Microeconomics Chapter 9

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? a. output will be too small and its price too high b. output will be too large and its price too high c. output will be too small and its price too low output will be too large and its price too low

a. output will be too small and its price too high

A firm that holds a monopoly position in the market place is a. price maker b. price taker c. monopolistically competitive d. subject to infinite market forces.

a. price maker

The marginal revenue curve for a monopolist ___ the market demand curve. a. always rises above b. always rises beneath c. always runs parallel d. always is the same

b. always lies beneath

A natural monopoly occurs when the quantity demanded is ___ the minimum quantity it takes to be at the bottom of the long-run average cost curve. a. greater than b. less than c. equal to d. a or c above

b. less than

Which of the following is most likely to be a monopoly? a. local fast-food restaurant b. local electricity distributor c. local bathroom fixtures shop d. local television broadcaster

b. local electricity distributor

If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be a. elimination of barriers to entry b. irregularly high unsustainable profits c. government deregulation d. high sustained profits

c. high unstained profits

The use of sharp, temporary price cuts as a form of _________________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers. a. natural monopoly b. monopolistic competition c. predatory prices d. oligopolistic competition

c. predatory pricing

Which of the following is most unlikely to present a barrier to entry into a market? a. market forces b. patent laws c. technological advantages d. deregulation

d. deregulation

The slop of the demand curve for a monopoly is a. horizontal, parallel to the x-axis b. vertical, parallel to the y-axis c. upward sloping d. downward sloping

d. downward sloping

When a natural monopoly exists in a given industry, the per-unit costs of production will be a. lowest when there are a large number of producers in the industry b. lower for the smaller firms than for larger firms c. minimized at the output that maximized the industry's profitability d. lowest when a single firm generates the entire output of the industry

d. lowest when a single firm generates the entire output of the industry