econ exam 2
By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the ________________.
banking sector
Occasionally, ________________ may lead to pure monopoly; in other market conditions, they may limit competition ______________________-.
barriers to entry; to a few oligopoly firms
For a monopolistic firm, the demand for its product is
completely inelastic
The form of legal protection intended to prevent reproduction of original works is referred to as _________ law.
copyright
Intellectual property law is a body of law that includes
copyright legislation, as well as all of the above
The ______________ of all firms can be broken down into some common underlying patterns.
cost structure
Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?
costs incurred in the act of producing
Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?
costs of research and development
The graph above illustrates the total cost function for GoodieCookie Co. The changing slope of the total cost curve reflects this company's
decreasing marginal costs
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
decreasing returns to scale
The two primary factors determining monopoly market power are the firm's
demand curve and its cost structure
Which of the following is most unlikely to present a barrier to entry into a market?
deregulation
In microeconomics, the term ___________________ is synonymous with decreasing returns of scale
diseconomies of scale
If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?
divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be
A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.
fixed costs; do not change
In microeconomics, the term _____________________ is synonymous with economies of scale
increasing returns to scale
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.
trade secret
If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?
variable costs
occur when the marginal gain in output diminishes as each additional unit of input is added.
Diminishing marginal returns
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?
ancient Bible texts
The graph above illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?
as the point where the total cost curve touches the vertical axis
In order to determine ____________, the firm's total costs must be divided by the quantity of its output.
average cost
For a pure monopoly to exist
there is a single seller in a particular industry
When a firm pursues a predatory pricing strategy, it does so
to maximize profits in the long run
Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees?
. 35%
In the US economy, nearly half of all the workers employed by private firms work at
18,000 large firms that employ more than 500 workers
In the United States, a pharmaceutical company's exclusive patent rights last for
20 years
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
800,000 trademarks; identify the source of goods
Mindy's company manufactures rubber balls used by elementary schools for playground activities. The table below sets out her firm's production cost information. Some values are missing. Which of the following statements is correct?
A = 20; E = 5
The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct?
A = 42, E = 12
arises where many firms are competing in a market to sell similar but differentiated products.
Monopolistic competition
___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.
Total costs
is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.
Total revenue
include all of the costs of production that increase with the quantity produced
Variable costs
In economics, a firm that faces no competitors is referred to as
a monopoly
A firm that holds a monopoly position in the market place is
a price maker
Which one of the following is the most accurate description of a monopolist?
a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry
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
abnormally high sustained profits
In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.
acquire energy efficient production technologies
The marginal revenue curve for a monopolist _________ the market demand curve
always lies beneath
According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will
do so regardless of what type of competition exists in a market.
The slope of the demand curve for a monopoly firm is
downward sloping
Copyright protection legislation provides protection for original works
during the author's life plus 70 years
The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.
economies of scale
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
entry into the market
When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting
entry into the market.
If the North American newsprint paper market has barriers to entry, then
entry will be blocked even if firms are earning high profits.
The term "constant returns to scale" describes a situation where
expanding all inputs does not change the average cost of production
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.
less than
Which of the following is most likely to be a monopoly?
local electricity distributor
If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?
losses equal $5
When a natural monopoly exists in a given industry, the per-unit costs of production will be
lowest when a single firm generates the entire output of the industry.
The term _____________ is used to describe the additional cost of producing one more unit.
marginal cost
The largest cattle rancher in a given region will be unable to have a _____________ sufficient numbers of smaller cattle ranchers provide sources of competition
monopoly
A ___________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve.
natural monopoly
Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?
natural monopoly
Roughly speaking, patent law covers ____________ and ___________ law protects an author's original books.
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?
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 _______________.
patent; a limited time
Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?
physical space for the gallery
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
predatory pricing
Why would labor be treated as a variable cost?
producing larger quantities of a good or service generally requires more workers
A monopolist is able to maximize its profits by
producing output where MR = MC and charging a price along the demand curve
If the firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal?
profits equal $40
In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely
raise prices, cut production, and realize positive economic profits
If this information were used to create a total cost graph, the curve should
reflect all of the above
What qualities would ideally suit a monopolistic firm with regard to barriers to entry?
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
that firm could set up barriers to entry to discourage competition.
Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry?
the competitive actions of other business firms
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
the firm is a natural monopoly
In order to determine the average variable cost, the firm's variable costs are divided by
the quantity of output
