hw 10 Flashcards
final exam practive (17 cards)
which of the following is true?
a. Monopoly is a market structure in which one firm makes up the entire market.
b. A natural monopoly arises when a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. This is because economies of scale apply over the entire relevant range of output.
c. There are many close substitutes for a monopolist’s product.
d. Barriers to entry into the market prevent competition.
c. There are many close substitutes for a monopolist’s product.
the difference between a monopolist and a competitive firm is
a. A monopolist is a price taker while a competitive firm is a price maker.
b. A monopolist is one of many companies while a competitive firm is the sole producer.
c. A monopolist faces a downward sloping demand curve while a competitive firm faces a horizontal demand curve.
d. None of these.
c. a monopolist faces a downward sloping demand curve while a competitive farm faces a horizontal demand curve
Which of the following is true?
a. The monopolist maximizes profit when Marginal Revenue equals Marginal Cost.
b. The monopolist maximizes profit when Marginal Revenue equals Price.
c. The monopoly maximizes profit when Marginal Cost equals Price.
d. None of these.
a. The monopolist maximizes profit when Marginal Revenue equals Marginal Cost
If MR > MC, the monopolist can increase profit by _________ its output. If MR < MC, the monopolist can increase profit by __________ its output.
a. Decreasing, increasing
b. Decreasing, decreasing
c. Increasing, decreasing
d. Increasing, increasing
c. Increasing, decreasing
Which of the following is true?
a. Monopoly output is higher and price is higher than perfect competition
b. Monopoly output is lower and price is higher than perfect competition
c. Monopoly output is higher and price is lower than perfect competition
d. Monopoly output is lower and price is lower than perfect competition
b. monopoly output is lower and price is higher than perfect competition
Which of the following is true?
a.With a monopoly, there is both
a welfare loss and a transfer of surplus from the monopolist to the consumer.
b. With a monopoly, there is either a welfare loss or a transfer of surplus from the consumer to the monopolist.
c.With a monopoly, there is neither a welfare loss nor a transfer of surplus.
d. With a monopoly, there is both a welfare loss and a transfer of surplus from the consumer to the monopolist.
d. With a monopoly, there is both a welfare loss and a transfer of surplus from the consumer to the monopolist
When a monopolist price discriminates, it charges different prices to different individuals or groups of individuals. Consumers with less elastic demands are charged ______ prices, and consumers with more elastic demands are charged ______ prices.
a. Lower, higher
b. Lower, lower
c. Higher, higher
d. Higher, lower
d. higher, lower
Compared to a monopolist that does not practice perfect price discrimination, perfect price discrimination by a monopolist _______ profit, _______ total surplus, and _______ consumer surplus.
a. Raises, raises, lowers
b. Raises, lowers, lowers
c. Raises, raises, raises
d. Lowers, raises, lowers
a. Raises, raises, lowers
Which of the following is NOT a barrier to entry?
a. New technology
b. Natural Monopolies
c. Government-Created Monopolies
d. Sales taxes paid by a monopolist
d. sales taxes paid by a monopolist
Which of the following are true?
a. Lazy monopolists are firms that do not push for efficiency, but merely enjoy the position they are already in
b. Lazy monopolists are not profit maximizers
c. Lazy monopolists have monopoly positions, but they don’t make large monopoly profits
d. All of these are true
d. all of these are true
Competitive forces work to break down a monopoly by:
Lobbying to change a law protecting a monopoly such as the Public Utilities Regulatory Policies Act of 1978
a. Developing a generally similar product without violating a patent such, as Beta versus VHS video recording
b. Developing a substitute such as consumer-owned rooftop solar power in lieu of utility-owned coal power plants
c. Developing new technologies that can compete with natural monopolies such as the recent (2005) introduction of streaming technology used by Netflix, Hulu, YouTube, and others.
Correct!
d. All of the above
d. all of the above
Which of the following are true?
a. Regulated natural monopolies are given the exclusive right to operate in the industry. For example, a natural gas company will be given the exclusive or franchise right to operate within a community.
b. Regulated monopolies are allowed to charge a fair price, which includes all costs plus a normal return on capital investment. This fair price is determined by regulatory hearings called rate cases.
c. When regulated monopolies are allowed to pass on all cost increases, they have little or no incentive to hold down costs and X–inefficiency develops. This is why the cost of an airline ticket in 1960 was much higher than the price of an airline ticket in 2015.
d. All of these are true
d.all of these are true
When a monopolist changes from charging a single price to perfect price discrimination, it reduces:
a. The quantity produced
b. The firm’s profit
c. Consumer surplus
d. Total surplus
c. consumer surplus
Compared to the social optimum, a monopolist chooses:
a. A quantity that is too low and a price that is too high
b. A quantity that is too high and a price that is too low
c. A quantity and a price that are both too high
d. A quantity and a price that are both too low
a. a quantity that is too low and a price that is too high
For a profit maximizing monopolist that charges the same price to all consumers, what is the relationship between price P, marginal revenue MR, and marginal cost MC?
a. P = MR and MR = MC
b. P > MR and MR = MC
c. P = MR and MR > MC
d. P > MR and MR > MC
b. P> MR and MR = MC
A monopolist can have losses. This is because:
a. If demand for the monopolist’s product drops sufficiently low, it can fall below ATC.
b. The cost for the monopolist to make the product could push ATC above demand.
c. Both A and B
d. Neither A or B
c. both A and B
Without barriers to entry, new entrants would compete away the monopoly profits. Which of the following is NOT a common barrier to entry:
a. Legal Barriers
b. Technological Barriers
c. Strategic Barriers
d. The Great Barrier Reef
d. the Great Barrier Reef
