Chapter 13 Micro

Suppose a monopoly is producing at the profit-maximizing level of output. At that level of output: a. marginal revenue equals marginal cost. b. marginal revenue is greater than marginal cost. c. marginal revenue is less than marginal cost. d. price is less than marginal cost.

a. marginal revenue equals marginal cost.

Firms in which of the following market structures have the most market power? a. monopoly b. duopoly c.oligopoly d. monopolistic competition

a. monopoly

In general, economists are critical of monopoly where ________ exist(s). a. no natural monopoly b. a natural monopoly c. only a few firms d. persistent economies of scale

a. no natural monopoly

A statement that best reflects an evaluation of monopoly firms is that: a. they are economically inefficient. b. they have little or no market power. c. consumers are given more choices, lower costs, and higher quality. d. competition should replace all monopolies.

a. they are economically inefficient.

Because monopoly firms are price-setters: a. they can sell more only by lowering price. b. they sell more at higher prices than at lower prices. c. they take the market-determined price as given and sell all they can at that price. d. they charge the highest possible price.

a. they can sell more only by lowering price.

An industry with a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is: a. a duopoly. b. a monopoly. d. perfect competition.

b. a monopoly.

The main reason a monopoly engages in price discrimination is that: a. it wants to discriminate against a particular ethnic group. b. doing so increases its profits. c. it wants to discourage potential competitors. d. by charging a lower price to some people, it may succeed in discouraging efforts to regulate it.

b. doing so increases its profits.

A natural monopoly exists whenever a single firm: a. is owned and operated by the federal or local government. b. is investor owned but has been granted the exclusive right by the government to operate in a market. c. has economies of scale over the entire range of production that is relevant to its market. d. has gained control over a strategic input of an important production process.

c. has economies of scale over the entire range of production that is relevant to its market.

The ability of a monopolist to raise the price of a product above the competitive level by reducing the output is known as: a. product differentiation. b. barrier to entry. c. market power. d. patents and copyrights.

c. market power.

Because of monopoly, consumers experience ________ than with perfect competition. a. more choices b. larger quantities c. higher quality d. higher prices

d. higher prices

Many hotel chains offer discounts for senior citizens. This is an example of ________ that is ________ in the United States. a. market power; illegal b. single-price monopoly power; legal c. price discrimination; illegal d. price discrimination; legal

d. price discrimination; legal

Conditions that prevent the entry of new firms in a monopoly market are: a. barriers to entry. b. terms of sale. c. labor market stipulations. d. production controls.

a. barriers to entry.

Price discrimination is the practice of: a. charging different prices to buyers of the same good. b. paying different prices to suppliers of the same good. c. equating price to marginal cost. d. equating price to marginal revenue.

a. charging different prices to buyers of the same good.

The De Beers company is described as a monopolist in the production of: a. diamonds. b. software. c. oil. d. beer

a. diamonds.

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

b. the industry demand curve.

The profit-maximizing rule MR = MC is: a. followed by a monopoly but not by a perfectly competitive firm. b. followed by a perfectly competitive firm but not by a monopoly. c. followed by all types of firms. d. not followed by a monopoly because it would reduce economic profit to zero.

c. followed by all types of firms.

Marginal revenue for a monopolist is: a. equal to price. b. greater than price. c. less than price. d. equal to average revenue.

c. less than price.

The demand curve for a monopoly is: a. the MR curve above the AVC curve. b. the MR curve above the horizontal axis. c. the entire MR curve. d. above the MR curve.

d. above the MR curve.