Section 5
42. Situations in which the more users of a product there are, the more useful the product becomes are called: A) network effects. B) monopolies. C) conglomerates. D) exclusive franchises.
a
49. Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each. If she wants to sell six, she must charge $20,000 each. The quantity effect of selling the sixth motor home is: A) $20,000. B) $10,000. C) $15,000. D) $21,000.
a
41. A firm that experiences economies of scale: A) at lower levels of output and then encounters diseconomies of scale at higher levels of output is a natural monopoly. B) over the entire range of outputs demanded is called a natural monopoly. C) at any particular level of output is called a natural monopoly. D) has a continually rising long-run average cost curve.
b
43. The demand curve for a monopoly is: A) the sum of the supply curves of all the firms in the monopoly's industry. B) the industry demand curve. C) horizontal because no one can enter. D) perfectly elastic.
b
46. Lenoia runs a natural monopoly producing electricity for a small mountain village. The barrier preventing other firms from competing with her is: A) her control of scarce natural resources. B) economies of scale. C) her technological superiority. D) a government-created barrier.
b
45. 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) a patent B) a copyright C) control of a scarce resource or input D) economies of scale
c
47. Which of the following is not a barrier to entry? A) control of an input essential for production B) government-created barriers such as patents C) a ban on certain kinds of advertising D) the existence of significant economies of scale
c
48. Diamond rings are relatively scarce because: A) according to geologists, diamonds are less common than any other gem-quality colored stone. B) the demand for diamonds is so high. C) De Beers limits the quantity of diamonds supplied to the market. D) of monopolistic competition.
c
50. After the first unit sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold because of: A) diminishing marginal returns. B) increasing marginal cost. C) a downward-sloping demand curve. D) declining average fixed cost.
c
44. Which of the following is a barrier to entry? A) control of scarce resources B) economies of scale C) government-created barriers such as patents and copyrights D) control of scarce resources, economies of scale, and government-created barriers (i.e., patents and copyrights)
d