By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating.
  • True
  • False
Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, produces an output level of 100 units, and charges a price of $The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $4,000.
  • True
  • False
Patent and copyright laws encourage
  • deadweight loss.
  • profit maximizers.
  • dead weight loss.
  • creative activity.
Antitrust laws have economic benefits that outweigh the costs if they
  • prevent mergers that would decrease competition and raise the costs of production.
  • arbitrage.
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • at the present level of output, marginal revenue exceeds marginal cost.
For a profit-maximizing monopolist,
  • dead weight loss.
  • P > MR = MC.
  • deadweight loss.
  • a larger number of firms will lead to a higher average cost.
Average revenue for a monopoly is the total revenue divided by the quantity produced.
  • True
  • False
The amount of power that a monopoly has depends on whether there are close substitutes for its product.
  • True
  • False
Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.
  • True
  • False
One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.
  • True
  • False
Which of the following is not an example of a barrier to entry?
  • charge a price above marginal cost.
  • a local cable TV provider
  • The government can regulate the monopoly.
  • A college student starts a part-time tutoring business.
If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.
  • True
  • False
Because a monopolist must lower its price in order to sell another unit of output,
  • a local cable TV provider
  • charge a price above marginal cost.
  • The government can regulate the monopoly.
  • marginal revenue is less than price.
If government officials break a natural monopoly up into several smaller firms, then
  • A college student starts a part-time tutoring business.
  • marginal revenue is less than price.
  • the average costs of production will increase.
  • rise by less than $1.
When an industry is a natural monopoly,
  • A college student starts a part-time tutoring business.
  • a larger number of firms will lead to a higher average cost.
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • A monopolist can charge any price and sell any quantity that it chooses.
The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits was the
  • be able to determine which mergers are desirable and which are not.
  • False
  • Clayton Act.
  • antitrust law.
A monopolist does not have a supply curve because the firm's decision about how much to supply is impossible to separate from the demand curve it faces.
  • True
  • False
Which of the following is not correct?
  • A monopolist can charge any price and sell any quantity that it chooses.
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • A college student starts a part-time tutoring business.
  • charge a price above marginal cost.
A monopolist
  • (a) producing an output level where marginal revenue equals marginal cost. (b) charging a price that is greater than marginal revenue.Both a and b are correct.
  • at the present level of output, marginal revenue exceeds marginal cost.
  • output effect and the price effect.
  • does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply.
Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?
  • False
  • some people fear that generic drugs are inferior.
  • The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.
  • the average costs of production will increase.
Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output.
  • True
  • False
A monopolist's profit is equal to (Price - Marginal Cost) ´ Quantity.
  • True
  • False
University financial aid can be viewed as a type of price discrimination.
  • True
  • False
A monopolist will choose to increase output when
  • A monopolist can charge any price and sell any quantity that it chooses.
  • at the present level of output, marginal revenue exceeds marginal cost.
  • (a) producing an output level where marginal revenue equals marginal cost. (b) charging a price that is greater than marginal revenue.Both a and b are correct.
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
A monopoly creates a deadweight loss to society because it earns both short-run and long-run positive economic profits.
  • True
  • False
A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost.
  • True
  • False
A market force that can prevent firms from price discriminating is
  • True
  • marginal revenue is less than price.
  • deadweight loss.
  • arbitrage.
Which of the following would be most likely to have monopoly power?
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • A college student starts a part-time tutoring business.
  • charge a price above marginal cost.
  • a local cable TV provider
In order for antitrust laws to raise social welfare, the government must
  • be able to determine which mergers are desirable and which are not.
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • A college student starts a part-time tutoring business.
  • The government can regulate the monopoly.
When a firm's average total cost curve continually declines, the firm is a
  • a local cable TV provider
  • antitrust law.
  • natural monopoly.
  • dead weight loss.
When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.
  • True
  • False
By selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits.
  • True
  • False
Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?
  • A competitive firm is a price taker, whereas a monopolist is a price maker.
  • The government can regulate the monopoly.
  • charge a price above marginal cost.
  • output effect and the price effect.
Who in the following statements is a discouraged worker​?
  • Robin is quitting his current job to find another that has better prospects.
  • Dan works at Subway for 8 hours each day from Monday through Friday.Mary works at​ Starbucks' for 4 hours each day on weekends.
  • Sherrie is a graduate who started working at Safeway pharmacy for 4 hours each​ day, three days a​ week, as they do not currently have a​ full-time opening.
  • Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
The natural unemployment rate is the unemployment rate when the economy is​ _____.
  • labor force
  • number unemployed
  • working-age population
  • at full employment
The labor force is the number of people employed plus the​ _____.
  • number unemployed
  • labor force
  • working-age population
  • at full employment
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during​ _____ and decreases during​ _____.
  • labor; capital;​ land; entrepreneurial​ ability; employed
  • a​ recession; an expansion
  • cyclical; frictional; structural
  • at full employment
A marginally attached worker is a person who does not have a​ job, is​ _____ and​ _____ to​ work, has​ _____ specific efforts to find a job within the previous​ _____ weeks, but has looked for work sometime in the recent past.
  • labor; capital;​ land; entrepreneurial​ ability; employed
  • cyclical; frictional; structural
  • people; 16
  • ​available; willing; not​ made; four
Who in the following statements is a ​full-time worker and who is a ​part-time worker​?
  • Sherrie is a graduate who started working at Safeway pharmacy for 4 hours each​ day, three days a​ week, as they do not currently have a​ full-time opening.
  • Dan works at Subway for 8 hours each day from Monday through Friday.Mary works at​ Starbucks' for 4 hours each day on weekends.
  • Robin is quitting his current job to find another that has better prospects.
  • Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
The output gap is real GDP minus​ _____ expressed as a percentage of​ _____.
  • cyclical; frictional; structural
  • working-age population
  • at full employment
  • potential​ GDP; potential GDP
The labor force participation rate is the percentage of the​ _____ who are members of the labor force.
  • at full employment
  • number unemployed
  • potential​ GDP; potential GDP
  • working-age population
Which of the following statements illustrates structural unemployment​?
  • potential​ GDP; potential GDP
  • number unemployed
  • labor; capital;​ land; entrepreneurial​ ability; employed
  • Outsourcing resulted in many job losses in the mid 2000s.
Who in the following statements is a ​part-time worker for economic reasons​?
  • Dan works at Subway for 8 hours each day from Monday through Friday.Mary works at​ Starbucks' for 4 hours each day on weekends.
  • Sherrie is a graduate who started working at Safeway pharmacy for 4 hours each​ day, three days a​ week, as they do not currently have a​ full-time opening.
  • Robin is quitting his current job to find another that has better prospects.
  • Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
The Great Depression was a period of high​ _____, low​ _____, and extreme economic hardship that lasted from​ _____ to​ _____.
  • unemployment; incomes;​ 1929; 1939
  • working-age population
  • a​ recession; an expansion
  • cyclical; frictional; structural
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