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Chap 024

Chap 024

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Published by Matt Jordan

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Published by: Matt Jordan on Jul 24, 2012
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10/14/2014

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CHAPTER
24
Pure Monopoly
Topic Question numbers
 ___________________________________________________________________________________________________ 
1.Monopoly concept; definition1-72.Barriers to entry8-133.Monopoly demand curve14-734.Profit maximization74-1165.Economic implications117-1456.Price discrimination146-1647.Regulated monopolies165-179Consider This180-181Last Word182-184True-False185-208
 ___________________________________________________________________________________________________ 
Multiple Choice QuestionsMonopoly concept; definition
Type: D Topic: 1 E: 438 MI: 1941.Pure monopoly means:A)any market in which the demand curve to the firm is downsloping.B)a standardized product being produced by many firms.C)a single firm producing a product for which there are no close substitutes.D)a large number of firms producing a differentiated product.Answer: CType: D Topic: 1 E: 438 MI: 1942.Which of the following is
correct 
?A)Both purely competitive and monopolistic firms are "price takers."B)Both purely competitive and monopolistic firms are "price makers."C)A purely competitive firm is a "price taker," while a monopolist is a "price maker."D)A purely competitive firm is a "price maker," while a monopolist is a "price taker."Answer: C
 
Type: A Topic: 1 E: 438-439 MI: 194-1953.A purely monopolistic industry:A)has no entry barriers.B)has a downward sloping demand curve.C)produces a product or service for which there are many close substitutes.D)earns only a normal profit in the long run.Answer: DType: D Topic: 1 E: 438 MI: 1944.A pure monopolist is:A)any firm realizing all existing economies of scale.B)any firm whose demand curve is downsloping.C)any firm which can engage in price discrimination.D)a one-firm industry.Answer: DType: A Topic: 1 E: 439 MI: 1955.Pure monopolists may obtain economic profits in the long run because:A)of advertising. C)of barriers to entry.B)marginal revenue is constant as sales increase. D)of rising average fixed costs.Answer: CType: F Topic: 1 E: 439 MI: 1956.Which of the following approximates a pure monopoly?A)the foreign exchange market C)the diamond marketB)the Kansas City wheat market D)the soft drink marketAnswer: CType: A Topic: 1 E: 439 MI: 1957.Which of the following is a characteristic of pure monopoly?A)close substitute products B) barriers to entry C) the absence of market power D) "price taking"Answer: B
Barriers to entry
Type: A Topic: 2 E: 439-441 MI: 195-1978.Which of the following is
not 
a barrier to entry?A)patents B) X-inefficiency C) economies of scale D) ownership of essential resourcesAnswer: BType: A Topic: 2 E: 439 MI: 1959.Barriers to entering an industry:A)are justified because they result in allocative efficiency.B)are justified because they result in productive efficiency.C)are the basis for monopoly.D)apply only to purely monopolistic industries.Answer: C
 
Chapter 24: Pure MonopolyType: A Topic: 2 E: 440 MI: 19610.Patents:A)give firms the exclusive right to produce or control a product for 100 years.B)discourage research and innovation.C)are a source of monopoly.D)are also called trademarks.Answer: DType: A Topic: 2 E: 440 MI: 19611.A natural monopoly occurs when:A)long-run average costs decline continuously through the range of demand.B)a firm owns or controls some resource essential to production.C)long-run average costs rise continuously as output is increased.D)economies of scale are obtained at relatively low levels of output.Answer: AType: A Topic: 2 E: 440 MI: 19612.Large minimum efficient scale of plant combined with limited market demand may lead to:A)natural monopoly. B) patent monopoly C) government franchise monopoly. D) shared monopoly.Answer: AType: A Topic: 2 E: 439-441 MI: 195-19713.What do economies of scale, the ownership of essential raw materials, and patents have in common?A)They must all be present before price discrimination can be practiced.B)They are all barriers to entry.C)They all help explain why a monopolist's demand and marginal revenue curves coincide.D)They all help explain why the long-run average cost curve is U-shaped.Answer: B
Monopoly demand curve
Type: A Topic: 3 E: 441 MI: 19714.The nondiscriminating pure monopolist's demand curve:A)is the industry demand curve.B)shows a direct or positive relationship between price and quantity demanded.C)tends to be inelastic at high prices and elastic at low prices.D)is identical to its marginal revenue curve.Answer: DType: A Topic: 3 E: 441-442 MI: 197-19815.The nondiscriminating monopolist's demand curve:A)is less elastic than a purely competitive firm's demand curve.B)is perfectly elastic.C)coincides with its marginal revenue curve.D)is perfectly inelastic.Answer: AMcConnell/Brue: Economics, 16/e Page 733

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