men; elastic women; inelastic

men ; elastic

Which of the following is TRUE? MR = MC is a profit-maximizing rule for firms in perfect competition only. Monopolies tend to charge lower prices than perfectly competitive firms. MR = P if the demand curve is downward-sloping. A monopoly firm is a price maker.

A monopoly firm is a price maker

De Beers became a monopoly by: ownership of a patent. use of technological superiority. use of economies of scale. establishing control over diamond mines.

establishing control over diamond mines

A monopolist responds to an increase in marginal cost by _____ price and _____ output. decreasing; increasing increasing; decreasing increasing; increasing decreasing; decreasing

increasing; decreasing

In contrast with perfect competition, a monopolist: produces where MR > MC, and a perfectly competitively firm produces where P = MC. may have economic profits in the long run. produces more at a lower price. earns zero economic profits in the long run.

may have economic profits in the long run

When a monopoly maximizes profit, the loss of surplus by consumers is _____ the monopolist's gain in profit. sometimes more than and sometimes less than equal to more than less than

more than

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning. In response to the increase in fees, the firm will: raise its price by somewhat more than amount of the license fee. raise its price by less than the amount of the license fee. not change its price. raise its price by the amount of the license fee.

not change its price

_____ is the practice of selling _____ product(s) at different prices to different consumers, without corresponding differences in costs. Price fixing; different Privatizing; the same Monopolizing; similar Price discrimination; the same

price discrimination; the same

The advantage of public ownership of a monopoly is that prices can be based on efficiency rather than profit maximization. True False

True

To engage in price discrimination a firm must be: a price taker. a price setter. able to identify consumers whose elasticities differ. a price setter, and it must be able to identify consumers whose elasticities differ.

a price setter, and it must be able to identify consumers whose elasticities differ

The demand curve for a monopoly is: infinitely elastic. below the marginal revenue curve. above the marginal revenue curve. horizontal because of economics of scale.

above the marginal revenue curve

A monopolist _____ than a perfectly competitive industry. produces a larger quantity charges a higher price charges a lower price earns less profit in the long run

charges a higher price

If your farm had the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from: increasing returns to scale. technological superiority. control of a scarce resource or input. government-set barriers.

control of a scarce resource or input

Suppose that a monopoly computer chip maker increases production from 10 microchips to 11 microchips. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is: $1. $29. $9. $19.

19

The demand curve for a monopolist is P = 75 - 0.5Q, and the monopolist has the following MC expressed as P = 2Q. Assume also that ATC at the profit-maximizing level of production is equal to $12.50. Reference: Ref 13-20 (Scenario: Monopolist) Look at the scenario Monopolist. The profit-maximizing output is _____ units and the profit-maximizing price is _____. 25; $75.00 25; $62.50 20; $62.50 25; $75.50

25; 62.50

The demand curve for a monopoly is: the sum of the supply curves of all of the firms in the monopoly's industry. the industry demand curve. perfectly elastic. horizontal because no one can enter.

the industry demand curve