Ch. 22-26

Question 1

There are no monopolies in the United States. (T/F)

Answer 1

False

Question 2

The monopolist produces at the minimum point of her ATC curve. (T/F)

Answer 2

False

Question 3

A monopoly is a firm that produces at the output in an industry. (T/F)

Answer 3

True

Question 4

The monopolist produces

Answer 4

where MC=MR

Question 5

The monopolist will not lose money in the long run. (T/F)

Answer 5

True

Question 6

The most efficient output is found

Answer 6

at the bottom of the ATC curve.

Question 7

An example of government ownership of a monopoly would be

Answer 7

the Tennessee Valley Authority.

Question 8

The monopolist charges a higher price than the perfect competitor in the long run. (T/F)

Answer 8

True

Question 9

A monopolist operates at the minimum point of there ATC curve

Answer 9

in neither the short run not the long run.

Question 10

If the government attempts to break up a natural monopoly to enforce competition in an industry

Answer 10

the average cost of producing the good will increase.

Question 11

In the United States, natural monopolies

Answer 11

are commonly regulated by governments.

Question 12

Patents function to

Answer 12

temporarily protect monopoly power.

Question 13

Monopoly firms are

Answer 13

sometimes very large.

Question 14

A public utility would be an example of

Answer 14

a natural monopoly

Question 15

Monopoly profit

Answer 15

equals (price-ATC) times quantity sold.

Question 16

When an industry is a natural monopoly

Answer 16

the economies of scale in it arc very great.

Question 17

The perfect competitor____produces at the output at which MC=MR; the monopolist ____ produces at the output at which MC=MR.

Answer 17

Always;always

Question 18

All monopolists are imperfect Competitors.(T/F)

Answer 18

true

Question 19

The International Nickel Company is not a natural monopoly.(T/F)

Answer 19

true

Question 20

A monopolist make a profit

Answer 20

in both the short and long run.

Question 21

A monopolist can lose money.(T/F)

Answer 21

true

Question 22

Each of the following is a legal barrier to entry into an industry except

Answer 22

brand names.

Question 23

One basis for monopoly is control over an essential resource. (T/F)

Answer 23

true

Question 24

Monopolies tend to be inefficient. (T/F)

Answer 24

true

Question 25

The concentration ratio is the percentage of ___ earned by the __ largest firms In the industry.

Answer 25

sales;4

Question 26

The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over

Answer 26

80

Question 27

___ is leagal in the U.S.

Answer 27

Cut throat competition

Question 28

A highly oligopolied industry would have a ___ Herfindahl-Hirschman Index and a ___ concentration ratio.

Answer 28

High;high

Question 29

Oligopolies are illegal in most states.(T/F)

Answer 29

false

Question 30

A Herfindahl-Hirschman Index of 10,000 would mean there is how many firms in the industry?

Answer 30

1

Question 31

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is

Answer 31

oligopoly

Question 32

Which one of these firms would be oligopolist?

Answer 32

Proctor & Gamble

Question 33

Oligopoly is characterized by

Answer 33

high barriers to entry

Question 34

the closer the industry concentration ratio is to 100, the more likely it is that

Answer 34

there is a small number of firms.

Question 35

The highest concentration ratio

Answer 35

is in Industry Y.

Question 36

The Highest Herfindahl-Hirschman Index

Answer 36

is in Industry X

Question 37

An example of an oligopoly market would be one in which ____ firms sell ___%j of the output.

Answer 37

4;80

Question 38

Each of the following are oligopoly except

Answer 38

Microsoft

Question 39

Which of the following represents an illegal control of prices

Answer 39

colluding

Question 40

A cartel is

Answer 40

a group of firms acting under collusion to control output and maximize group profits

Question 41

Price leadership is a leagal way to reduce the price problems oligopolies face.(T/F)

Answer 41

true

Question 42

If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be

Answer 42

5,000

Question 43

An industry with 4 firms each having 25% market share would have a Herfindahl-Hirschman Index of

Answer 43

2,500

Question 44

At one end of the competitive spectrum is cutthroat competition. At the other end is

Answer 44

cartel

Question 45

A concentration ratio of 100 would imply that the industry has ___

Answer 45

no more than four firms

Question 46

Corporate concentration can be measured by

Answer 46

both the concentration ratio and the Herfindahl-Hirschman Index

Question 47

As foreign imports become a greater percentage of sales in oligopolized industries.=, the concentration ratio and the Herfindahl-Hirschman Index

Answer 47

become less accurate as a measure of concentration

Question 48

The higher the concentration ratio, the higher the degree of oligopolization.(T/F)

Answer 48

True

Question 49

A monopolistic competitive industry has

Answer 49

many firms producing a differentiated product.

Question 50

Product differentiation takes place in the minds of the buyer. (T/F)

Answer 50

true

Question 51

Price discrimination

Answer 51

occurs when a seller charges 2 or more prices for the same good or service.

Question 52

Which statement is true about the monopolistic competitor in the long run?

Answer 52

it will be breaking even.

Question 53

Price discrimination means

Answer 53

charging different prices for identical goods that have identical production costs.

Question 54

Through product differentiation, firms attempt to increase the

Answer 54

demands for their products, while making its demand less elastic.

Question 55

Which of the following would NOT cause the costs in a monopolistically competitive industry to be higher than those in a competitive industry?

Answer 55

A large number of competitors.

Question 56

An important result in long-run equilibrium in monopolistic competition is that the equilibrium point results in

Answer 56

price=ATC

Question 57

Which is NOT a characteristic of monopolistic competition?

Answer 57

each firm must take into account the actions of its rivals.

Question 58

The monopolist competitor has more a elastic demand curve than the monopolist.(T/F)

Answer 58

true

Question 59

Statement 1. The airlines often engage in price discrimination. Statement 2. Price discrimination occurs when a seller charges two or more prices for the same good or service.

Answer 59

Both statements are true

Question 60

______ is the crucial characteristic of monopolistic competition.

Answer 60

product differentiation.

Question 61

The typical monopolistic competitor

Answer 61

may compete on the basis of convenience, service, and ambience.

Question 62

Most firms in the US are monopolistic competitors.

Answer 62

most accurate statement

Question 63

Product differentiation is ____ based on real physical differences among products.

Answer 63

sometimes

Question 64

Product differentiation

Answer 64

takes place in the minds of the buyers.

Question 65

The typical monopolistic competior

Answer 65

may be a drugstore, restaurant, gas station, or dry cleaner.

Question 66

Monopolistic competition is similar to perfect competition for all of the following reasons except

Answer 66

both have identical demand and marginal revenue curves.

Question 67

Monopolistic competition may lead to each of the following except

Answer 67

peak efficiency

Question 68

In general, it is fair to say that Americans are provided with

Answer 68

a greater amount of product differentiation than people in most other countries.

Question 69

Corn from an Iowa cornfield vs. corn from an ILlinois cornfield is not an example of product differentiation.

Answer 69

...

Question 70

AN industry that has many firms producing a differentiated product would be classified as

Answer 70

monopolistically competitive

Question 71

Providing better service, ambience, or a convenient location are all forms of

Answer 71

product differentiation.

Question 72

Expensive blood tests in a medical lab for well-to-do medical patients is not an example of price discrimination.

Answer 72

..