CH12 PURE MONOPOLY - Assignment Essays

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economics

CH12 PURE MONOPOLY

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Posted on 
March 14th, 2023
Home economics CH12 PURE MONOPOLY
question
The change in total revenue is called ________ revenue.
answer
marginal
question
When a firm produces a specific output level at a higher level at a higher cost than the necessary cost for that level of output, it is called:

A. economies of scale
B. rent-seeking expenditures
C. x-inefficiency
D. simultaneous consumption
answer
C. x-inefficiency
question
What are the two legal barriers to entry created by the government?

A. licenses
B. Marginal cost
C. Unions
D. Patents
answer
A. licenses
D. Patents
question
What is the term for factors that prohibit firms from entering an industry?

A. lack of entry
B. barriers to entry
C. reduction of entry
D. barriers to business
answer
B. barriers to entry
question
Government creates ________ barriers to entry.
answer
legal
question
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close _______.

A. substitutes
B. price takers
C. complements
D. complements
E. patents
answer
A. substitutes
question
Which of the following can cause x-inefficiency?

A. poorly motivated work force
B. highly effective supervision
C. hiring the most qualified workers
D. an interest in lowering costs
E. desire for easier work life
F. hiring incompetent relatives.
answer
A. poorly motivated work force
E. desire for easier work life
F. hiring incompetent relatives.
question
Economies of scale refer to __________ average total costs with added firm size.

A. constant
B. marginal
C. declining
D. rising
answer
C. declining
question
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which ______.

A. MR > MC
B. MR = MC
C. P = ATC
D. P = MC
E. P = MR = MC
answer
B. MR = MC
question
Which of the following are assumptions made in the model of pure monopoly?

A. The firm is a single-price monopolist; it charges the same price for all units of output.
B. No unit of government regulates the firm.
C. The government regulates the firm.
D. The firm is a multi-price monopolist; it charges different prices for all units of output.
E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
answer
A. The firm is a single-price monopolist; it charges the same price for all units of output.

B. No unit of government regulates the firm.

E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
question
Patents and patent laws aim to protect the inventor from _____.
answer
rivals
question
Total _____ profit is found by multiplying per-unit profit by the profit-maximising output.
answer
economic
question
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the _____ _______ cost curve.
answer
Average Total
question
Which of the following are the main characteristics of a pure monopoly?

A. Ease of entry for other firms.
B. Availability of multiple substitutes of its products
C. Blocked entry for other firms
D. Absolute control over the price
E. Presence of at least two sellers
F. Presence of a single seller
G. Unavailability of close substitutes of its products
answer
C. Blocked entry for other firms
D. Absolute control over the price
F. Presence of a single seller
G. Unavailability of close substitutes of its products
question
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then the firm:

A. may be broken into two or more competing firms.
B. may be forced into filing for bankruptcy.
C. may be required to testify before Congress.
D. may be expressly prohibited from engaging in business activities.
answer
A. may be broken into two or more competing firms.
D. may be expressly prohibited from engaging in business activities.
question
When marginal revenue is ________ (positive/negative) total revenue is diminishing.
answer
negative
question
What is the term used to describe a single firm with the bulk of sales in a specific market?

A. regulated monopoly
B. pure monopoly
C. large corporation
D, near-monopoly
answer
D. near-monopoly
question
Which of the following entry barriers created by monopolists?

A. Impositions of tariffs and quotas
B. Price reductions
C. Collaboration with government
D. Increased advertising
answer
B. Price reductions
D. Increased advertising
question
What is the difference in demand between a purely competitive seller and a monopolist?

A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not.

B. Demand for the monopolist is perfectly elastic, and demand for the purely competitive seller is not.
answer
A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not.
question
Identify the correct statement:

A. A monopolist is a price taker in an industry
B. A monopolist cannot change its product price by changing the quantity supplied of the product.
C. A monopolist produces an optimal combination of goods in the market.
D. A monopolist can change its product price by changing the quantity supplied of the product.
answer
D. A monopolist can change its product price by changing the quantity supplied of the product.
question
Efficiency loss is also known as _____ loss.

A. wage
B. utility
C. deadweight
answer
C. deadweight
question
Firms with downward-sloping product _____ curves are called price ______.
answer
demand; makers
question
For the pure monopolist, there is no relationship between __________ and quantity supplied and therefore no supply curve.
answer
price
question
Government licensing is a legal ______ to entry.
answer
barrier
question
Imperfect competitors include which if the following?

A. oligopolists
B. monopolistic competitors
C. pure monopolists
D. pure competitors
answer
A. oligopolists
B. monopolistic competitors
C. pure monopolists
question
Monopolists may create an entry barrier when confronted with a new entrant to the industry by _______.
(screenshot in ipad)
A.
B.
C.
D.
answer
A. reducing product price
B.
D. incurring advertising costs
question
When _______ efficiency and allocative efficiency are not achieved in a market, it is known as efficiency loss.
answer
productive
question
Which of the following are reasons for a monopoly's loss of economic profit?

A. Change in tastes reducing demand.
B. Upward-shifting cost curves caused by escalating prices.
C. Decreases in fixed costs
D. Cost curves shifting downward due to rising prices.
answer
A. Change in tastes reducing demand.
B. Upward-shifting cost curves caused by escalating prices.
question
Consider the demand and marginal revenue information shown in the graph. A pure monopolist will come closest to maximising total revenue when it produces approximately at which of the following quantities?

A. 10
B. 6
C. 8
D. 9
answer
C. 8
question
When marginal revenue is ______, total revenue is increasing.
answer
positive
question
Considering the industry structures of pure (perfect) competition and pure monopoly, a firm will experience a more inelastic demand curve in which form of industry?

A. pure (perfect) competition
B. pure monopoly
answer
B. pure monopoly
question
Imperfect competitors can influence product price by changing what?

A. Quantity supplied
B. labor inputs
C. marketing
D. research and development
answer
A. Quantity supplied
question
_______ utilities are government owned or regulated.
answer
public
question
______ effects exist if the value of a value of a product to each user increases as the total number of users increase.
answer
Network
question
Simultaneous _________ is a product's ability to satisfy a large number of consumers at the same time.
answer
consumption
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:

A. the loss-maximising output
B. the profit-minimising output
C. the profit-maximising output
D. the loss-minimising output
E. the minimum efficient scale
answer
C. the profit-maximising output
D. the loss-minimising output
question
Which of the following are reasons that a monopolist is considered a price maker?

A. the monopolist exerts control over the price.
B. the monopolist controls demand.
C. the monopolist controls the total quantity supplied.
D. the monopolist controls marketing.
answer
A. the monopolist exerts control over the price.
C. the monopolist controls the total quantity supplied.
question
Monopoly yields neither _______ efficiency nor allocative efficiency.
answer
productive
question
A monopolist does not have a supply curve because:

A.
B.
C.
D.
answer
b) it does not equate price with marginal cost

c) there is no single, unique price associated with each level of output.
question
_______ competitors can influence total supply through their own output decisions.
answer
imperfect
question
What is the shape of the product demand curve for a pure monopolist?

A. horizontal
B. downward sloping
C. upward sloping
D. vertical
answer
B. downward sloping
question
Which of the following describes what "no close substitutes" means as it relates to consumers and a pure monopoly?
answer
A consumer must either buy the monopolised product or do without it.
question
Natural gas and electricity are both examples of which type of monopoly?

A. differentiated
B. pure
C. competitive
D. standardised
answer
D. standardised
question
At a pure monopolist's profit-maximising output, its _____ exceeds marginal cost, resulting in allocative efficiency.
answer
price
question
Drawing a vertical line from the profit-maximising output on the horizontal axis to the demand curve represents the _______.

A. price
B. output
C. total costs
D. marginal revenue
answer
A. price
question
A price _____ will use its power over product quantity and price whenever it is advantageous to do so.
answer
maker
question
Which of the following are examples of a geographic monopolies?

A. A small town with one railroad
B. A small town with one restaurant
C. A small town served by one airline
D. A small town with more than one restaurant
answer
A. A small town with one railroad
B. A small town with one restaurant
C. A small town served by one airline
question
A ______ is the exclusive right of an inventor to use, or allow another to use, her or his invention.
answer
patent
question
Which of the following describes why marginal revenue is less than price in an imperfect market?

A. Because marginal revenue is greater than marginal cost which is less than price.
B. Because the lower price of the extra unit of output only applies to all prior units of output.
C. Because the lower price of the extra unit of output only applies to subsequent units of output.
D. Because total revenue is greater than price.
answer
B. Because the lower price of the extra unit of output only applies to all prior units of output.
question
Economic, technological, legal, pricing and advertising strategies are all types of ______.

A. production strategies
B. non-price competition
C. economies of scale
D. barriers to entry
answer
D. barriers to entry
question
A monopolist will never choose a price-quantity combination that causes a decrease in _________ revenue.
answer
total
question
Which of the following steps are necessary to determine the profit-maximising or loss-minimising level of output, profit-maximising or loss minimising price, and economic profit or loss in pure monopoly?

A. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR>MC.
B. Employ the profit-maximising or loss minimising rule of MR=MC.
C. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR=MC.
D. Employ the profit-maximising or loss minimising rule of MR>MC.
E. Employ the profit-maximising or loss minimising rule of MC>MR.
answer
B. Employ the profit-maximising or loss minimising rule of MR=MC.

C. Identify the profit- maximising or loss minimising price and output by finding the price/output combination at MR=MC
question
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?

A. There are no new entrants to decrease supply, drive
answer
D. There are no new entrants to increase supply, drive down price, and eliminate profit.
question
_______ - _________ expenditures add nothing to the firm's output, but increases the firm's costs.
answer
rent-seeking
question
The spread of difference that results when product price exceeds average total cost determines:

A. per-unit economic profit
B. total revenue
C. per-unit total revenue
D. per-unit normal profit
answer
A. per-unit economic profit
question
Which of the following is more likely for a pure monopolist than for a pure competitor?

A. economic loss
B. lower costs
C. accounting profit
D. normal profit
E. economic profit
answer
E. economic profit
question
At a pure monopolist's profit-maximising output, its _________ exceeds marginal cost, resulting in allocative inefficiency.
answer
Price
question
A pure monopolist has no ___________ curve
answer
supply
question
What leads to most patentable inventions and products?

A. new technology
B. marketing
C. financial expertise
D. research and development
answer
D. research and development
question
With a fixed downward sloping demand curve, the pure monopolist can only increase sales by charging a ______ price.

A. fixed
B. lower
C. variable
D. higher
answer
B. lower
question
Entry is completely blocked to competitors in case of pure ________.
answer
Monopoly
question
Patents provide the inventor with a monopoly position for what length of time?

A. one year
B. for the life of the inventor
C. indefinitely
D. twenty years
answer
D. twenty years
question
A firm's long-run average total costs decline over a wide range of output due to __________ of scale
answer
economies
question
Which of the following are reasons monopoly is not widespread in the United States?

A. The government has successfully ended all monopolies.
B. Barriers to entry are seldom completely successful.
C. They are not profitable.
D. Patents eventually expire.
answer
B. Barriers to entry are seldom completely successful.
D. Patents eventually expire.
question
What aspect of the market defines the crucial difference between a pure monopolist and a purely competitive seller?

A. the demand curve
B. the supply cure
C. price
D. output
answer
A. the demand curve
question
The firm and _____ are synonymous in pure monopoly.

A. supply
B. productive efficiency
C. the industry
D. allocative efficiency
answer
C. the industry
question
The profit-maximising monopolist will always want to avoid the ________ segment of its demand curve.
answer
inelastic
question
A firm's manager is given the following information: To sell 4 units of output, a price of $132 must be charged; this level of output reflects marginal revenue of $102 and marginal costs of $60. If the firm wants to sell 5 units of output, a price of $122 must be charged; this reflects marginal revenue of $82 and marginal costs of $70. To sell 6 units of output, a price of $112 must be charged; at this level of output, marginal revenue will be $62 and marginal costs $80. What should the manager do?

A. Produce 6 units of output and charge $112.
B. Produce an amount less than 4 units.
C. Produce an amount greater than 6 units.
D. Produce 4 units of output and charge $132.
E. Produce 5 units of output and charge $122.
answer
E. Produce 5 units of output and charge $122
question
________ and development leads to most patentable inventions and products.
answer
Research
question
Declines in the long-run average total costs occur due to which of the following:

A. network effects
B. simultaneous consumption
C. spreading of product development costs
D. learning by doing
E. greater use of specialised inputs
F. higher resource costs
answer
A. network effects
B. simultaneous consumption
C. spreading of product development costs
D. learning by doing
E. greater use of specialised input
question
Which of the following is a reason for a monopolist to block entry in a market?

A. To restrict potential competitors from entering the market.
B. To ensure availability of multiple substitutes of its products.
C. To achieve efficiency in the production
D. To attain socially optimum output.
answer
A. To restrict potential competitors from entering the market.
question
For a pure monopolist, total revenue _______ at a diminishing rate.
answer
increases
question
Marginal revenue (MR) for the monopolist compared to that of a pure competitor:

A. is constant and equal to product price.
B. fluctuates and is higher than product price.
C. is constant and higher than product price.
D. declines and is lower than product price.
answer
D. declines and is lower than product price.
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are still ______________.
answer
declining
question
What allows a natural monopoly to produce efficiency?

A. Extensive economies of scale.
B. Diseconomies of scale.
C. A declining long-run average total cost curve.
D. An increasing long-run average total cost curve.
answer
A. Extensive economies of scale.
C. A declining long-run average total cost curve.
question
"Single seller" refers to:

A. a group of producers selling a variety of goods and services.
B. a price-taker producer of a specific good or service.
C. a sole producer of a specific good or service.
D. a sole proprietor.
answer
C. a sole producer of a specific good or service.
question
_________ of essential property is a barrier to entry into an industry.

A. Mergers
B. Sale
C. Control
D. Deterioration
answer
C. Control
question
Which of the following can be a cause of extensive economies of scale?

A. Labor
B. Modern technology
C. New production inputs
D. Creative destruction
answer
B. Modern technology
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ________ so that other firms cannot compete.

A. average variable costs
B. barriers to entry
C. marginal costs
D. prices
answer
D. prices
question
For a monopolist, marginal ______________ is lower than _________ (average revenue) for every unit of output except the first.
answer
revenue; price
question
Which of the following types of firms have achieved economies of scale through information technologies?

A. Computer software
B. Retail clothing
C. Internet service
D. Raw steel
E. Wireless communication
answer
Internet service

Wireless communication

Computer Software
question
When the demand for a good price is elastic, an increase in its price will __________ total revenue.
answer
decrease
question
Why do costs differ between a purely competitive firm and a pure monopoly?

A. Allowing technological advances
B. Access to different natural resources
C. A factor called "X-inefficiency"
D. Economies of scale
E. Monopoly-preserving expenditures
F. Different skill levels of labor
answer
A. Allowing technological advances
C. A factor called "X-inefficiency"
D. Economies of scale
E. Monopoly-preserving expenditures
question
With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a _______ price.

A. variable
B. higher
C. fixed
D. lower
answer
D. lower
question
Which of the following is a good example of network effects?

A. People with similar software can share pictures.
B. Employees mingle in the break room at work.
C. Microsoft delivers a program by disk to millions of consumers.
D. The Internet allows people to send and receive emails.
answer
A. People with similar software can share pictures. D. The Internet allows people to send and receive emails.
question
A monopolist must obtain a minimum of a(n) ______ profit in the long run, or it will go out of business.
answer
normal
question
Dentsply, a dominant American maker of false teeth, unlawfully prevented independent distributors of false teeth from carrying competing brands. This action is an example of ____________.

A. small business thinking
B. the power of private ownership
C. a created entry barrier
D. natural monopoly behavior
answer
C. a created entry barrier
question
A firm positions itself in the best profit-maximising (or loss minimising) level of production if that amount of output reflects the point at which the last unit's marginal revenue is equal to its marginal cost because:

A. each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs.
B. total revenue is greatest at amounts prior to the MR=MC amount.
C. each unit of output after the MR=MC amount will earn less revenue that its costs.
D. total revenue is greatest by producing after the quantity determined by the MR=MC rule.
answer
Each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs

Each unit of output after the MR=MC amount will earn less revenue than its costs
question
A(n) _________ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
answer
monopoly
question
Barriers to entry contribute to _______ status.
answer
monopoly
question
Monopolists that have _______ products engage mainly in advertising their product's attributes.

A. homogeneous
B. standardised
C. differentiated
answer
C. differentiated
question
The _______ regulates some natural monopolies to guard against excessively high prices to consumers.
answer
government
question
The pharmaceutical industry is an example of an industry that has achieved a self-sustaining monopoly power through ____ on drugs.
answer
patents
question
Network effects may drive a market toward ______ , because consumers tend to choose standard products that everyone else is using.
answer
monopoly
question
The profit-maximising monopolist avoids the inelastic segment of its demand curve because:

A. it would mean lowering price and decreasing output, which leads to higher total revenue.
B. it would mean raising price and increasing output, which leads to less total revenue.
C. it would mean lowering price and increasing output, which leads to less total revenue.
D. it would mean charging a regulated price and increasing output, which leads to less total revenue.
answer
C. it would mean lowering price and increasing output, which leads to less total revenue.
question
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially levies a "private tax" on consumers. The owners of the monopoly benefit from these transactions at the expense of the consumer. This is an example of a monopoly contributing to:

A. spillovers
B. income equality
C. income inequality
D. externalities
answer
C. income inequality
question
Pure monopolists may have products that are ______ or differentiated.
answer
standardised
question
Which of the following reasons explains why a professional sports team can be considered a monopoly?

A. They draw a crowd according to preference that is usually dictated by geographic proximity.
B. They are one of many suppliers of specific services in a large geographic area.
C. They are the sole suppliers of specific services in a large geographic area.
answer
C. They are the sole suppliers of specific services in a large geographic area.
question
The highest barriers to entry can be found with pure ______. The lowest barriers to entry can be found with pure ______.
answer
monopoly; competition
question
At the profit-maximising (loss-minimising) output for a monopoly, if average revenue is less than average total costs, then the monopoly is experiencing:

A. an economic profit
B. a normal profit
C. an economic loss
answer
C. an economic loss
question
Monopolists that have _________ products engage mainly in public relations advertising, while those with _______ products advertised their products' attributes.
answer
standardised; differentiated
question
In the long run, only ______ for a pure competitor are possible , wherareas a monopoly earns _______.
answer
normal profits; economic profits
question
Marginal revenue (MR) for the monopolist compared to that of a pure competitor:

A. is constant and equal to product price.
B. declines and is lower than product price.
C. fluctuates and is higher than product price
D. is constant and higher than product price
answer
B. declines and is lower than product price.
question
First Data Corporation accounts for 80% of the market for money order transfers. This is an example of a __________ -monopoly
answer
near-monopoly
question
When faced with continuing losses , what do the owners of a monopoly do?
answer
They move their resources to alternative industries in the long run.
question
In pure competition, _____ efficiency is achieved because free entry and exit forces firms to operate where average total cost is at minimum.
answer
productive
question
It is difficult for a major league sports team to start up, because existing professional teams have contracts with the best players and long-term leases on stadiums. Which of the following does this illustrate?

A. low barriers to entry
B. obstacle to potential rivals
C. ownership of a key resource
D. a perfectly competitive market
E. blocked entry
answer
B. obstacle to potential rivals
question
In a pure monopoly, the demand curve for the firm is also the demand curve for the ___________.
answer
industry
question
The monopolist wants a price-quantity combination to fall in the ______ section of its demand curve, where a lower price means _______ total revenue.
answer
elastic; greater
question
The monopolist seeks maximum _______ profit, not maximum unit profit.
answer
total
question
As an example of ______, the Federal Commission licenses only so many radio and television station in each geographic area.
answer
barriers to entry
question
The government broke up Standard Oil in 1911 due to its breach of _____ laws.
answer
antitrust
question
How common are examples of less pure forms of monopoly?

A. very common
B. nonexistent
C. rare
D. not very common
answer
A. very common
question
If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a

Multiple Choice
A. monopoly firm in St Louis.
B. monopoly firm in Major League Baseball.
C. purely competitive firm in St Louis.
D. purely competitive firm in Major League Baseball.
answer
A. monopoly firm in St Louis. Correct
question
Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?
Multiple Choice
A. The price elasticity of demand is greater at W than at V.
B. The demand curve has unit price elasticity at W.
C. The price elasticity of demand is less at U than at V.
D. The area 0QVS is greater than the area 0RWT.
answer
D. The area 0QVS is greater than the area 0RWT. Correct
question
Barriers to entry

Multiple Choice
A. are typically the result of wrongdoing on the part of a firm.
B. can result from government regulation.
C. usually result in pure competition.
D. exist in economic theory but not in the real world.
answer
B. can result from government regulation. Correct
question
One major barrier to entry under pure monopoly arises from

Multiple Choice
A. diseconomies of scale.
B. ownership of essential resources.
C. the availability of close substitutes for a product.
D. the price taking ability of the firm.
answer
B. ownership of essential resources. Correct
question
Total Output Price MR ATC MC
1 $100 $100 $100.00 $30
2 $90 $80 $63.00 $26
3 $80 $60 $52.67 $32
4 $70 $40 $49.50 $40
5 $60 $20 $49.60 $50
6 $50 $0 $50.00 $52
7 $40 -20 $52.29 $66
8 $30 -40 $55.75 $80
9 $20 -60 $60.67 $100
10 $10 -80 $67.60 $130

Refer to the data. At its profit-maximizing output, this firm's total revenue will be
Multiple Choice
A. $180.
B. $198.
C. $300.
D. $280.
answer
D. $280. Correct
question
For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Multiple Choice
A. total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing.
B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing.
C. marginal revenue is positive so long as total revenue is positive.
D. marginal revenue is positive when total revenue is at a maximum.
answer
B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. Correct
question
Natural monopolies result from

Multiple Choice
A. pricing strategies.
B. patents and copyrights.
C. control over an essential natural resource.
D. extensive economies of scale in production.
answer
D. extensive economies of scale in production. Correct
question
Refer to the graph, which shows a total revenue curve for a monopolist. If total revenue falls as output expands, marginal revenue is

Multiple Choice
A. negative.
B. zero.
C. positive.
D. greater than demand at that output level.
answer
A. negative. Correct
question
Refer to the diagram. At the profit-maximizing level of output, the firm will realise

Multiple Choice
A. an economic profit of ACGJ.
B. a loss of JH per unit.
C. an economic profit of ABHJ.
D. a loss of GH per unit.
answer
C. an economic profit of ABHJ. Correct
question
An unregulated pure monopolist will maximize profits by producing that output at which

Multiple Choice
A. MR = MC.
B. P = MC.
C. P = ATC.
D. MC = AC.
answer
A. MR = MC. Correct
question
A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

Multiple Choice
A. a loss that could be reduced by producing more output.
B. an economic profit that could be increased by producing less output.
C. a loss that could be reduced by producing less output.
D. an economic profit that could be increased by producing more output.
answer
D. an economic profit that could be increased by producing more output. Correct
question
At the profit-maximizing level of output for a monopolist,

Multiple Choice
A. price is greater than marginal cost.
B. total revenue is greater than total cost.
C. average total cost equals marginal cost.
D. price is greater than average revenue.
answer
A. price is greater than marginal cost. Correct
question
Marginal costs of a producer may be very small due to its product's ability to satisfy a large number of consumers at the same time. This characteristic of a product is called

Multiple Choice
A. rent-seeking.
B. consumer sovereignty.
C. economies of scale.
D. simultaneous consumption.
answer
D. simultaneous consumption. Correct
question
Under which of the following situations would a monopolist increase profits by lowering price (and increasing output)?

Multiple Choice
A. if it discovered that it was producing where its MC curve intersects its demand curve.
B. if it discovered that it was producing where MC = MR.
C. if it discovered that it was producing where MC < MR.
D. under none of these circumstances because a monopolist would never lower price.
answer
C. if it discovered that it was producing where MC < MR Correct
question
Refer to the diagrams. With the industry structures represented by diagram
Multiple Choice
A. (A), price exceeds marginal cost, resulting in allocative inefficiency.
B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist.
C. (B), equilibrium price and quantity will be e and h, respectively.
D. (B), price equals marginal cost, resulting in allocative efficiency.
answer
B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist. Correct
question
A pure monopolist

Multiple Choice
A. always realizes an economic profit.
B. will realize an economic profit if ATC exceeds MR at C. the profit-maximizing/loss-minimizing level of output.
D. will realize an economic loss if MC intersects the down-sloping portion of MR.
E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
answer
E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. Correct
question
In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to

Multiple Choice
A. marginal revenue.
B. average cost.
C. average variable cost.
D. average total cost.
answer
A. marginal revenue. Correct
question
A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sales quantity increases by

Multiple Choice
A. 4 units per day.
B. 2 units per day. Correct
C. 3 units per day.
D. 1 unit per day.
answer
B. 2 units per day. Correct
question
Refer to the diagrams. Firm A is a

Multiple Choice
A. pure monopoly, and Firm B is a pure competitor.
B. pure competitor, and Firm B is a pure monopoly.
C. pure monopoly, as is Firm B.
D. pure competitor, as is Firm B.
answer
B. pure competitor, and Firm B is a pure monopoly. Correct
question
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

Multiple Choice
A. price, output, and average total cost would all be higher.
B. price, output, and average total cost would all be lower.
C. price and average total cost would be higher, but output would be lower.
D. price and output would be lower, but average total cost would be higher.
answer
C. price and average total cost would be higher, but output would be lower. Correct
question
There is some evidence to suggest that X-inefficiency is

Multiple Choice
A. more likely to occur in competitive firms than in monopolistic firms.
B. absent whenever two or more producers are competing with one another.
C. more likely to occur in monopolistic firms than in competitive firms.
D. not encountered in either competitive or monopolistic firms.
answer
C. more likely to occur in monopolistic firms than in competitive firms. Correct
question
Which of the following is characteristic of a pure monopolist's demand curve?

Multiple Choice
A. Its elasticity coefficient is 1 at all levels of output.
B. It is the same as the market demand curve.
C. Average revenue is less than price.
D. Price and marginal revenue are equal at all levels of output.
answer
B. It is the same as the market demand curve. Correct
question
Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by

Multiple Choice
A. decreasing price and leaving output unchanged.
B. increasing price and decreasing output.
C. decreasing output and leaving prices unchanged.
D. decreasing price and increasing output.
answer
D. decreasing price and increasing output. Correct
question
Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC3, then the firm is

Multiple Choice
A. producing the profit-maximizing output but is failing to minimise production costs.
B. incurring X-inefficiency but is realizing all existing economies of scale.
C. incurring X-inefficiency and is failing to realize all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.
answer
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale. Correct
question
pure monopoly
answer
Exsists when a single firm is the sole producer of s product for which there are no close substitutes
question
Pure Monopoly Characteristics
answer
single seller, no close substitutes, price maker, blocked entry
question
examples of monopolies
answer
Government owned or government regulated public utilities, natural gas and electric companies, water company, cable tv company, local telephone company
question
The firm and what are synonymous in pure monopoly?
answer
The industry
question
No close substitutes
answer
A consumer must either buy the monopolized product or do without it entirely
question
A pure monopolist must face a downward sloping product _____ curve?
answer
Demand
question
A monopolist can change its products price by changing the quantity supplied of the product
answer
True
question
Barriers to enter a pure monopoly
answer
Economic, technological, legal, pricing and advertising strategies
question
Single firm with the bulk of sales in a specific market
answer
Near monopoly
question
single seller
answer
a sole producer of a specific good or service
question
change in total revenue
answer
marginal revenue
question
X-inefficiency occurs when a firm operates at a cost which is higher than the lowest cost for a particular level of output
answer
True
question
How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
answer
c) Up to the output at which marginal revenues equals marginal cost
question
Which of the following are assumptions made in the model of pure monopoly?
answer
a) Patents, economies of scale, and resource ownership secure the firm's monopoly

c) The firm is a single-price monopolist; it changes the same price for all units of output

e) No unit of government regulates the firm
question
Which of the following are reasons that a monopolist is considered a price maker?
answer
a) The monopolist exerts control over the price.

d) The monopolist controls the total quantity supplied.
question
Monopolistic competition and obligopoly combine in differing degrees, characteristics of pure competition and pure monopoly
answer
True
question
Price makers are firms with:
answer
Downward sloping demand curves
question
How is economic profit determined?
answer
By multiplying per unit profit by the total quantity produced
question
The spread or difference that results when product price exceeds average total cost determines
answer
Per unit economic profit
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:
answer
a) the loss-minimizing output

d) the profit-maximizing output
question
Which curve does a monopolist not have because there is no unique relationship between price and quantity supplied?
answer
Supply curve
question
A monopolist will not seek the highest price possible because?
answer
A monopolist seeks maximum profit not maximum price
question
The spread or difference that results when product price exceeds average total cost determines:
answer
Per unit economic profit
question
For the pure monopolist, there is no relationship between price and quantity supplied and therefore no supply curve
answer
True
question
Why might a monopolist seek a less than maximum per unit profit?
answer
Additional sales (quantity) more than compensate for the lower unit profit
question
What is more likely for a pure monopolist than for a pure competitor?
answer
Economic profit
question
How is a pure monopoly able to maintain an economic profit in the long run?
answer
Because there is now new entrants to increase supply, drive down price, and eliminate economic profit
question
In the long run, only normal profits for a pure competitor are possible, whereas a monopoly earns economic profit.
answer
True
question
What is a reason for a monopoly's loss of economic profit?
answer
Changes in tastes that reduce demand for a product
question
At the profit maximizing, loss minimizing output for a monopoly, of average revenue is less than average total costs, then the monopoly is experiencing?
answer
Economic loss
question
When faced with continuing losses, what do the owners of a monopoly do?
answer
They move their resource to alternative industries in the long run
question
In the long run, a monopolist must obtain a minimum of a normal profit to prevent going out of business
answer
True
question
The economic profit per unit is the amount that the product price is greater than the average total cost at the profit maximizing output
answer
True
question
How do you determine economic profit?
answer
By multiplying per unit profit by the total quantity produced
question
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then the firm:
answer
May be expressway prohibited from engaging in business activities, may be broken into two or more competing firms
question
Efficiency loss is also known as?
answer
Deadweight loss
question
What can cause x-inefficiency?
answer
Poorly motivated work force, desire for easier work life, hiring incompetent relatives
question
rent-seeking expenditures add nothing to the firms output but increase the firms costs
answer
True
question
Monopoly is a legitimate concern because monopolies can charge a higher than competitive prices that result in?
answer
An under allocation of resources to the monopolized product
question
Reasons monopoly is not widespread in the US?
answer
Patents eventually expire, barriers to entry are seldom completely successful
question
With a fixed downward-sloping demand curve, how can a monopolist increase sales?
answer
b) By charging a lower price
question
When productive efficiency and allocative efficiency are not achieved in a market it is known as efficiency loss
answer
True
question
The profit maximizing monopolist will always want to avoid which segment of its demand curve?
answer
The inelastic segment
question
When demand is elastics and marginal revenue is positive, total revenue must be?
answer
Increasing
question
A monopolist will never choose a price quantity combination that causes a decrease in total revenue
answer
True
question
The monopolist wants a price quantity combination to fall in the elastics section of its demand curve where a lower price means great total revenue
answer
True
question
Why does the monopolist avoid the Inelastic segment of the demand curve?
answer
It would mean lower if price and increasing output which leads to less total revenue
question
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
answer
Pure monopoly
question
Which term describes a sole producer of a specific good or service?
answer
single seller
question
What two terms are synonymous in pure monopoly?
answer
Firm and Industry
(A monopoly firm is the industry and the industry is the monopoly firm.
question
The main characteristics of a pure _____ are a single seller, no close substitutes, a price maker, blocked entry, and non-price competition.
answer
Monopoly
question
Which characteristic of pure monopoly requires a consumer to buy the monopolized product or do without it entirely?
answer
No close substitutes
question
A monopolist is a price____ because it controls the total quantity produced and thus has control over the price.
answer
Maker
question
What does the characteristic of monopoly called "blocked entry" refer to?
answer
Barriers that keep potential competitors from entering the industry.
question
Entry is completely blocked to competitors in the case of pure_____.
answer
monopoly
question
Computer operating software, commercial aircraft, and basic steel are examples of industries in which ____ limit the entry of new firms.
answer
economies of scale
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are sill_____.
answer
declining
question
Which of the following are characteristics of public utilities?
answer
Government owned or regulated
Monopolies or near-monopolies
question
A ____ -monopoly is a single firm that has the bulk of sales in a specific market.
answer
near
question
Which of the following is an example of a geographic monopoly?
answer
A small town with one airport
A small town with one restaurant
A small town with one railroad
question
Monopolistic competition and ____ combine, in differing degrees, characteristics of pure competition and pure monopoly.
answer
oligopoly
question
Economies of scale refer to ____ average total costs with added firm size.
answer
declining
question
All of the following are examples of barriers to entry, except:
technology
advertising
patents
income
answer
income
question
Government creates ____ barriers to entry.
answer
legal
question
What are the two legal barriers to entry created by the government?
answer
Licenses
Patents
question
What leads to most patentable inventions and products?
answer
Research and development
question
Government licensing is a legal ____ to entry.
answer
barrier
question
Economic, technological, legal, pricing and advertising strategies are all types of ____.
answer
barriers to entry
question
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which:
answer
MR=MC
question
The change in total revenue is called ____ revenue.
answer
Marginal
question
A monopolist does not have a supply curve because:
answer
There is no single, unique price associated with each level of output
It does not equate price with marginal cost
question
Monopolists may create an entry barrier when confronted with a new entrant into the industry by:
answer
Raising resource prices
Reducing product price
Incurring advertising costs
question
When ____ efficiency and allocative efficiency are not achieved in a market, it is known as efficiency loss.
answer
productive
question
Imperfect competitors can influence product price by changing what?
answer
Quantity supplied
question
How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
answer
Up to the output at which marginal revenue equals marginal cost.
question
Which of the following steps are necessary to determine the profit-maximizing or loss minimizing level of output, profit-maximizing or loss minimizing price, and economic profit or loss in pure monopoly?
answer
Employ the profit-maximizing or loss minimizing rule of MR=MC
Identify the profit-maximizing or loss minimizing price and output by finding the price/output combination at MR=MC
question
Charging different prices to different buyers is known as price____.
answer
discrimination
question
Monopoly yields neither ___ efficiency nor allocative efficiency.
answer
productive
question
What might monopolists do when confronted with a new entrant into their industry?
answer
Create an entry barrier
question
The economic profit per unit is the amount that the product price ____ the average total cost at the profit-maximizing output.
answer
is greater than
question
Imperfect competitors, by changing market supply, can influence product _____.
answer
price
question
Which of the following are potential solutions to the economic losses incurred by a regulated monopoly caused by socially optimal pricing?
answer
Price discrimination
Public subsidies
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:
answer
The loss-minimizing output
The profit-maximizing output
question
A natural monopoly may occur when only a single firm can achieve the ____ of scale necessary to compete in an industry.
answer
economies
question
Efficiency loss occurs when the sum of ___and ___ is less than the maximum.
answer
consumer surplus; producer surplus
question
With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a _____ price.
answer
Lower
question
Which of the following is more likely for a pure monopolist that for a pure competitor?
answer
Economic profit
question
A firm's long-run average total costs may decline over a wide range of output due to ____ of scale.
answer
economies
question
For a monopolist, marginal ____ is lower than ____ (average revenue) for every unit of output except the first.
answer
revenue; price
question
The profit-maximizing monopolist will always want to avoid the ____ segment of its demand curve.
answer
inelastic.
question
A ____ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
answer
monopoly
question
The key difference between a pure monopolist and a purely competitive seller lies on the ____ side of the market.
answer
demand
question
Which of the following are conditions necessary for price discrimination?
answer
Market segregation
Monopoly power
No resale
question
Which of the following are forms of price discrimination?
answer
Charging each customer the maximum price he or she is willing to pay
Charging different customers different prices
Charging each customer one price for the first unit and a lower price for subsequent units.
question
Firms with downward-sloping product ___ curves are called price ____.
answer
demand; makers
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ____ so that other firms cannot compete.
answer
prices
question
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
answer
Pure monopoly
question
Barriers to __________ reduce the likelihood or prohibit firms from entering an industry?
answer
entry
question
The main characteristics of a pure _______ are presence of a single seller, availability of no close substitutes, price making power, blocked entry, and existence of non- price competition/
answer
monopoly
question
What two terms are synonymous in pure monopoly?
answer
firm and industry.

a monopoly firm is the industry and the industry is the monopoly firm.
question
"Single Seller" refers to:
answer
A sole producer of a specific good or service.
question
Which characteristic of pure monopoly requires a consumer to buy the monopolized product or do without it entirely?
answer
No close subsitutes
question
A price _________ will use its power over product quantity and price whenever it is advantageous to do so.
answer
Price maker
question
A monopolist changes the _______ of its product by changing the quantity of the product it produces.
answer
price
question
What is the shape of the product demand curve for a pure monopolist?
answer
Downward sloping
question
Which of the following are reasons that a monopolist is considered a price marker? all that apply
answer
The monopolist exerts control over the price

The monopolist controls the total quantity supplied
question
All the following are examples of barriers to entry, except _________.
answer
income.
question
The blocked entry characteristic of monopoly refers to barriers that keep potential _____ from entering the industry?
answer
competitors
question
Entry is totally blocked to competitors in the case of what?
answer
Pure monopoly
question
Natural gas and electricity are both examples of what type of monopoly?
answer
Standardized
question
Which of the following are characteristics of public utilities? all that apply
answer
monopolies or near monopolies

Government owned or regulated.
question
What is the term used to describe a single firm with the bulk or sales in a specific market?
answer
near monopoly
question
Which of the following are examples of a geographic monopolies?
answer
a small town with one restaurant
a small town with one railroad
a small town by one airline
question
The market structures of monopolistic competition and _________ combine, in differing degrees, characteristics of pure competition and pure monopoly.
answer
oligopoly
question
What term is used to describe declining average total costs with added firm size?
answer
Economies of scale
question
A firm's long-run average costs may decline over a wide range of output due to ________ of scale?
answer
economies
question
Which of the following can be a cause of extensive economics of scale?
answer
Modern technology
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ________ so that other firms cannot compete.
answer
prices
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total cost (ATC) are still _________.
answer
declining
question
_________ create(s) legal barriers to entry.
answer
Government
question
What are the two legal barriers to entry created by the government? all that apply
answer
Patents
Licenses
question
Monopolists may create an entry barrier when confronted with a new entrant into the industry by _________.
all that apply
answer
incurring advertising cost
reducing product
taking other strategic actions
question
The exclusive right of an inventor to use, or to allow another to use, his or her invention it called:
answer
a partent
question
Patents provide the inventor with a monopoly position for what length of time?
answer
Twenty years
question
Which of the following is considered a barrier to entry protecting an inventor from its rivals?
answer
Patents
question
________ and development leads to most patentable inventions and products.
answer
Resarch
question
True or False: Government licensing is not a barrier to entry.
answer
False
question
_____________ of essential property is a barrier to entry into an industry?
answer
control
1 of 265
question
The change in total revenue is called ________ revenue.
answer
marginal
question
When a firm produces a specific output level at a higher level at a higher cost than the necessary cost for that level of output, it is called:

A. economies of scale
B. rent-seeking expenditures
C. x-inefficiency
D. simultaneous consumption
answer
C. x-inefficiency
question
What are the two legal barriers to entry created by the government?

A. licenses
B. Marginal cost
C. Unions
D. Patents
answer
A. licenses
D. Patents
question
What is the term for factors that prohibit firms from entering an industry?

A. lack of entry
B. barriers to entry
C. reduction of entry
D. barriers to business
answer
B. barriers to entry
question
Government creates ________ barriers to entry.
answer
legal
question
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close _______.

A. substitutes
B. price takers
C. complements
D. complements
E. patents
answer
A. substitutes
question
Which of the following can cause x-inefficiency?

A. poorly motivated work force
B. highly effective supervision
C. hiring the most qualified workers
D. an interest in lowering costs
E. desire for easier work life
F. hiring incompetent relatives.
answer
A. poorly motivated work force
E. desire for easier work life
F. hiring incompetent relatives.
question
Economies of scale refer to __________ average total costs with added firm size.

A. constant
B. marginal
C. declining
D. rising
answer
C. declining
question
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which ______.

A. MR > MC
B. MR = MC
C. P = ATC
D. P = MC
E. P = MR = MC
answer
B. MR = MC
question
Which of the following are assumptions made in the model of pure monopoly?

A. The firm is a single-price monopolist; it charges the same price for all units of output.
B. No unit of government regulates the firm.
C. The government regulates the firm.
D. The firm is a multi-price monopolist; it charges different prices for all units of output.
E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
answer
A. The firm is a single-price monopolist; it charges the same price for all units of output.

B. No unit of government regulates the firm.

E. Patents, economies of scale, and resource ownership secure the firm's monopoly.
question
Patents and patent laws aim to protect the inventor from _____.
answer
rivals
question
Total _____ profit is found by multiplying per-unit profit by the profit-maximising output.
answer
economic
question
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the _____ _______ cost curve.
answer
Average Total
question
Which of the following are the main characteristics of a pure monopoly?

A. Ease of entry for other firms.
B. Availability of multiple substitutes of its products
C. Blocked entry for other firms
D. Absolute control over the price
E. Presence of at least two sellers
F. Presence of a single seller
G. Unavailability of close substitutes of its products
answer
C. Blocked entry for other firms
D. Absolute control over the price
F. Presence of a single seller
G. Unavailability of close substitutes of its products
question
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then the firm:

A. may be broken into two or more competing firms.
B. may be forced into filing for bankruptcy.
C. may be required to testify before Congress.
D. may be expressly prohibited from engaging in business activities.
answer
A. may be broken into two or more competing firms.
D. may be expressly prohibited from engaging in business activities.
question
When marginal revenue is ________ (positive/negative) total revenue is diminishing.
answer
negative
question
What is the term used to describe a single firm with the bulk of sales in a specific market?

A. regulated monopoly
B. pure monopoly
C. large corporation
D, near-monopoly
answer
D. near-monopoly
question
Which of the following entry barriers created by monopolists?

A. Impositions of tariffs and quotas
B. Price reductions
C. Collaboration with government
D. Increased advertising
answer
B. Price reductions
D. Increased advertising
question
What is the difference in demand between a purely competitive seller and a monopolist?

A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not.

B. Demand for the monopolist is perfectly elastic, and demand for the purely competitive seller is not.
answer
A. Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not.
question
Identify the correct statement:

A. A monopolist is a price taker in an industry
B. A monopolist cannot change its product price by changing the quantity supplied of the product.
C. A monopolist produces an optimal combination of goods in the market.
D. A monopolist can change its product price by changing the quantity supplied of the product.
answer
D. A monopolist can change its product price by changing the quantity supplied of the product.
question
Efficiency loss is also known as _____ loss.

A. wage
B. utility
C. deadweight
answer
C. deadweight
question
Firms with downward-sloping product _____ curves are called price ______.
answer
demand; makers
question
For the pure monopolist, there is no relationship between __________ and quantity supplied and therefore no supply curve.
answer
price
question
Government licensing is a legal ______ to entry.
answer
barrier
question
Imperfect competitors include which if the following?

A. oligopolists
B. monopolistic competitors
C. pure monopolists
D. pure competitors
answer
A. oligopolists
B. monopolistic competitors
C. pure monopolists
question
Monopolists may create an entry barrier when confronted with a new entrant to the industry by _______.
(screenshot in ipad)
A.
B.
C.
D.
answer
A. reducing product price
B.
D. incurring advertising costs
question
When _______ efficiency and allocative efficiency are not achieved in a market, it is known as efficiency loss.
answer
productive
question
Which of the following are reasons for a monopoly's loss of economic profit?

A. Change in tastes reducing demand.
B. Upward-shifting cost curves caused by escalating prices.
C. Decreases in fixed costs
D. Cost curves shifting downward due to rising prices.
answer
A. Change in tastes reducing demand.
B. Upward-shifting cost curves caused by escalating prices.
question
Consider the demand and marginal revenue information shown in the graph. A pure monopolist will come closest to maximising total revenue when it produces approximately at which of the following quantities?

A. 10
B. 6
C. 8
D. 9
answer
C. 8
question
When marginal revenue is ______, total revenue is increasing.
answer
positive
question
Considering the industry structures of pure (perfect) competition and pure monopoly, a firm will experience a more inelastic demand curve in which form of industry?

A. pure (perfect) competition
B. pure monopoly
answer
B. pure monopoly
question
Imperfect competitors can influence product price by changing what?

A. Quantity supplied
B. labor inputs
C. marketing
D. research and development
answer
A. Quantity supplied
question
_______ utilities are government owned or regulated.
answer
public
question
______ effects exist if the value of a value of a product to each user increases as the total number of users increase.
answer
Network
question
Simultaneous _________ is a product's ability to satisfy a large number of consumers at the same time.
answer
consumption
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:

A. the loss-maximising output
B. the profit-minimising output
C. the profit-maximising output
D. the loss-minimising output
E. the minimum efficient scale
answer
C. the profit-maximising output
D. the loss-minimising output
question
Which of the following are reasons that a monopolist is considered a price maker?

A. the monopolist exerts control over the price.
B. the monopolist controls demand.
C. the monopolist controls the total quantity supplied.
D. the monopolist controls marketing.
answer
A. the monopolist exerts control over the price.
C. the monopolist controls the total quantity supplied.
question
Monopoly yields neither _______ efficiency nor allocative efficiency.
answer
productive
question
A monopolist does not have a supply curve because:

A.
B.
C.
D.
answer
b) it does not equate price with marginal cost

c) there is no single, unique price associated with each level of output.
question
_______ competitors can influence total supply through their own output decisions.
answer
imperfect
question
What is the shape of the product demand curve for a pure monopolist?

A. horizontal
B. downward sloping
C. upward sloping
D. vertical
answer
B. downward sloping
question
Which of the following describes what "no close substitutes" means as it relates to consumers and a pure monopoly?
answer
A consumer must either buy the monopolised product or do without it.
question
Natural gas and electricity are both examples of which type of monopoly?

A. differentiated
B. pure
C. competitive
D. standardised
answer
D. standardised
question
At a pure monopolist's profit-maximising output, its _____ exceeds marginal cost, resulting in allocative efficiency.
answer
price
question
Drawing a vertical line from the profit-maximising output on the horizontal axis to the demand curve represents the _______.

A. price
B. output
C. total costs
D. marginal revenue
answer
A. price
question
A price _____ will use its power over product quantity and price whenever it is advantageous to do so.
answer
maker
question
Which of the following are examples of a geographic monopolies?

A. A small town with one railroad
B. A small town with one restaurant
C. A small town served by one airline
D. A small town with more than one restaurant
answer
A. A small town with one railroad
B. A small town with one restaurant
C. A small town served by one airline
question
A ______ is the exclusive right of an inventor to use, or allow another to use, her or his invention.
answer
patent
question
Which of the following describes why marginal revenue is less than price in an imperfect market?

A. Because marginal revenue is greater than marginal cost which is less than price.
B. Because the lower price of the extra unit of output only applies to all prior units of output.
C. Because the lower price of the extra unit of output only applies to subsequent units of output.
D. Because total revenue is greater than price.
answer
B. Because the lower price of the extra unit of output only applies to all prior units of output.
question
Economic, technological, legal, pricing and advertising strategies are all types of ______.

A. production strategies
B. non-price competition
C. economies of scale
D. barriers to entry
answer
D. barriers to entry
question
A monopolist will never choose a price-quantity combination that causes a decrease in _________ revenue.
answer
total
question
Which of the following steps are necessary to determine the profit-maximising or loss-minimising level of output, profit-maximising or loss minimising price, and economic profit or loss in pure monopoly?

A. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR>MC.
B. Employ the profit-maximising or loss minimising rule of MR=MC.
C. Identify the profit-maximising or loss minimising price and output by finding the price/output combination at MR=MC.
D. Employ the profit-maximising or loss minimising rule of MR>MC.
E. Employ the profit-maximising or loss minimising rule of MC>MR.
answer
B. Employ the profit-maximising or loss minimising rule of MR=MC.

C. Identify the profit- maximising or loss minimising price and output by finding the price/output combination at MR=MC
question
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?

A. There are no new entrants to decrease supply, drive
answer
D. There are no new entrants to increase supply, drive down price, and eliminate profit.
question
_______ - _________ expenditures add nothing to the firm's output, but increases the firm's costs.
answer
rent-seeking
question
The spread of difference that results when product price exceeds average total cost determines:

A. per-unit economic profit
B. total revenue
C. per-unit total revenue
D. per-unit normal profit
answer
A. per-unit economic profit
question
Which of the following is more likely for a pure monopolist than for a pure competitor?

A. economic loss
B. lower costs
C. accounting profit
D. normal profit
E. economic profit
answer
E. economic profit
question
At a pure monopolist's profit-maximising output, its _________ exceeds marginal cost, resulting in allocative inefficiency.
answer
Price
question
A pure monopolist has no ___________ curve
answer
supply
question
What leads to most patentable inventions and products?

A. new technology
B. marketing
C. financial expertise
D. research and development
answer
D. research and development
question
With a fixed downward sloping demand curve, the pure monopolist can only increase sales by charging a ______ price.

A. fixed
B. lower
C. variable
D. higher
answer
B. lower
question
Entry is completely blocked to competitors in case of pure ________.
answer
Monopoly
question
Patents provide the inventor with a monopoly position for what length of time?

A. one year
B. for the life of the inventor
C. indefinitely
D. twenty years
answer
D. twenty years
question
A firm's long-run average total costs decline over a wide range of output due to __________ of scale
answer
economies
question
Which of the following are reasons monopoly is not widespread in the United States?

A. The government has successfully ended all monopolies.
B. Barriers to entry are seldom completely successful.
C. They are not profitable.
D. Patents eventually expire.
answer
B. Barriers to entry are seldom completely successful.
D. Patents eventually expire.
question
What aspect of the market defines the crucial difference between a pure monopolist and a purely competitive seller?

A. the demand curve
B. the supply cure
C. price
D. output
answer
A. the demand curve
question
The firm and _____ are synonymous in pure monopoly.

A. supply
B. productive efficiency
C. the industry
D. allocative efficiency
answer
C. the industry
question
The profit-maximising monopolist will always want to avoid the ________ segment of its demand curve.
answer
inelastic
question
A firm's manager is given the following information: To sell 4 units of output, a price of $132 must be charged; this level of output reflects marginal revenue of $102 and marginal costs of $60. If the firm wants to sell 5 units of output, a price of $122 must be charged; this reflects marginal revenue of $82 and marginal costs of $70. To sell 6 units of output, a price of $112 must be charged; at this level of output, marginal revenue will be $62 and marginal costs $80. What should the manager do?

A. Produce 6 units of output and charge $112.
B. Produce an amount less than 4 units.
C. Produce an amount greater than 6 units.
D. Produce 4 units of output and charge $132.
E. Produce 5 units of output and charge $122.
answer
E. Produce 5 units of output and charge $122
question
________ and development leads to most patentable inventions and products.
answer
Research
question
Declines in the long-run average total costs occur due to which of the following:

A. network effects
B. simultaneous consumption
C. spreading of product development costs
D. learning by doing
E. greater use of specialised inputs
F. higher resource costs
answer
A. network effects
B. simultaneous consumption
C. spreading of product development costs
D. learning by doing
E. greater use of specialised input
question
Which of the following is a reason for a monopolist to block entry in a market?

A. To restrict potential competitors from entering the market.
B. To ensure availability of multiple substitutes of its products.
C. To achieve efficiency in the production
D. To attain socially optimum output.
answer
A. To restrict potential competitors from entering the market.
question
For a pure monopolist, total revenue _______ at a diminishing rate.
answer
increases
question
Marginal revenue (MR) for the monopolist compared to that of a pure competitor:

A. is constant and equal to product price.
B. fluctuates and is higher than product price.
C. is constant and higher than product price.
D. declines and is lower than product price.
answer
D. declines and is lower than product price.
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are still ______________.
answer
declining
question
What allows a natural monopoly to produce efficiency?

A. Extensive economies of scale.
B. Diseconomies of scale.
C. A declining long-run average total cost curve.
D. An increasing long-run average total cost curve.
answer
A. Extensive economies of scale.
C. A declining long-run average total cost curve.
question
"Single seller" refers to:

A. a group of producers selling a variety of goods and services.
B. a price-taker producer of a specific good or service.
C. a sole producer of a specific good or service.
D. a sole proprietor.
answer
C. a sole producer of a specific good or service.
question
_________ of essential property is a barrier to entry into an industry.

A. Mergers
B. Sale
C. Control
D. Deterioration
answer
C. Control
question
Which of the following can be a cause of extensive economies of scale?

A. Labor
B. Modern technology
C. New production inputs
D. Creative destruction
answer
B. Modern technology
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ________ so that other firms cannot compete.

A. average variable costs
B. barriers to entry
C. marginal costs
D. prices
answer
D. prices
question
For a monopolist, marginal ______________ is lower than _________ (average revenue) for every unit of output except the first.
answer
revenue; price
question
Which of the following types of firms have achieved economies of scale through information technologies?

A. Computer software
B. Retail clothing
C. Internet service
D. Raw steel
E. Wireless communication
answer
Internet service

Wireless communication

Computer Software
question
When the demand for a good price is elastic, an increase in its price will __________ total revenue.
answer
decrease
question
Why do costs differ between a purely competitive firm and a pure monopoly?

A. Allowing technological advances
B. Access to different natural resources
C. A factor called "X-inefficiency"
D. Economies of scale
E. Monopoly-preserving expenditures
F. Different skill levels of labor
answer
A. Allowing technological advances
C. A factor called "X-inefficiency"
D. Economies of scale
E. Monopoly-preserving expenditures
question
With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a _______ price.

A. variable
B. higher
C. fixed
D. lower
answer
D. lower
question
Which of the following is a good example of network effects?

A. People with similar software can share pictures.
B. Employees mingle in the break room at work.
C. Microsoft delivers a program by disk to millions of consumers.
D. The Internet allows people to send and receive emails.
answer
A. People with similar software can share pictures. D. The Internet allows people to send and receive emails.
question
A monopolist must obtain a minimum of a(n) ______ profit in the long run, or it will go out of business.
answer
normal
question
Dentsply, a dominant American maker of false teeth, unlawfully prevented independent distributors of false teeth from carrying competing brands. This action is an example of ____________.

A. small business thinking
B. the power of private ownership
C. a created entry barrier
D. natural monopoly behavior
answer
C. a created entry barrier
question
A firm positions itself in the best profit-maximising (or loss minimising) level of production if that amount of output reflects the point at which the last unit's marginal revenue is equal to its marginal cost because:

A. each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs.
B. total revenue is greatest at amounts prior to the MR=MC amount.
C. each unit of output after the MR=MC amount will earn less revenue that its costs.
D. total revenue is greatest by producing after the quantity determined by the MR=MC rule.
answer
Each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs

Each unit of output after the MR=MC amount will earn less revenue than its costs
question
A(n) _________ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
answer
monopoly
question
Barriers to entry contribute to _______ status.
answer
monopoly
question
Monopolists that have _______ products engage mainly in advertising their product's attributes.

A. homogeneous
B. standardised
C. differentiated
answer
C. differentiated
question
The _______ regulates some natural monopolies to guard against excessively high prices to consumers.
answer
government
question
The pharmaceutical industry is an example of an industry that has achieved a self-sustaining monopoly power through ____ on drugs.
answer
patents
question
Network effects may drive a market toward ______ , because consumers tend to choose standard products that everyone else is using.
answer
monopoly
question
The profit-maximising monopolist avoids the inelastic segment of its demand curve because:

A. it would mean lowering price and decreasing output, which leads to higher total revenue.
B. it would mean raising price and increasing output, which leads to less total revenue.
C. it would mean lowering price and increasing output, which leads to less total revenue.
D. it would mean charging a regulated price and increasing output, which leads to less total revenue.
answer
C. it would mean lowering price and increasing output, which leads to less total revenue.
question
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially levies a "private tax" on consumers. The owners of the monopoly benefit from these transactions at the expense of the consumer. This is an example of a monopoly contributing to:

A. spillovers
B. income equality
C. income inequality
D. externalities
answer
C. income inequality
question
Pure monopolists may have products that are ______ or differentiated.
answer
standardised
question
Which of the following reasons explains why a professional sports team can be considered a monopoly?

A. They draw a crowd according to preference that is usually dictated by geographic proximity.
B. They are one of many suppliers of specific services in a large geographic area.
C. They are the sole suppliers of specific services in a large geographic area.
answer
C. They are the sole suppliers of specific services in a large geographic area.
question
The highest barriers to entry can be found with pure ______. The lowest barriers to entry can be found with pure ______.
answer
monopoly; competition
question
At the profit-maximising (loss-minimising) output for a monopoly, if average revenue is less than average total costs, then the monopoly is experiencing:

A. an economic profit
B. a normal profit
C. an economic loss
answer
C. an economic loss
question
Monopolists that have _________ products engage mainly in public relations advertising, while those with _______ products advertised their products' attributes.
answer
standardised; differentiated
question
In the long run, only ______ for a pure competitor are possible , wherareas a monopoly earns _______.
answer
normal profits; economic profits
question
Marginal revenue (MR) for the monopolist compared to that of a pure competitor:

A. is constant and equal to product price.
B. declines and is lower than product price.
C. fluctuates and is higher than product price
D. is constant and higher than product price
answer
B. declines and is lower than product price.
question
First Data Corporation accounts for 80% of the market for money order transfers. This is an example of a __________ -monopoly
answer
near-monopoly
question
When faced with continuing losses , what do the owners of a monopoly do?
answer
They move their resources to alternative industries in the long run.
question
In pure competition, _____ efficiency is achieved because free entry and exit forces firms to operate where average total cost is at minimum.
answer
productive
question
It is difficult for a major league sports team to start up, because existing professional teams have contracts with the best players and long-term leases on stadiums. Which of the following does this illustrate?

A. low barriers to entry
B. obstacle to potential rivals
C. ownership of a key resource
D. a perfectly competitive market
E. blocked entry
answer
B. obstacle to potential rivals
question
In a pure monopoly, the demand curve for the firm is also the demand curve for the ___________.
answer
industry
question
The monopolist wants a price-quantity combination to fall in the ______ section of its demand curve, where a lower price means _______ total revenue.
answer
elastic; greater
question
The monopolist seeks maximum _______ profit, not maximum unit profit.
answer
total
question
As an example of ______, the Federal Commission licenses only so many radio and television station in each geographic area.
answer
barriers to entry
question
The government broke up Standard Oil in 1911 due to its breach of _____ laws.
answer
antitrust
question
How common are examples of less pure forms of monopoly?

A. very common
B. nonexistent
C. rare
D. not very common
answer
A. very common
question
If you want to enjoy a Major League Baseball game at the stadium in St Louis, you must patronize the Cardinals. This makes the Cardinals organization a

Multiple Choice
A. monopoly firm in St Louis.
B. monopoly firm in Major League Baseball.
C. purely competitive firm in St Louis.
D. purely competitive firm in Major League Baseball.
answer
A. monopoly firm in St Louis. Correct
question
Refer to the graph, which shows a linear demand curve for a monopolist. Which of the following statements is correct?
Multiple Choice
A. The price elasticity of demand is greater at W than at V.
B. The demand curve has unit price elasticity at W.
C. The price elasticity of demand is less at U than at V.
D. The area 0QVS is greater than the area 0RWT.
answer
D. The area 0QVS is greater than the area 0RWT. Correct
question
Barriers to entry

Multiple Choice
A. are typically the result of wrongdoing on the part of a firm.
B. can result from government regulation.
C. usually result in pure competition.
D. exist in economic theory but not in the real world.
answer
B. can result from government regulation. Correct
question
One major barrier to entry under pure monopoly arises from

Multiple Choice
A. diseconomies of scale.
B. ownership of essential resources.
C. the availability of close substitutes for a product.
D. the price taking ability of the firm.
answer
B. ownership of essential resources. Correct
question
Total Output Price MR ATC MC
1 $100 $100 $100.00 $30
2 $90 $80 $63.00 $26
3 $80 $60 $52.67 $32
4 $70 $40 $49.50 $40
5 $60 $20 $49.60 $50
6 $50 $0 $50.00 $52
7 $40 -20 $52.29 $66
8 $30 -40 $55.75 $80
9 $20 -60 $60.67 $100
10 $10 -80 $67.60 $130

Refer to the data. At its profit-maximizing output, this firm's total revenue will be
Multiple Choice
A. $180.
B. $198.
C. $300.
D. $280.
answer
D. $280. Correct
question
For a pure monopolist, the relationship between total revenue and marginal revenue is such that

Multiple Choice
A. total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing.
B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing.
C. marginal revenue is positive so long as total revenue is positive.
D. marginal revenue is positive when total revenue is at a maximum.
answer
B. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. Correct
question
Natural monopolies result from

Multiple Choice
A. pricing strategies.
B. patents and copyrights.
C. control over an essential natural resource.
D. extensive economies of scale in production.
answer
D. extensive economies of scale in production. Correct
question
Refer to the graph, which shows a total revenue curve for a monopolist. If total revenue falls as output expands, marginal revenue is

Multiple Choice
A. negative.
B. zero.
C. positive.
D. greater than demand at that output level.
answer
A. negative. Correct
question
Refer to the diagram. At the profit-maximizing level of output, the firm will realise

Multiple Choice
A. an economic profit of ACGJ.
B. a loss of JH per unit.
C. an economic profit of ABHJ.
D. a loss of GH per unit.
answer
C. an economic profit of ABHJ. Correct
question
An unregulated pure monopolist will maximize profits by producing that output at which

Multiple Choice
A. MR = MC.
B. P = MC.
C. P = ATC.
D. MC = AC.
answer
A. MR = MC. Correct
question
A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing

Multiple Choice
A. a loss that could be reduced by producing more output.
B. an economic profit that could be increased by producing less output.
C. a loss that could be reduced by producing less output.
D. an economic profit that could be increased by producing more output.
answer
D. an economic profit that could be increased by producing more output. Correct
question
At the profit-maximizing level of output for a monopolist,

Multiple Choice
A. price is greater than marginal cost.
B. total revenue is greater than total cost.
C. average total cost equals marginal cost.
D. price is greater than average revenue.
answer
A. price is greater than marginal cost. Correct
question
Marginal costs of a producer may be very small due to its product's ability to satisfy a large number of consumers at the same time. This characteristic of a product is called

Multiple Choice
A. rent-seeking.
B. consumer sovereignty.
C. economies of scale.
D. simultaneous consumption.
answer
D. simultaneous consumption. Correct
question
Under which of the following situations would a monopolist increase profits by lowering price (and increasing output)?

Multiple Choice
A. if it discovered that it was producing where its MC curve intersects its demand curve.
B. if it discovered that it was producing where MC = MR.
C. if it discovered that it was producing where MC < MR.
D. under none of these circumstances because a monopolist would never lower price.
answer
C. if it discovered that it was producing where MC < MR Correct
question
Refer to the diagrams. With the industry structures represented by diagram
Multiple Choice
A. (A), price exceeds marginal cost, resulting in allocative inefficiency.
B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist.
C. (B), equilibrium price and quantity will be e and h, respectively.
D. (B), price equals marginal cost, resulting in allocative efficiency.
answer
B. (A), there will be only a normal profit in the long run, while in (B) an economic profit can persist. Correct
question
A pure monopolist

Multiple Choice
A. always realizes an economic profit.
B. will realize an economic profit if ATC exceeds MR at C. the profit-maximizing/loss-minimizing level of output.
D. will realize an economic loss if MC intersects the down-sloping portion of MR.
E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
answer
E. will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. Correct
question
In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to

Multiple Choice
A. marginal revenue.
B. average cost.
C. average variable cost.
D. average total cost.
answer
A. marginal revenue. Correct
question
A monopolist sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sales quantity increases by

Multiple Choice
A. 4 units per day.
B. 2 units per day. Correct
C. 3 units per day.
D. 1 unit per day.
answer
B. 2 units per day. Correct
question
Refer to the diagrams. Firm A is a

Multiple Choice
A. pure monopoly, and Firm B is a pure competitor.
B. pure competitor, and Firm B is a pure monopoly.
C. pure monopoly, as is Firm B.
D. pure competitor, as is Firm B.
answer
B. pure competitor, and Firm B is a pure monopoly. Correct
question
Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

Multiple Choice
A. price, output, and average total cost would all be higher.
B. price, output, and average total cost would all be lower.
C. price and average total cost would be higher, but output would be lower.
D. price and output would be lower, but average total cost would be higher.
answer
C. price and average total cost would be higher, but output would be lower. Correct
question
There is some evidence to suggest that X-inefficiency is

Multiple Choice
A. more likely to occur in competitive firms than in monopolistic firms.
B. absent whenever two or more producers are competing with one another.
C. more likely to occur in monopolistic firms than in competitive firms.
D. not encountered in either competitive or monopolistic firms.
answer
C. more likely to occur in monopolistic firms than in competitive firms. Correct
question
Which of the following is characteristic of a pure monopolist's demand curve?

Multiple Choice
A. Its elasticity coefficient is 1 at all levels of output.
B. It is the same as the market demand curve.
C. Average revenue is less than price.
D. Price and marginal revenue are equal at all levels of output.
answer
B. It is the same as the market demand curve. Correct
question
Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by

Multiple Choice
A. decreasing price and leaving output unchanged.
B. increasing price and decreasing output.
C. decreasing output and leaving prices unchanged.
D. decreasing price and increasing output.
answer
D. decreasing price and increasing output. Correct
question
Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC3, then the firm is

Multiple Choice
A. producing the profit-maximizing output but is failing to minimise production costs.
B. incurring X-inefficiency but is realizing all existing economies of scale.
C. incurring X-inefficiency and is failing to realize all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.
answer
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale. Correct
question
pure monopoly
answer
Exsists when a single firm is the sole producer of s product for which there are no close substitutes
question
Pure Monopoly Characteristics
answer
single seller, no close substitutes, price maker, blocked entry
question
examples of monopolies
answer
Government owned or government regulated public utilities, natural gas and electric companies, water company, cable tv company, local telephone company
question
The firm and what are synonymous in pure monopoly?
answer
The industry
question
No close substitutes
answer
A consumer must either buy the monopolized product or do without it entirely
question
A pure monopolist must face a downward sloping product _____ curve?
answer
Demand
question
A monopolist can change its products price by changing the quantity supplied of the product
answer
True
question
Barriers to enter a pure monopoly
answer
Economic, technological, legal, pricing and advertising strategies
question
Single firm with the bulk of sales in a specific market
answer
Near monopoly
question
single seller
answer
a sole producer of a specific good or service
question
change in total revenue
answer
marginal revenue
question
X-inefficiency occurs when a firm operates at a cost which is higher than the lowest cost for a particular level of output
answer
True
question
How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
answer
c) Up to the output at which marginal revenues equals marginal cost
question
Which of the following are assumptions made in the model of pure monopoly?
answer
a) Patents, economies of scale, and resource ownership secure the firm's monopoly

c) The firm is a single-price monopolist; it changes the same price for all units of output

e) No unit of government regulates the firm
question
Which of the following are reasons that a monopolist is considered a price maker?
answer
a) The monopolist exerts control over the price.

d) The monopolist controls the total quantity supplied.
question
Monopolistic competition and obligopoly combine in differing degrees, characteristics of pure competition and pure monopoly
answer
True
question
Price makers are firms with:
answer
Downward sloping demand curves
question
How is economic profit determined?
answer
By multiplying per unit profit by the total quantity produced
question
The spread or difference that results when product price exceeds average total cost determines
answer
Per unit economic profit
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:
answer
a) the loss-minimizing output

d) the profit-maximizing output
question
Which curve does a monopolist not have because there is no unique relationship between price and quantity supplied?
answer
Supply curve
question
A monopolist will not seek the highest price possible because?
answer
A monopolist seeks maximum profit not maximum price
question
The spread or difference that results when product price exceeds average total cost determines:
answer
Per unit economic profit
question
For the pure monopolist, there is no relationship between price and quantity supplied and therefore no supply curve
answer
True
question
Why might a monopolist seek a less than maximum per unit profit?
answer
Additional sales (quantity) more than compensate for the lower unit profit
question
What is more likely for a pure monopolist than for a pure competitor?
answer
Economic profit
question
How is a pure monopoly able to maintain an economic profit in the long run?
answer
Because there is now new entrants to increase supply, drive down price, and eliminate economic profit
question
In the long run, only normal profits for a pure competitor are possible, whereas a monopoly earns economic profit.
answer
True
question
What is a reason for a monopoly's loss of economic profit?
answer
Changes in tastes that reduce demand for a product
question
At the profit maximizing, loss minimizing output for a monopoly, of average revenue is less than average total costs, then the monopoly is experiencing?
answer
Economic loss
question
When faced with continuing losses, what do the owners of a monopoly do?
answer
They move their resource to alternative industries in the long run
question
In the long run, a monopolist must obtain a minimum of a normal profit to prevent going out of business
answer
True
question
The economic profit per unit is the amount that the product price is greater than the average total cost at the profit maximizing output
answer
True
question
How do you determine economic profit?
answer
By multiplying per unit profit by the total quantity produced
question
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then the firm:
answer
May be expressway prohibited from engaging in business activities, may be broken into two or more competing firms
question
Efficiency loss is also known as?
answer
Deadweight loss
question
What can cause x-inefficiency?
answer
Poorly motivated work force, desire for easier work life, hiring incompetent relatives
question
rent-seeking expenditures add nothing to the firms output but increase the firms costs
answer
True
question
Monopoly is a legitimate concern because monopolies can charge a higher than competitive prices that result in?
answer
An under allocation of resources to the monopolized product
question
Reasons monopoly is not widespread in the US?
answer
Patents eventually expire, barriers to entry are seldom completely successful
question
With a fixed downward-sloping demand curve, how can a monopolist increase sales?
answer
b) By charging a lower price
question
When productive efficiency and allocative efficiency are not achieved in a market it is known as efficiency loss
answer
True
question
The profit maximizing monopolist will always want to avoid which segment of its demand curve?
answer
The inelastic segment
question
When demand is elastics and marginal revenue is positive, total revenue must be?
answer
Increasing
question
A monopolist will never choose a price quantity combination that causes a decrease in total revenue
answer
True
question
The monopolist wants a price quantity combination to fall in the elastics section of its demand curve where a lower price means great total revenue
answer
True
question
Why does the monopolist avoid the Inelastic segment of the demand curve?
answer
It would mean lower if price and increasing output which leads to less total revenue
question
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
answer
Pure monopoly
question
Which term describes a sole producer of a specific good or service?
answer
single seller
question
What two terms are synonymous in pure monopoly?
answer
Firm and Industry
(A monopoly firm is the industry and the industry is the monopoly firm.
question
The main characteristics of a pure _____ are a single seller, no close substitutes, a price maker, blocked entry, and non-price competition.
answer
Monopoly
question
Which characteristic of pure monopoly requires a consumer to buy the monopolized product or do without it entirely?
answer
No close substitutes
question
A monopolist is a price____ because it controls the total quantity produced and thus has control over the price.
answer
Maker
question
What does the characteristic of monopoly called "blocked entry" refer to?
answer
Barriers that keep potential competitors from entering the industry.
question
Entry is completely blocked to competitors in the case of pure_____.
answer
monopoly
question
Computer operating software, commercial aircraft, and basic steel are examples of industries in which ____ limit the entry of new firms.
answer
economies of scale
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are sill_____.
answer
declining
question
Which of the following are characteristics of public utilities?
answer
Government owned or regulated
Monopolies or near-monopolies
question
A ____ -monopoly is a single firm that has the bulk of sales in a specific market.
answer
near
question
Which of the following is an example of a geographic monopoly?
answer
A small town with one airport
A small town with one restaurant
A small town with one railroad
question
Monopolistic competition and ____ combine, in differing degrees, characteristics of pure competition and pure monopoly.
answer
oligopoly
question
Economies of scale refer to ____ average total costs with added firm size.
answer
declining
question
All of the following are examples of barriers to entry, except:
technology
advertising
patents
income
answer
income
question
Government creates ____ barriers to entry.
answer
legal
question
What are the two legal barriers to entry created by the government?
answer
Licenses
Patents
question
What leads to most patentable inventions and products?
answer
Research and development
question
Government licensing is a legal ____ to entry.
answer
barrier
question
Economic, technological, legal, pricing and advertising strategies are all types of ____.
answer
barriers to entry
question
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which:
answer
MR=MC
question
The change in total revenue is called ____ revenue.
answer
Marginal
question
A monopolist does not have a supply curve because:
answer
There is no single, unique price associated with each level of output
It does not equate price with marginal cost
question
Monopolists may create an entry barrier when confronted with a new entrant into the industry by:
answer
Raising resource prices
Reducing product price
Incurring advertising costs
question
When ____ efficiency and allocative efficiency are not achieved in a market, it is known as efficiency loss.
answer
productive
question
Imperfect competitors can influence product price by changing what?
answer
Quantity supplied
question
How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
answer
Up to the output at which marginal revenue equals marginal cost.
question
Which of the following steps are necessary to determine the profit-maximizing or loss minimizing level of output, profit-maximizing or loss minimizing price, and economic profit or loss in pure monopoly?
answer
Employ the profit-maximizing or loss minimizing rule of MR=MC
Identify the profit-maximizing or loss minimizing price and output by finding the price/output combination at MR=MC
question
Charging different prices to different buyers is known as price____.
answer
discrimination
question
Monopoly yields neither ___ efficiency nor allocative efficiency.
answer
productive
question
What might monopolists do when confronted with a new entrant into their industry?
answer
Create an entry barrier
question
The economic profit per unit is the amount that the product price ____ the average total cost at the profit-maximizing output.
answer
is greater than
question
Imperfect competitors, by changing market supply, can influence product _____.
answer
price
question
Which of the following are potential solutions to the economic losses incurred by a regulated monopoly caused by socially optimal pricing?
answer
Price discrimination
Public subsidies
question
Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:
answer
The loss-minimizing output
The profit-maximizing output
question
A natural monopoly may occur when only a single firm can achieve the ____ of scale necessary to compete in an industry.
answer
economies
question
Efficiency loss occurs when the sum of ___and ___ is less than the maximum.
answer
consumer surplus; producer surplus
question
With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a _____ price.
answer
Lower
question
Which of the following is more likely for a pure monopolist that for a pure competitor?
answer
Economic profit
question
A firm's long-run average total costs may decline over a wide range of output due to ____ of scale.
answer
economies
question
For a monopolist, marginal ____ is lower than ____ (average revenue) for every unit of output except the first.
answer
revenue; price
question
The profit-maximizing monopolist will always want to avoid the ____ segment of its demand curve.
answer
inelastic.
question
A ____ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
answer
monopoly
question
The key difference between a pure monopolist and a purely competitive seller lies on the ____ side of the market.
answer
demand
question
Which of the following are conditions necessary for price discrimination?
answer
Market segregation
Monopoly power
No resale
question
Which of the following are forms of price discrimination?
answer
Charging each customer the maximum price he or she is willing to pay
Charging different customers different prices
Charging each customer one price for the first unit and a lower price for subsequent units.
question
Firms with downward-sloping product ___ curves are called price ____.
answer
demand; makers
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ____ so that other firms cannot compete.
answer
prices
question
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
answer
Pure monopoly
question
Barriers to __________ reduce the likelihood or prohibit firms from entering an industry?
answer
entry
question
The main characteristics of a pure _______ are presence of a single seller, availability of no close substitutes, price making power, blocked entry, and existence of non- price competition/
answer
monopoly
question
What two terms are synonymous in pure monopoly?
answer
firm and industry.

a monopoly firm is the industry and the industry is the monopoly firm.
question
"Single Seller" refers to:
answer
A sole producer of a specific good or service.
question
Which characteristic of pure monopoly requires a consumer to buy the monopolized product or do without it entirely?
answer
No close subsitutes
question
A price _________ will use its power over product quantity and price whenever it is advantageous to do so.
answer
Price maker
question
A monopolist changes the _______ of its product by changing the quantity of the product it produces.
answer
price
question
What is the shape of the product demand curve for a pure monopolist?
answer
Downward sloping
question
Which of the following are reasons that a monopolist is considered a price marker? all that apply
answer
The monopolist exerts control over the price

The monopolist controls the total quantity supplied
question
All the following are examples of barriers to entry, except _________.
answer
income.
question
The blocked entry characteristic of monopoly refers to barriers that keep potential _____ from entering the industry?
answer
competitors
question
Entry is totally blocked to competitors in the case of what?
answer
Pure monopoly
question
Natural gas and electricity are both examples of what type of monopoly?
answer
Standardized
question
Which of the following are characteristics of public utilities? all that apply
answer
monopolies or near monopolies

Government owned or regulated.
question
What is the term used to describe a single firm with the bulk or sales in a specific market?
answer
near monopoly
question
Which of the following are examples of a geographic monopolies?
answer
a small town with one restaurant
a small town with one railroad
a small town by one airline
question
The market structures of monopolistic competition and _________ combine, in differing degrees, characteristics of pure competition and pure monopoly.
answer
oligopoly
question
What term is used to describe declining average total costs with added firm size?
answer
Economies of scale
question
A firm's long-run average costs may decline over a wide range of output due to ________ of scale?
answer
economies
question
Which of the following can be a cause of extensive economics of scale?
answer
Modern technology
question
Monopolists use economies of scale to block the entry of new firms into an industry by reducing ________ so that other firms cannot compete.
answer
prices
question
A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total cost (ATC) are still _________.
answer
declining
question
_________ create(s) legal barriers to entry.
answer
Government
question
What are the two legal barriers to entry created by the government? all that apply
answer
Patents
Licenses
question
Monopolists may create an entry barrier when confronted with a new entrant into the industry by _________.
all that apply
answer
incurring advertising cost
reducing product
taking other strategic actions
question
The exclusive right of an inventor to use, or to allow another to use, his or her invention it called:
answer
a partent
question
Patents provide the inventor with a monopoly position for what length of time?
answer
Twenty years
question
Which of the following is considered a barrier to entry protecting an inventor from its rivals?
answer
Patents
question
________ and development leads to most patentable inventions and products.
answer
Resarch
question
True or False: Government licensing is not a barrier to entry.
answer
False
question
_____________ of essential property is a barrier to entry into an industry?
answer
control

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