Microeconomics- Chapter 9

The largest cattle rancher in a given region will be unable to have a __________ when sufficient numbers of smaller cattle ranchers provide sources of competition. A. oligopoly B. patent C. monopoly D. monopolistic competition

C. monopoly

In the United States, a pharmaceutical company's exclusive patent rights last for A. 20 years. B. 25 years. C. 10 years. D. 70 years.

A. 20 years.

Occasionally, _________________ may lead to pure monopoly; in other market conditions, they may limit competition _________________ . A. barriers to entry; to a few oligopoly firms B. barriers to entry; to a natural monopoly C. deregulation; requiring new patent law D. deregulation; requiring new copyright law

A. barriers to entry; to a few oligopoly firms

A __________________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve. A. natural monopoly B. monopoly C. oligopoly D. monopolistic competition

A. natural monopoly

Roughly speaking, patent law covers __________ and __________ law protects an author's original books. A. original inventive creations; copyright B. trade secrets; trademark C. all inventions; trademark D. original audiovisual creations; copyright

A. original inventive creations; copyright

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. D. output will be too large and its price too low.

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

Government ______________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for ______________ . A. patent; a limited time B. trademark; an unlimited time C. copyright; a limited time D. trade secret; an unlimited time

A. patent; a limited time

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, A. the firm is a natural monopoly. B. there are close substitutes for the good the firm produces. C. firm is a single-price monopoly. D. firm is well protected from competition by a legal barrier.

A. the firm is a natural monopoly.

The US government has registered ___________________ on behalf of business firms to protect a particularly distinct element each has selected for its ability to aid consumers to easily __________________ . A. 200,00 patents; license for use B. 800,000 trademarks; identify the source of goods C. 1 million copyright licenses; identify the authors of creative works D. 200,000 trade secrets; create a natural monopoly

B. 800,000 trademarks; identify the source of goods

_____________ and __________________ refer to the quantity and price at a point in time. A. Monopoly; productive efficiency B. Productive; allocative efficiency C. Monopoly; allocative efficiency D. Profit; maximization

B. Productive; allocative efficiency

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.

B. less than

Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it? A. prices that can be charged B. natural monopoly C. conditions of entry in a certain industry D. quantities that can be produced

B. natural monopoly

A monopolist is able to maximize its profits by A. setting the price at the level that will maximize its per-unit profit. B. producing output where MR = MC and charging a price along the demand curve. C. setting output at MR = MC and setting price at the demand curve's highest point. D. producing maximum output where price is equal to its marginal cost.

B. producing output where MR = MC and charging a price along the demand curve.

Which of the following denotes the typical shape of the monopolist's total cost curve? A. total costs decrease and become flatter as output rises B. total costs rise and grow steeper as output rises C. higher output levels create the typical downward sloping cost curve D. total costs are typically constant and are shown by a straight horizontal line

B. total costs rise and grow steeper as output rises

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. abnormally high sustained profits.

D. abnormally high sustained profits.

The typical pattern of costs for a monopoly can be analyzed by using: I) total cost II) fixed cost III) variable cost IV) marginal cost V) average cost VI) average variable cost A. I, II, and III B. I, III and IV C. I, II, III, IV, and VI D. all of the above

D. all of the above

The typical pattern of costs for a perfectly competitive firm can be analyzed by using: I) total cost II) fixed cost III) variable cost IV) marginal cost V) average cost VI) average variable cost A. I, II, and III B. I, III and IV C. I, II, III, IV, and VI D. all of the above

D. all of the above

The total revenue curve for a monopolist will A. start high, rise, and then decline. B. start low, decline, and then rise. C. start high, decline, and then rise. D. start low, rise, and then decline.

D. start low, rise, and then decline.

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm's revenue equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle BCFG D. the area of rectangle ADEH

D. the area of rectangle ADEH

The figure below shows the demand curve and the long run average cost curve for an electric company. This market is a natural monopoly because A. the long run average cost curve is U-shaped B. when producing large quantities, the long run average cost is greater than demand C. when producing small quantities, the demand is higher than long run average cost D. the demand curve intersects the long run average cost curve at a point where the long run average cost curve is downward sloping

D. the demand curve intersects the long run average cost curve at a point where the long run average cost curve is downward sloping

__________________ law implies ownership over an idea or concept or image A. Intellectual property B. Copyright C. Patent D. Trademark

A. Intellectual property

A firm that holds a monopoly position in the market place is A. a price maker B. a price taker C. monopolistically competitive D. subject to infinite market forces

A. a price maker

Copyright protection legislation provides protection for original works A. during the author's life plus 70 years B. during the author's life plus 20 years C. until the author is 70 years of age D. until the author is 75 years of age

A. during the author's life plus 70 years

If a monopolist increases quantity by one unit, but sells the increased output at a slightly lower price, A. marginal revenue is affected by adding one additional unit sold at the new price. B. all the previous units, which used to sell at a higher price, now sell for more. C. the marginal revenue of selling a unit is more than the price of the unit. D. because of higher output the marginal revenue curve is above the demand curve.

A. marginal revenue is affected by adding one additional unit sold at the new price.

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what do the firm's costs equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle ACFH D. the area of rectangle ADEH

A. the area of rectangle ABGH

For a pure monopoly to exist, A. there is a single seller in a particular industry B. there is only one seller, therefore no industry C. there are a few sellers in a given industry D. there are limited sellers in a particular industry

A. there is a single seller in a particular industry

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is A. $3.90 or less B. $3.40 or less C. $3.50 or less D. $4.00 or less

B. $3.40 or less

The marginal revenue curve for a monopolist ____________________ the market demand curve. A. always rises above B. always lies beneath C. always runs parallel D. always is the same

B. always lies beneath

The two primary factors determining monopoly market power are the firm's A. revenues and size of its customer base B. demand curve and its cost structure C. variable cost curve and its fixed cost structure D. demand curve and level of wealth within its market

B. demand curve and its cost structure

Once I'MaPharmaCo. has received confirmation of the registration for its latest drug patent application, it will have created a monopoly for that product by restricting A. demand for the product. B. entry into the market. C. amount of product advertising. D. the number of product compliments.

B. entry into the market.

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

In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely A. have a patent giving it exclusive legal rights to make, use, and sell for a limited time. B. raise prices, cut production, and realize positive economic profits. C. have legal protection to prevent copying its methods of production for commercial use. D. acquire rights for its investors to produce and sell their product.

B. raise prices, cut production, and realize positive economic profits.

What qualities would ideally suit a monopolistic firm with regard to barriers to entry? A. a few impediments to limit new firms from operating and expanding within the market B. sufficient strength to prevent or discourage potential competitors from entering the market C. government rules on prices, quantities, or conditions of entry in an industry D. government regulations that provide no barriers to entry, exit, or competition

B. sufficient strength to prevent or discourage potential competitors from entering the market

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then A. they will strive to reach efficiencies only they know how to make. B. that firm could set up barriers to entry to discourage competition. C. government will deregulate to ensure the company's monopoly. D. the factors of market demand and supply will set the price.

B. that firm could set up barriers to entry to discourage competition.

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what do the firm's profit's equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle BCFG D. the area of rectangle ADEH

B. the area of rectangle BDEG

The following graph shows the demand curve for a good and the long run average cost curve for a typical firm in this market. If the government does not intervene in the market, then A. there will be many firms in this market, all of whom will take the market price as given and produce where price equals marginal cost B. there will only be 1 firm in this market, and they will produce where marginal revenue equals marginal cost C. there will only be 1 firm in this market, and they will take the price as given and produce where price equals marginal cost D. no firms will enter this market

B. there will only be 1 firm in this market, and they will produce where marginal revenue equals marginal cost

If a firm holds a pure monopoly in the market and is able to sell 4 units of output at $2.00 per unit and 5 units of output at $1.75 per unit, it will produce and sell the fifth unit if its marginal cost is A. $1.75 or less B. $2.00 or less C. $0.75 or less D. $1.00 or less

C. $0.75 or less

Which one of the following is the most accurate description of a monopolist? A. a sole producer of a narrowly defined product class, such as brown, Grade A eggs produced in Eagle County, Colorado B. a firm that is very large relative to all its competitors within a narrow product class C. a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry D. a large, multinational firm that produces a single product in a narrow product class

C. a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry

By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the ________________________ . A. telecommunications sector B. postal services sector C. banking sector D. nuclear power sector

C. banking sector

For a monopolistic firm, the demand for its product is A. unitary elastic B. completely elastic C. completely inelastic D. neither b or c

C. completely inelastic

The form of legal protection intended to prevent reproduction of original works is referred to as ______________ law. A. patent B. trademark C. copyright D. trade secret

C. copyright

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting A. the number of inventors. B. unit production costs. C. entry into the market. D. demand for the product.

C. entry into the market.

The demand curve perceived by a perfectly competitive firm A. shows that such a firm is a price-maker B. shows economies of scale over a large range of output C. is horizontal D. all of the above

C. is horizontal

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 pricing D. oligopolistic competition

C. predatory pricing

Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry? A. whether consumers will purchase its product B. whether consumers will spend on different products C. the competitive actions of other business firms D. barriers to entry and competitors' patent protection

C. the competitive actions of other business firms

When a firm pursues a predatory pricing strategy, it does so A. to hire more staff to lower unemployment. B. to increase supply to benefit consumers. C. to maximize profits in the long run. D. to discourage short run competition.

C. to maximize profits in the long run

In the business world, a _________________ is recognized as a legally acceptable way for any business to keep knowledge of its particular methods of production from being known by competing firms. A. patent B. monopoly C. trade secret D. trademark

C. trade secret

The US laws dealing with original works of authorship allow the US Copyright Office to enforce protection for all but one of the following. Which one is it? A. contemporary sculptures B. contemporary paintings C. pantomimic works D. ancient Bible texts

D. ancient Bible texts

Intellectual property law is a body of law that includes A. the right of inventors to produce their inventions B. the right of inventors to sell their inventions C. trademark, patent and trade secret legislation D. copyright legislation, as well as all of the above

D. copyright legislation, as well as all of the above

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 slope of the demand curve for a monopoly firm is A. horizontal, parallel to the x-axis B. vertical, parallel to the y-axis C. upward sloping D. downward sloping

D. downward sloping

If the North American newsprint paper market has barriers to entry, then A. abnormally high profits will attract the entry of new firms. B. the entry of new firms will eventually cause price to decline. C. surviving firms earn only a normal level of profit in the long run. D. entry will be blocked even if firms are earning high profits.

D. entry will be blocked even if firms are earning high profits.

When a monopolist increases sales by one unit, A. it gains some marginal revenue from selling that extra unit. B. more low priced sales cause negative marginal revenues. C. every other unit must now be sold at a lower price. D. it loses some marginal revenue and all of the above.

D. it loses some marginal revenue and all of the above.

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 maximizes 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.