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Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market. a. (i) only b. (i) and (ii) only c. (i) and (iii) only d. (i), (ii), and (iii) only e. (i), (ii), (iii), and (iv)

A

1) Why are the markets for some goods characterized by an oligopoly market structure, even in the long run? a. The government has issued patents to produce these goods. b. There are very high fixed costs required to produce those goods. c. Because there is free entry. d. Because each firm in the oligopoly has a production quota and that limits supply.

B

A monopolistic competitive industry has: A) identical products and easy entry of new firms. B) differentiated products and easy entry of new firms. C) identical products and significant barriers to entry. D) differentiated products and significant barriers to entry.

B

Granting a pharmaceutical company a patent for a new medicine will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) incentives for pharmaceutical companies to invest in research and development. (iii) higher quantities of output than without the patent. a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. (i) and (iii) only e. (i), (ii), and (iii)

B

If a monopolist increases output from 14 to 15 by lowering its price from $32 to $30, its marginal revenue would be: A) -$2. B) $2. C) $448. D) $450.

B

If firms in monopolistically competitive industries are currently earning economic profits in the short run, then in the long run we can expect: A) economic losses to occur as too many firms try to enter the industry. B) profits to fall as new firms enter the market and drive the price down. C) economic profits to persist. D) price to be driven down to minimum possible average total cost.

B

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy, a. consumer surplus increases and total surplus increases in the market for that good. b. consumer surplus increases and total surplus decreases in the market for that good. c. consumer surplus decreases and total surplus increases in the market for that good. d. consumer surplus decreases and total surplus decreases in the market for that good. e. consumer surplus decreases and total surplus remains the same in the market for that good.

B

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market. a. (i) only b. (i) and (ii) only c. (i) and (iii) only d. (i), (ii), and (iii) only e. (i), (ii), (iii), and (iv)

B

A significant long-run difference between monopoly and competition is that: A) there are free entry and exit in a monopolized industry, whereas barriers to entry exist in a competitive market. B) competitive firms control A significant long-run difference between monopoly and competition is that: C) profits are driven to zero in a perfectly competitive industry, whereas positive profits may persist in a monopolized industry. D) profits are driven to zero in a monopolized industry, whereas positive profits may persist in a competitive industry.

C

Monopolistic competition is an a. efficient market structure because long-run profits are zero. b. efficient market structure because each firm produces at its efficient scale. c. inefficient market structure because there is deadweight loss. d. inefficient market structure because firms maximize profits. e. Both a and b are correct.

C

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1, a. exceeds the level of output at which marginal revenue equals marginal cost. b. exceeds the level of output at which marginal cost equals average total cost. c. falls short of the level of output at which price equals marginal cost. d. exceeds the firm's efficient scale of output. e. equals the level of output where average total cost is at a minimum.

C

When a firm has a natural monopoly, the firm's a. marginal cost always exceeds its average total cost. b. total cost curve is horizontal. c. average total cost curve is downward sloping. d. marginal cost curve must lie above the firm's average total cost curve. e. average fixed cost curve is horizontal.

C

Which of the following statements is not correct? a. Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs. b. Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry. c. Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry. d. Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers. e. Monopolistic competition is similar to perfect competition because both market structures are characterized by profit maximizing behavior.

C

1) Which of the following are a reason that cartels tend to not have monopoly power for very long periods of time? a. New firms enter the market because of the existence of positive economic profits among cartel members. b. Each cartel member has an incentive to "cheat" on the cartel and exceed its production quota. c. Cartels actually tend to have monopoly power for long periods of time. d. Both a and b are correct.

D

Assume the firm in the figure is currently producing eight units of output and charging $400. The firm a. will increase its profits if it raises its price and reduces its production level. b. will increase its profits if it lowers its price and expands its production level. c. is maximizing profits. d. will increase its profits if it raises its prices and expands its production level. e. will increase its profits if it lowers its price and reduces its production level.

D

The monopolist's marginal revenue is less than price because: A) the monopolist's supply curve is below its marginal revenue curve. B) total revenue is increasing. C) the selling price is constant. D) the monopolist must lower the price of all units in order to sell and additional unit.

D

If firms in a particular market sell identical products, then the market is (i) perfectly competitive. (ii) monopolistically competitive. (iii) an oligopoly. a. (i) and (ii) only b. (ii) and (iii) only c. (iii) only d. (ii) only e. (i) only

E