question
The U.S. Postal Service has a monopoly on the delivery of first-class mail due to
A) economies of scale
B) lack of initiative on the part of competing firms
C) legal barriers limiting entry
D) control over an essential resource
A) economies of scale
B) lack of initiative on the part of competing firms
C) legal barriers limiting entry
D) control over an essential resource
answer
C) legal barriers limiting entry
question
On of the effects of patents is to
A) reduce incentive for innovation
B) give firms incentive to worry less about minimizing production costs
C) temporarily provide the patent owner with monopoly power
D) reduce the degree of monopoly power in the short run
A) reduce incentive for innovation
B) give firms incentive to worry less about minimizing production costs
C) temporarily provide the patent owner with monopoly power
D) reduce the degree of monopoly power in the short run
answer
C) temporarily provide the patent owner with monopoly power
question
The key element is preserving a monopoly is
A) government subsidy of critical enterprises
B) keeping potential rivals out of the market
C) guaranteeing availability of substitute products
D) increases advertising expenditure
A) government subsidy of critical enterprises
B) keeping potential rivals out of the market
C) guaranteeing availability of substitute products
D) increases advertising expenditure
answer
B) keeping potential rivals out of the market
question
Which of the following is true of a monopolist's demand curve?
A) it is perfectly elastic
B) it is perfectly inelastic
C) it indicated that the monopolists will be able to sell more units at a higher price
D) it is identical with the industry demand curve for the product
A) it is perfectly elastic
B) it is perfectly inelastic
C) it indicated that the monopolists will be able to sell more units at a higher price
D) it is identical with the industry demand curve for the product
answer
D) it is identical with the industry demand curve for the product
question
If marginal revenue exceeds marginal cost. a profit-maximizing monopolist will
A) raise price and decrease output
B) lower price and increase output
C) reduce both output and price
D) hold output constant and raise price
A) raise price and decrease output
B) lower price and increase output
C) reduce both output and price
D) hold output constant and raise price
answer
B) lower price and increase output
question
If a monopolist wants to maximize profit, what price should he charge?
A) the highest price possible
B) the price where marginal revenue equals average variable cost
C) the price where average total cost crosses the demand curve
D) the price on the demand curve associated with the MC=MR output
A) the highest price possible
B) the price where marginal revenue equals average variable cost
C) the price where average total cost crosses the demand curve
D) the price on the demand curve associated with the MC=MR output
answer
D) the price on the demand curve associated with the MC=MR output
question
Which of the following is true for pure monopoly?
A) monopoly expands the options available to consumers
B) monopoly results in allocative inefficiency
C) profits and losses induce firms to enter and exit from industries
D) monopoly works well when governments regulate prices
A) monopoly expands the options available to consumers
B) monopoly results in allocative inefficiency
C) profits and losses induce firms to enter and exit from industries
D) monopoly works well when governments regulate prices
answer
B) monopoly results in allocative inefficiency
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