Chapter 13- Econ
Refer to Figure 13.3. The marginal revenue of the fifth pound of cheese is: A) $1 B) $3 C) $6 D0 $24
A) $1
Refer to Figure 13.4. The marginal revenue of the sixth pound of burritos is: A) $10 B) $14 C) $20 D) $84
A) $10
Refer to Figure 13.4. The marginal revenue of the 10th pound of burritos is: A) $2 B) $4 C) $10 D) $100
A) $2
38) Refer to Figure 13.5. The profit‐maximizing price for this firm is A) $5. B) $7. C) $9. D) $11.
A) $5
Refer to figure 13.1. The demand curve facing Microsoft is most likely represent by: A) Panel A B) Panel B C) Panel C D) Panel D
A) Panel A
Refer to figure 13.1. The demand curve facing an electric company is most likely represented by: A) Panel A B) Panel B C) Panel C D) Panel D
A) Panel A
________ is(are) protected by barriers to entry, specifically _______. A) State lotteries; government rules B) DeBeers Company; economies of scale C) Cable companies; patents D) All of the above are correct.
A) State lotteries; government rules
A monopoly is an industry with: A) a single firm in which the entry of new firms is blocked B) a small number of firms each large enough to impact the market price of its output C) many firms each able to differentiate their product D) many firms each too small to impact the market price of its output
A) a single firm in which the entry of new firms is blocked
Imperfect competition and market power: A) are major sources of inefficiency B) result in higher output that in perfect competition C) are always the results of product differentiation D) result from diseconomies of scale
A) are major sources of inefficiency
A ________ prevents new firms from entering and competing in a monopolistic industry. A) barrier to entry B) collusive agreement C) market power sharing agreement D) cartel agreement
A) barrier to entry
A monopolistʹs supply of a good is A) dependent on the monopolistʹs demand curve and its marginal cost curve. B) given by the portion of the monopolistʹs marginal cost curve that lies above its average variable cost curve. C) independent of the monopolistʹs demand curve. D) given by the portion of the monopolistʹs average variable cost curve that lies above its marginal cost curve.
A) dependent on the monopolistʹs demand curve and its marginal cost curve.
Refer to Figure 13.2. The only firm producing electricity has a long‐run average total cost curve as shown. The market demand for electricity from all buyers is 100,000 kilowatts per hour. It makes economic sense for this firm to be the only producer of electricity because it has A) economies of scale in producing electricity. B) a patent on the production process necessary to produce electricity C) control over a scarce factor of production. D) a government franchise to produce electricity.
A) economies of scale in producing electricity.
Firms with market power must decide all of the following EXCEPT: A) how much to supply in each input market B) how much to produce C) how to produce it D) what price to charge for their output
A) how much to supply in each input market
The Rare Bird Company has a monopoly in the sale of macaws in Iowa. When the Rare Bird Company sells three macaws its marginal revenue is $50. When the Rare Bird Company sells four macaws its marginal revenue will be: A) less the $50 B) greater than $30 C) equal to $50 D) greater than $50 if demand is elastic and less than $50 if demand is inelastic
A) less the $50
The dammed for Ben & Jerry's ice cream will likely be _____the demand for dessert. A) more price elastic than B) less price elastic than C) equally price elastic as D) indeterminate from the given information
A) more price elastic than
The ____broadly we define a market, the more difficult it becomes to find ____. A) more; substitutes B) more; complements C) less; substitutes D) less; goods independent of each other
A) more; substitutes
For a monopoly, the marginal revenue curve has ___point(s) in common with the firm's demand curve: A) one B) no C) all D) Indeterminate from the given information
A) one
Refer to Figure 13.2. Each electricity producer has the given LRACcurve. The total cost of producing 100,000 kilowatts per hour is minimized with ________ firm(s) in the industry. A) one B) ten C) one hundred D) Indeterminate from the given information
A) one
A monopolists price equals its marginal revenue only when: A) output is zero B) total revenue is maximum C) marginal revenue is zero D) the monopolists demand schedule intersects the horizontal(quantity) axis
A) output is zero
Refer to Figure 13.4. The firms marginal revenue will be negative at: A) prices below $10 B) prices above $10 C) all prices D) prices between $4 and $8
A) prices below $10
Market power refers to a firm's ability to : A) raise price without losing all demand for its product B) charge any price it likes C) sell any amount of output it desires at the markets determined price D) monopolize a market completely
A) raise price without losing all demand for its product
Refer to Figure 13.6. The Silver Exchange has a monopoly over the sale of solid silver walking sticks. The Silver Exchange has hired you as an economic consultant. You should advise this monopolist to A) shut down in the short run and exit the industry in the long run. B) produce in the short run and expand capacity in the long run. C) produce in the short run but exit the industry in the long run. D) shut down in the short run but expand capacity in the long run
A) shut down in the short run and exit the industry in the long run.
Patents A) slow the flow of benefits from research and development to consumers. B) are granted for a period of 10 years in the United States. C) create monopolies and are thus inefficient. D) All of the above are correct
A) slow the flow of benefits from research and development to consumers.
The market demand curve facing a monopoly is: A) the only firms demand curve B) the summation of all individual firms demand curves C) nonexistent D) the marginal cost curve above minimum average variable cost
A) the only firms demand curve
Refer to Figure 13.4. The firms total revenue will be maximized at a price of: A) $12 B) $10 C) $8 D) $6
B) $10
When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $690. When the monopolist sells three units of output, the price per unit is A) $210. B) $230. C) $300. D) $630.
B) $230.
Refer to Figure 13.3. The marginal revenue of the third pound of cheese is: A) -$5 B) $5 C) $7 D) $21
B) $5
When a monopolist sells two units of output its total revenue is $150. When it sells three units of outputs its total revenue, is $180. When the monopolist sells three units of output, the price per unite is: A) $50 B) $60 C) $75 D) $90
B) $60
38) Refer to Figure 13.5. The profit‐maximizing price for this firm is A) $5. B) $7. C) $9. D) $11.
B) $7
Stereo Sound Unlimited has a monopoly over the installation of surround sound systems. If Stereo Sound Unlimited's total revenue from installing 10 sound systems is $20,000 and its total revenue from installing 11 sound system is $19,000 what is the marginal revenue of the eleventh sound system? A) -$2,000 B) -$1,000 C) $2,000 D) $3,8000
B) -$1,000
Refer to Figure 13.7. The Memory Companyʹs profit‐maximizing level of output is ________ high school yearbooks. A) 0 B) 200 C) 300 D) 350
B) 200
37) Refer to Figure 13.5. The profit‐maximizing level of output for this monopolist is ________ units of output. A) 20 B) 22 C) 24 D) 26
B) 22
Refer to figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by: A) Panel A B) Panel B C) Panel C D) Panel D
B) Panel B
In imperfectly completive markets : a) there is no competition among firms B) some completion may exist among firms C) Some competition may exist but only in price and not in other ways D) Some completion may exist nut only in other ways and not in price
B) Some competition may exist among firms
A monopolist is NOT guaranteed positive economic profits solely because it is a monopoly since there may be no output for which A) TR = TVC. B) TR > TC. C) MC = MR. D) ATR < MR.
B) TR > TC
In an imperfectly completive industry: A) a single firm has no control over the price of its output B) a single firm has some control over the price of its output C) a single firm will charge whatever prices it wants to charge D) the government will always regulate the output price
B) a single firm has some control over the price of its output
An oligopoly is an industry market structure with: A) a single firm in which the entry of new firms is blocked B) a small number of firms each large enough to impact the market price of its output C) many firms each able to differentiate their products D) many firms each too small to impact the market price
B) a small number of firms each large enough to impact the market price of its output
Due to the network externalities in the game console market, we would expect this market to A) overproduce game consoles. B) be highly concentrated. C) be efficient. D) be serviced by a natural monopoly.
B) be highly concentrated
Verizon® has a monopoly over local telephone service.If Verizon® is producing where marginal revenue is greater than marginal cost, the firm A) could increase profits by reducing output. B) could increase profits by increasing output. C) is maximizing profits. D) must be earning zero profit
B) could increase profits by increasing output
When a monopolist sells two units of outputs its total revenue is $600. When a monopolist sells three units of output its total revenue is $690. In order to sell three units of output instead of only two, the monopolist must A) decrease its price by $30 per unit B) decrease its price by $70 per unit C) make not change in price and increate output by one unit D) decrease its price by $90 per unit
B) decrease its price by $70 per unit
A monopolistic firm face a(n)______demand curve. A) upward- sloping B) downward-sloping C) horizontal D) vertical
B) downward-sloping
A monopolist is currently producing output that maximizes its profits. In addition, if P > ATC> MC, then it is A) breaking even. B) earning positive economic profits. C) covering total variable costs but not total fixed costs. D) covering total fixed costs but not total variable costs.
B) earning positive economic profits
The ________ type of entry barrier allows an electric company to maintain a monopoly over electricity production. A) patent B) economies of scale C) diseconomies of scale D) ownership of a scarce factor of production
B) economies of scale
Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. Hi Phi Unlimited's total revenue from installing 20 sounds sound systems is $30,000 and its total revenue from installing 21 sound systems is $33,800. The price of the 21st sound system is ______the marginal revenue of that system. A) equal to B) greater than C) less than D) Indeterminate from the given information
B) greater than
Monopolies, oligopolies, and monopolistic competitive industries all: A) earn positive profits in the long run B) have market power C) are completely unconstrained in their pricing D) raise price and quantity over what would occur in perfect completion in order to maximize their profits
B) have market power
For a monopolist to sell more units of output: A) it must increase the price B) it must decrease the price C) demand must become more elastic D) the other competing firms must sell fewer units
B) it must decrease the price
In the long run, a monopoly A) will usually earn zero economic profits. B) may earn positive economic profits due to entry barriers. C) will never exit the industry. D) results in an efficient outcome.
B) may earn positive economic profits due to entry barriers
When______substitutes exist, a monopolist has ____power to raise price. A) more;more B) more; less C) fewer; less D) no; infinite
B) more; less
Refer to Figure 13.4. This firms marginal revenue will be positive at: A) prices above $20 B) prices above $10 C) all prices D) prices between $4 and $8
B) prices above $10
Refer to Figure 13.3. The firms marginal revenue will be negative at: A) price about $5 B) prices below $5 C) all prices D) prices between $4 and $8
B) prices below $5
Imperfect competition: A) means there is no competition in the market B) results in less efficient market outcomes C) should always be regulated by the government D) All of the above are correct
B) results in less efficient market outcomes
A coffee manufacturers raises the price of its coffee by 12%, and the quantity demanded of its coffee falls by only 5%. This firm has: A) no monopoly power in the output market B) some market power C) some output power D) not been able to prevent its competitions from competing with it on price
B) some market power
A monopolist maximizes total revenue when its marginal revenue is: A) positive B) zero C) negative D) equal to price
B) zero
Refer to Figure 13.8. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set at A) $12.00. B) $12.50. C) $13.00. D) $16.00.
C) $13.00
Refer to Figure 13.7. The profit‐maximizing price for the Memory Companyʹs high school yearbook is A) $0. B) $9. C) $16. D) $20
C) $16
Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $500, and if it sells three calculators its total revenue is $800. The marginal revenue of the third calculator sold is: A) $100 B) $150 C) $300 D) $800
C) $300
XYZ Computer Company has a monopoly on the sale of a specialize color printer. If it sells two of these printers, its total revenue is $1,000 and if it sells three, its total revenue is $1,300. The marginal revenue of the third color printer sold is: A) $100 B)$150 C) $300 D) $1,300
C) $300
Refer to Figure 13.3. The firms total revenue will be maximized at a price of A) $8 B) $6 C) $5 D) $4
C) $5
Refer to Figure 13.7. The Memory Companyʹs maximum level of profit is A) ‐$1,800. B) ‐$1,200. C) ‐$800. D) $0
C) -$800
A monopolist suffers a loss if its ________ schedule is everywhere above its ________ schedule. A) ATC; MC B) MC; AVC C) ATC; Demand D) Demand; ATC
C) ATC; Demand
________ present(s) a barrier to entry in the DVD player market. A) Economies of scale B) Ownership of a scarce resource C) Network externalities D) A government franchise
C) Network externalities
Refer to figure 13.1. The demand curve for insulin is most likely represented by: A) Panel A B) Panel B C) Panel C D) Panel D
C) Panel C
We consider _____ LEAST likely to be a firm in an imperfectly competitive industry: A) a McDonalds in Houston, Texas B) HawaiianTel Telephone Company C) a corn farmer in Ohio D) the only locally owned and operated bank in Portland, Oregon
C) a corn farmer in Ohio
For a perfectly competitive firm, the marginal revenue curve has ____ point(s) in common with the firms demand curve A) one B) no C) all D) Indeterminate from the given information
C) all
Which of the following are NOT barriers to entry? A) government franchises B) patents C) consent decrees D) economies of scale
C) consent decrees
The demand for food will likely be price______ while the demand for Brand X Burger will likely be price _____. A) inelastic; elastic B) elastic; inelastic C) inelastic, elastic D) inelastic; inelastic
C) inelastic, elastic
For a monopolist, price _____ marginal revenue. A) always equal B) is less than C) is greater than D) is first greater than and than less than
C) is greater than
A monopolist will not produce if: A) marginal revenue is declining B) price is less than average total cost but greater than average variable cost C) is in the inelastic portion of its demand curve, where marginal revenue is negative D) price is greater than average total cost
C) is in the inelastic portion of its demand curve, where marginal revenue is negative
41) The XYZ Computer Company monopolizes the production of a specialized color printer. The XYZ Computer Company will find it profitable to reduce output as long as marginal revenue is A) greater than marginal cost. B) equal to marginal cost. C) less than marginal cost. D) positive.
C) less than marginal cost
Monopolistic competition is an industry market structure with: A) a single firm in which the entry of new firms is blocked B) a small number of firms each large enough to impact the market price of its output C) many firms each able to differentiate their products D) many firms each too small to impact the market price of its output
C) many firms each able to differentiate their products
On way that perfect completion and monopoly differ is that in: A) perfect competition, there is not difference between firm and industry demand B) perfect completion, there is only one firm in the industry C) monopoly, the firm faces the market demand curve D) monopoly, the firm produces less than the total market quantity supplied
C) monopoly, the firm faces the market demand curve
Relative to a monopolized industry, a competitively organized industry produces ________ output, charges ________ prices, and earns ________. A) more; higher; only a normal profit B) more; lower; economic profits C) more; lower; only a normal profit D) less; higher; economic profits
C) more; lower; only a normal profit
A monopolist can choose both price and quantity simultaneously. The amount of output that it supplies depends ________ curve. A) only on its marginal cost B) only on its demand C) on its marginal cost and its demand D) on its average cost and its demand
C) on its marginal cost and its demand
Monopolists differ from perfectly competitive firms: A) on the cost and demand sides of the profit equation B) on the cost side of the profit equation alone C) on the demand side of the profit equation alone D) on neither the cost not demand sides of the profit equation
C) on the demand side of the profit equation alone
For a monopolist, if total revenue increases as output increases, the marginal revenue is: A) greater than the prices B) zero C) positive D) negative
C) positive
When a monopolist incurs a loss in the short run, it will A) always shut down. B) always produce where marginal cost equals marginal revenue. C) produce as long as total revenue is sufficient to cover variable costs . D) produce as long as total revenue is sufficient to cover fixed costs
C) produce as long as total revenue is sufficient to cover variable costs
The Exclusive Gift Company monopolizes the sale of gold hula hoops. The company is currently setting marginal revenue equal to marginal cost and selling 50 gold hula hoops at a price of $5,000 each. Total costs for the company are $300,000 of which fixed costs are $100,000. You are hired as an economic consultant to this company. You should advise this monopolist to A) shut down in the short run and exit the industry in the long run. B) produce in the short run and expand capacity in the long run. C) produce in the short run but exit the industry in the long run if conditions do not change. D) shut down in the short run but expand capacity in the long run if conditions do not change.
C) produce in the short run but exit the industry in the long run if conditions do not change.
When the demand curve is a downward sloping straight line, the quantity at which the demand curve intersects the horizontal (quantity) axis is _____ the quantity at which the marginal revenue curve intersects the horizontal (quantity) axis. A) equal to B) less than C) twice D) four times
C) twice
38) Refer to Figure 13.5. The profit‐maximizing price for this firm is A) $5. B) $7. C) $9. D) $11.
D) $11
Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. If Hi Phi Unlimited's total revenue from installing 20 sounds sound systems is $30,000 and its total revenue from installing 21 sound systems is $33,800, what is the marginal revenue of the twenty-first sound system? A) -$2,000 B)-$1,000 C) $2,000 D) $3,800
D) $3,800
A firm must be able to ______competition if its is to exercise control over the price of it product. A) maximize B) increase C) not change D) limit
D) Limit
When a monopolistʹs marginal profit is negative, then it follows that A) MR > ATC. B) MR = MC. C) MR > MC. D) MR < MC.
D) MR < MC.
In a monopolistic industry there is (are): A) many firms and free entry of new firms B) many firms and entry of new firms is blocked C) a single firm and free entry of new firms D) a single firm and entry of new firms is blocked
D) a single firm and entry of new firms is blocked
The shape of monopolists total revenue schedule is: A) straight line with positive slope passing through the origin B) straight line with negative slope C) curve bowed in to the quantity (horizontal) axis D) curve bowed out from the quantity (horizontal) axis
D) curve bowed out from the quantity (horizontal) axis
Suppose we know that a monopolist is maximizing profits. Which of the following is a correct inference? The monopolist has: A) maximized its total revenue B) set price equal to its average cost C) maximized the difference between marginal revenue and marginal cost D) equated marginal revenue and marginal cost
D) equated marginal revenue and marginal cost
Because of a patent, Alcoa is the only manufacturer of soda cans with a stay‐put tab. Alcoa can earn a profit on the sale of soda cans with stay‐put tabs A) in the short run but not in the long run because new firms will enter the industry in the long run. B) only in the long run because government regulations prevent monopolists from earning profits in the short run. C) in the long run but not the short run because the monopolist will face competition in the short run. D) in the long run because entry into the industry by new firms is blocked until the patent expires.
D) in the long run because entry into the industry by new firms is blocked until the patent expires
Relative to a competitively organized industry, firms acting collusively produce ________ output, charge ________ prices, and earn ________. A) more; higher; economic profits B) less, lower; economic profits C) less, lower; only a normal profit D) less, higher; economic profits
D) less, higher; economic profits
Relative to a competitively organized industry, a monopoly produces ________ output, charges ________ prices, and earns ________. A) more; higher; economic profits B) less; lower; economic profits C) less; lower; only a normal profit D) less; higher; economic profits
D) less; higher; economic profits
From a monopolist to sell one more unite, it must: A) raise the price of only the last unite produced B) lower the prices of only the last unite produced C) raise the prices of the last as well as all previous units produced D) lower the prices of the last as well as all previous units produced
D) lower the prices of the last as well as all previous units produced
42) A profit‐maximizing monopolist will produce output where A) marginal revenue is zero. B) marginal cost is minimized. C) marginal cost is equal to price. D) marginal revenue is equal to marginal cost
D) marginal revenue is equal to marginal cost
DeBeersʹ diamond monopoly results from A) economies of scale. B) a patent. C) a government franchise. D) ownership of a scarce factor of production.
D) ownership of a scarce factor of production
If a monopolist earns positive economic profits in the long run A) new firms will enter the market. B) the monopolist expands production. C) the industry supply curve shifts to the right. D) the monopolist will not change its current behavior.
D) the monopolist will not change its current behavior
When a demand curve is downward sloping straight line, the slop of the marginal revenue curve is ____ the demand curve. A) always equal to the slope of B) the same of the slope of C) half as steep as D) twice as steep as
D) twice as steep as
True/ False: A firm with market power has the ability to raise their price to any level they desire
False
True/ False: Imperfect completion results in inefficiency but greater equity than perfect competition
False
True/ False: We call a market where there is only one buyer for a good or service a monopoly
False
True/ False: there are a few firms selling differentiated products in a monopolistically competitive industry
False
True/ False: In imperfect completion, competition takes place on more dimensions than in perfect competition
True
True/ False: The demand for Tyson chicken is more elastic than the demand for meat
True
Refer to Figure 13.3. The firms marginal revenue will be positive at: A) price about $5 B) prices below $5 C) all prices D) prices between $4 and $8
prices above $5
