eco final
Refer to Figure 16-8. In order to maximize its profit, the firm will choose to produce
el punto máximo que choca con el precio máximo
a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
natural monopoly
a firm tat is the sole seller of a product without close substitutes
monopoly
A situstion in which the monopolist is able o charge each customer precisely his or her willingness to pay
perfect price discrimination
the business practice of selling the same good at different prices to different customers
price discrimination
If the government regulates the price that a natural monopolist can charge to be equal to the firm's average total cost, the firm will A earn zero economic profits. B earn positive economic profits, causing other firms to enter the industry. C earn negative economic profits, causing the firm to exit the industry. D minimize costs in order to lower the price that it charges.
A
Refer to Figure 16-9. As the figure is drawn, the firm is in Correct! a short-run equilibrium but it is not in a long-run equilibrium.
A
Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce A 100 units of output. B between 100 and 133.33 units of output. C 133.33 units of output. D 154.92 units of output
A
Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as A average revenue exceeds marginal cost. B average revenue exceeds average total cost. C marginal revenue exceeds marginal cost. D marginal revenue exceeds average total cost.
A
The fundamental source of monopoly power is A barriers to entry. B profit. C decreasing average total cost. D a product without close substitutes.
A
The relationship between advertising and product differentiation is A positive; the more differentiated the product, the more a firm is likely to spend on advertising. B negative; the more differentiated the product, the less a firm is likely to spend on advertising. C zero; there is no relationship between product differentiation and advertising. D irrelevant; firms with differentiated products do not need to advertise.
A
When a firm operates with excess capacity, A additional production would lower the average total cost. B additional production would increase the average total cost. C it must be a perfectly competitive firm. D it must be a monopolistically competitive firm.
A
Which of the following goods are likely to be sold in a monopolistically competitive market? A sweaters B cola C corn D postage stamps
A
Which of the following is a characteristic of a natural monopoly? A Marginal cost declines over large regions of output. B Average total cost declines over large regions of output. C The product sold is a natural resource such as diamonds or water. D All of the above are correct.
B
Antitrust laws have economic benefits that outweigh the costs if they A prevent mergers that would decrease competition and lower the costs of production. B prevent mergers that would decrease competition and raise the costs of production. C allow mergers that would decrease competition and raise the costs of production. D None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.
B
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost? A monopoly only B monopoly and monopolistic competition only C monopoly, monopolistic competition, and perfect competition D The answer cannot be determined without knowing whether the market is in the long run or short run
B
Economists assume that monopolists behave as A cost minimizers. B profit maximizers. C price maximizers. D maximizers of social welfare.
B
Patent and copyright laws are major sources of A natural monopolies. B government-created monopolies. C resource monopolies. D antitrust regulation.
B
Price discrimination is the business practice of A bundling related products to increase total sales. B selling the same good at different prices to different customers. C pricing above marginal cost. D hiring marketing experts to increase consumers' brand loyalty.
B
The deadweight loss associated with a monopoly occurs because the monopolist A maximizes profits. B produces an output level less than the socially optimal level. C produces an output level greater than the socially optimal level. D equates marginal revenue with marginal cost.
B
What is the shape of the monopolist's marginal revenue curve? A a downward-sloping line that is identical to the demand curve B a downward-sloping line that lies below the demand curve C a horizontal line that is identical to the demand curve D a horizontal line that lies below the demand curve
B
In the short run, a firm in a monopolistically competitive market operates much like a A firm in a perfectly competitive market. B firm in an oligopoly. C monopolist. D monopsonist.
C
A monopolistically competitive firm's choice of output level is virtually identical to the choice made by A a perfectly competitive firm. B a duopolist. C a monopolist. D an oligopolist.
C
A monopolistically competitive market has characteristics that are similar to A a monopoly only. B a competitive firm only. C both a monopoly and a competitive firm. D neither a monopoly nor a competitive firm.
C
A monopoly A can set the price it charges for its output and earn unlimited profits. B takes the market price as given and earns small but positive profits. C can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. D can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.
C
A profit-maximizing monopolist will produce the level of output at which A average revenue is equal to average total cost. B average revenue is equal to marginal cost. C marginal revenue is equal to marginal cost. D total revenue is equal to opportunity cost.
C
A profit-maximizing monopolistically competitive firm will produce the level of output at which A average revenue is equal to average total cost. B average revenue is equal to marginal cost. C marginal revenue is equal to marginal cost. D total revenue is equal to opportunity cost
C
Additional firms often do not try to compete with a natural monopoly because A they fear retaliation in the form of pricing wars from the natural monopolist. B they are unsure of the size of the market in general. C they know they cannot achieve the same low costs that the natural monopolist enjoys. D the natural monopoly doesn't make a huge profit.
C
Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n) (i)imperfectly competitive market. (ii)monopoly market. (iii)oligopoly market. A (i) and (ii) only B (ii) and (iii) only C (i) and (iii) only D (iii) only
C
Drug companies are allowed to be monopolists in the drugs they discover in order to A allow drug companies to charge a price that is equal to their marginal cost. B discourage new firms from entering the drug market. C encourage research. D allow the government to earn patent revenue.
C
Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because A there are many other sellers in the market. B there are very few other sellers in the market. C the firm's product is different from those offered by other firms in the market. D the firm faces the threat of entry into the market by new firms.
C
For a monopolistically competitive firm, at the profit-maximizing quantity of output, A price exceeds marginal cost. B marginal revenue exceeds marginal cost. C marginal cost exceeds average revenue. D price equals marginal revenue
C
In a market that is characterized by imperfect competition, A firms are price takers. B there are always a large number of firms. C there are at least a few firms that compete with one another. D the actions of one firm in the market never have any impact on the other firms' profits.
C
In which of the following market structures can firms earn economic profits in the long run? A perfect competition B monopolistic competition C monopoly D Both b and c are correct.
C
Monopolies use their market power to A charge prices that equal minimum average total cost. B increase the quantity sold as they increase price. C charge a price that is higher than marginal cost. D dump excess supplies of their product on the market.
C
Refer to Figure 16-9. The firm's maximum profit is A $-7,000. B $-5,000. C $-2,000. D The firm's maximum profit cannot be determined from the figure.
C
Splitting up a monopoly is often justified on the grounds that A consumers prefer dealing with small firms. B small firms have lower costs. C competition is inherently efficient. D nationalization is a less-preferred option.
C
The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as A sabotage. B conspiracy. C arbitrage. D collusion.
C
The socially efficient level of production occurs where the marginal cost curve intersects A average variable cost. B average total cost. C demand. D marginal revenue
C
When a market is monopolistically competitive, the typical firm in the market can earn A losses in the short run and profits in the long run. B profits in the short run and the long run. C Profits and losses in the short run and zero economic profit in the long run. D zero profit in the short run and losses in the long run
C
When an industry has many firms, the industry is A an oligopoly if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products. B an oligopoly if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products. C monopolistically competitive if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products. D perfectly competitive if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products.
C
Which of the following goods are not likely to be sold in monopolistically competitive markets? A jeans B books C tap water D clocks
C
Which of the following statements is correct? A Both a competitive firm and a monopolist are price takers. B Both a competitive firm and a monopolist are price makers. C A competitive firm is a price taker, whereas a monopolist is a price maker. D A competitive firm is a price maker, whereas a monopolist is a price taker.
C
Which of the following statements is correct? A Public ownership is preferred to regulation in order to minimize the deadweight losses associated with natural monopolies. B Antitrust laws are always the best way to limit monopoly power. C It is possible that the best approach to monopolies is for the government to do nothing. D Marginal-cost pricing requires a natural monopoly to earn zero economic profits.
C
Which of the following statements is correct? A The benefits that accrue to a monopoly's owners are equal to the costs that are incurred by consumers of that firm's product. B The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially-efficient quantity. C The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. D The primary social problem caused by monopoly is monopoly profit.
C
Which of the following statements is correct? A The demand curve facing a competitive firm is horizontal, as is the demand curve facing a monopolist. B The demand curve facing a competitive firm is downward sloping, whereas the demand curve facing a monopolist is horizontal. C The demand curve facing a competitive firm is horizontal, whereas the demand curve facing a monopolist is downward sloping. D The demand curve facing a competitive firm is downward sloping, as is the demand curve facing a monopolist.
C
A business-stealing externality is A an externality that is likely to be punished under antitrust laws. B the negative externality that occurs when one firm attempts to duplicate exactly the product of a different firm. C an externality that is considered to be an explicit cost of business in monopolistically competitive markets. D the negative externality associated with entry of new firms in a monopolistically competitive market.
D
A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost A only when the market is a monopoly. B only when the market is a monopoly or monopolistically competitive. C only when the market is monopolistically competitive or perfectly competitive. D when the market is perfectly competitive, monopolistically competitive, or monopolistic.
D
A monopolistically competitive firm chooses A the quantity of output to produce, but the market determines price. B the price, but competition in the market determines the quantity. C price, but output is determined by a cartel production quota. D the quantity of output to produce and the price at which it will sell its output.
D
Most markets are not monopolies in the real world because A firms usually face downward-sloping demand curves. B supply curves slope upward. C price is usually set equal to marginal cost by firms. D there are reasonable substitutes for most goods.
D
Refer to Figure 16-9. In response to the situation represented by the figure, we would expect A some of the firms that are currently in the market to exit. B the demand for this firm's product to increase, assuming this firm does not exit. C this firm's profit to move from its current value toward zero. D All of the above are correct.
D
Some firms have an incentive to advertise because they sell a A homogeneous product and charge a price equal to marginal cost. B homogeneous product and charge a price above marginal cost. C differentiated product and charge a price equal to marginal cost. D differentiated product and charge a price above marginal cost
D
The economic inefficiency of a monopolist can be measured by the A number of consumers who are unable to purchase the product because of its high price. B excess profit generated by monopoly firms. C poor quality of service offered by monopoly firms. D deadweight loss.
D
The simplest way for a monopoly to arise is for a single firm to A decrease its price below its competitors' prices. B decrease production to increase demand for its product. C make pricing decisions jointly with other firms. D own a key resource.
D
The supply curve for the monopolist A is horizontal. B is vertical. C is upward sloping. D does not exist.
D
Under which of the following market structures would consumers likely pay the highest price for a product? A perfect competition B monopolistic competition C oligopoly D monopoly
D
Under which of the following market structures would consumers likely pay the highest price for a product? A perfect competition B monopolistic competition C oligopoly D monopoly
D
Which of the following statements is correct? A Firms in monopolistic competition and monopoly can earn economic profits in both the short run and the long run. B Both perfectly competitive and monopolistically competitive firms are price takers. C Both a monopolistically competitive industry and a monopoly are characterized by a very small number of (or one) firm(s). D Firms can easily enter a perfectly competitive or monopolistically competitive industry.
D
Refer to Figure 15-4. Profit will be maximized by charging a price equal to
El mayor P que este en Q ( union de curva c y b)
Refer to Figure 15-7. What is the monopoly price and quantity?
El mayor precio y mayor cantidad
Refer to Figure 15-7. What is the socially efficient price and quantity?
El precio y cantidad intermedia
Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to
Union entre curva C y curva B
the process of buying a good in one market at a low price and selling it in another market at a higher price
arbitrage