1) A monopoly is an industry with A) a single firm in which the entry of new firms is blocked. B) a small number of firms each large enough to impact the market price of its output. C) many firms each able to differentiate their product. D) many firms each too small to impact the market price of its output. 2) Resources are allocated efficiently when A) the market produces what people want. B) economic profits are zero. C) output is distributed in an equitable fashion. D) output is produced in a sustainable fashion. Refer to the information provided in Figure 12.1 below to answer the questions that follow. Figure 12.1 3) Refer to Figure 12.1. This firm is currently at Point A on the ATC curve. If this firm moves toward Point B, this will make the A) distribution of outcome more equitable. B) economy more stable. C) economy more efficient. D) economy less stable. 4) Under perfect competition, the efficient level of output is produced because A) government regulates the output level that must be produced. B) firms earn only a normal profit in the long run. C) firms can earn an economic profit in the long run. D) price equals marginal cost. 5) In perfect competition, the condition that ensures that the right things are produced is A) MUX = PX. B) P = MC. C) P = ATC. D) MRPL = ATC
6) Society will produce at a productive efficient output if all firms equate A) price and marginal cost. B) price and average total cost. C) marginal cost and average total cost. D) price and marginal revenue. 7) In a perfectly competitive market, productive efficiency is A) where P = MR B) where MR = D C) where P= ATC D) where P=minimum ATC 8) A firm must be able to competition if it is to exercise control over the price of its product. A) maximize B) increase C) not change D) limit 9) Imperfect competition A) means there is no competition in the market. B) results in less efficient market outcomes. C) should always be regulated by the government D) is a major cause of externalities in the market. 10) Which of the following is LEAST likely to be considered a firm in an imperfectly competitive industry? A) a Burger King in Pittsburgh, Pa. B) Ohio Bell Telephone Company C) a wheat farmer in Kansas D) the only locally owned and operated bank in Severn, MD. 11) Which of the following statements represents the best reason to study economics? A) You love studying Scarcity B) You feel your teacher needs a hair transplant C) You have nothing better to do with your time D) You feel that economists are the coolest people on earth
Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1 12) Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by A) Panel A. B) Panel B. C) Panel C. D) Panel D. 13) Refer to Figure 13.1. The demand curve facing an electric company is most likely represented by A) Panel A. B) Panel B. C) Panel C. D) Panel D. 14) Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by A) Panel A. B) Panel B. C) Panel C. D) Panel D.
15) Refer to Figure 13.1. The demand curve for insulin is most likely represented by A) Panel A. B) Panel B. C) Panel C. D) Panel D. 16) Monopolists differ from perfectly competitive firms A) on the cost and demand sides of the profit equation. B) on the cost side of the profit equation alone. C) on the demand side of the profit equation alone. D) on neither the cost nor demand sides of the profit equation. 17) Monopolists differ from perfectly competitive firms A) on the cost and demand sides of the profit equation. B) on the cost side of the profit equation alone. C) on the demand side of the profit equation alone. D) on neither the cost nor demand sides of the profit equation. 18) XYZ Computer Company has a monopoly on the sale of a specialized color printer. If it sells two of these printers its total revenue is $1,000, and if it sells three color printers its total revenue is $1,600. The marginal revenue of the third color printer sold is A) $200. B) $300. C) $600. D) $1,300. 19) For a monopolist to sell more units of output, A) the price must be increased. B) the price must be reduced. C) demand must become more elastic. D) the other competing firms must sell fewer units. 20) In a monopoly, the market demand curve is A) the same as the demand curve facing the firm. B) the summation of all the individual firm's cost curves. C) nonexistent. D) the marginal cost curve above minimum average variable cost. 21) For a monopoly, the marginal revenue curve has point(s) in common with the firm's linear demand curve. A) one B) no C) all D) Indeterminate from the given information.
22) For a perfectly competitive firm, the marginal revenue curve has point(s) in common with the firm's demand curve. A) one B) no C) all D) Indeterminate from the given information. 23) Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $600, and if it sells three calculators its total revenue is $750. The marginal revenue of the third calculator sold is A) $50. B) $75. C) $150. D) $250. 24) Stereo Sound Unlimited has a monopoly over the installation of surround sound systems. If Stereo Sound Unlimited's total revenue from installing 10 sound systems is $20,000 and its total revenue from installing 11 sound systems is $18,000, what is the marginal revenue of the eleventh sound system? A) -$2,000 B) -$1,000 C) $2,000 D) $3,800 25) Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. Hi Phi Unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 18 sound systems is $33,000. The marginal revenue received from selling the 18th sound system is A) equal to the price of the 16th sound system. B) greater than the price of the 16th sound system. C) less than the price of the 16th sound system. D) Indeterminate from the given information.
Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3 26) Refer to Figure 13.3. The marginal revenue of the fourth pound of cheese is A) $1. B) $3. C) $6. D) $24. 27) Refer to Figure 13.3. The marginal revenue of the sixth pound of cheese is A) -$4. B) -$1. C) $1. D) $4. 28) Refer to Figure 13.3. This firm's total revenue will be maximized at a price of A) $8. B) $6. C) $5. D) $4. 29) Refer to Figure 13.3. This firm's marginal revenue will be positive at A) prices above $5. B) prices below $5. C) all prices. D) prices between $4 and $8. 30) Refer to Figure 13.3. This firm's marginal revenue will be negative at A) prices above $5. B) prices below $5. C) all prices. D) prices between $4 and $8.
31) The demand curve facing a monopolistic firm is. A) upward- sloping B) downward- sloping C) horizontal D) vertical 32) For a monopolist, price A) equals marginal revenue at all output levels. B) is less than marginal revenue. C) is greater than marginal revenue. D) can be greater than or less than marginal revenue. 33) When the demand curve is a downward sloping straight line, the slope of the marginal revenue curve is A) always equal to one. B) the same as the slope of the demand curve. C) half as steep as the demand curve. D) twice as steep as the demand curve. 34) For a monopolist, if total revenue increases as output decreases, then marginal revenue is A) equal to price. B) zero. C) positive. D) negative. 35) A monopolist will not produce A) a positive level of output when its marginal revenue is declining. B) a positive level of output when its price is less than average total cost but greater than average variable cost. C) in the inelastic portion of its demand curve, where marginal revenue is negative. D) in the perfectly competitive level of output when it engages in perfect price discrimination. 36) Suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has A) maximized its total revenue. B) set price equal to its average cost. C) maximized the difference between marginal revenue and marginal cost. D) equated marginal revenue and marginal cost.
Refer to the information provided in Figure 13.5 below to answer the questions that follow. Figure 13.5 37) Refer to Figure 13.5. The profit-maximizing level of output for this monopolist is units of output. A) 20 B) 22 C) 24 D) 26 38) Refer to Figure 13.5. The profit-maximizing price for this firm is A) $5. B) $7. C) $9. D) $11. 39) Refer to Figure 13.5. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, the firm's profit will be A) $0. B) $88. C) $154. D) $242. 40) The XYZ Computer Company has a monopoly over the production of a specialized color printer. The XYZ Computer Company will find it profitable to reduce output as long as marginal revenue A) is greater than marginal cost. B) equals marginal cost. C) is less than marginal cost. D) is positive.
41) Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm A) could increase profits by reducing output. B) could increase profits by increasing output. C) is maximizing profits. D) must be earning a zero profit. 42) In the short run, when a monopolist incurs a loss, it will A) always shut down. B) always produce where marginal cost equals marginal revenue. C) produce as long as total revenue is sufficient to cover variable costs. D) produce as long as total revenue is sufficient to cover fixed costs. 43) In the long run, a monopoly A) will always earn zero economic profits. B) may earn positive economic profits due to entry barriers. C) will never exit the industry. D) will yield an efficient outcome. 44) A monopolist suffers a loss if its schedule is everywhere above its schedule. A) ATC; MC B) MC; AVC C) ATC; Demand D) Demand; ATC 45) A monopolist is NOT guaranteed positive economic profits solely because it is a monopoly since there may be no output for which A) TR = TVC. B) TR > TC. C) MC = MR. D) ATR < MR.
Refer to the information provided in Figure 13.6 below to answer the question that follows. Figure 13.6 46) Refer to Figure 13.6. The Silver Exchange has a monopoly over the sale of solid silver walking sticks. The Silver Exchange has hired you as an economic consultant. You should advise this monopolist to A) shut down in the short run and exit the industry in the long run. B) produce in the short run and expand capacity in the long run. C) produce in the short run but exit the industry in the long run. D) shut down in the short run but expand capacity in the long run.
Refer to the information provided in Figure 13.7 below to answer the question that follows. Figure 13.7 47) Refer to Figure 13.7. The profit-maximizing level of output for the Memory Company is high school yearbooks. A) 0 B) 200 C) 300 D) 350 48) Refer to Figure 13.7. The profit-maximizing price for the Memory Company's high school yearbook is A) $0. B) $9. C) $16. D) $20. 49) Refer to Figure 13.7. The maximum profit level for the Memory Company is A) -$1,800. B) -$1,200. C) -$800. D) $0. 50) Relative to a competitively organized industry, a monopoly is more likely to produce A) more output, charges higher prices, and earns economic profits. B) less output, charges lower prices, and earns economic profits. C) less output, charges lower prices, and earns only a normal profit. D) less output, charges higher price, and earns economic profits.
51) A prevents new firms from entering and competing in a monopolistic industry. A) barrier to entry B) collusive agreement C) market power sharing agreement D) cartel agreement Refer to the information provided in Figure 13.8 below to answer the questions that follow. Figure 13.8 52) Refer to Figure 13.8. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set at A) $12.00. B) $12.50. C) $13.00. D) $16.00. 53) Which type of barrier to entry allowed the electric company to maintain a monopoly over the production of electricity? A) a patent B) economies of scale C) diseconomies of scale D) ownership of a scarce factor of production 54) A barrier to entry that grants exclusive use of an invented product or process to the inventor is called. A) a government franchise B) a patent C) economies of scale D) the ownership of a scarce resource
55) When a firm's LRAC curve is still declining when it intersects the market demand curve, we call the firm a(n). A) perfect competitor B) monopolistic competitor C) oligopolist D) natural monopolist 56) An industry that realizes such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called a(n) monopoly. A) fixed cost B) economies of scale C) patent D) natural 57) It would be inefficient to break up a monopoly. A) government created B) price- fixing C) cartelized D) natural Refer to the information provided in Figure 13.10 below to answer the questions that follow. Figure 13.10 58) Refer to Figure 13.10. If Armstrong Cable were free to sell to any number of subscribers it desires and set any price, it would sell to subscribers at a price of. A) 800; $15 B) 1,000; $16 C) 2,200; $13 D) 2,500; $12
59) Refer to Figure 13.10. If Armstrong Cable is forced to sell the allocative efficient output or the social optimal output, it will A) incur a loss of $7,250. B) incur a loss of $1,250. C) earn a zero profit. D) earn a profit of $4,000. 60) Refer to Figure 13.10. If Armstrong Cable is forced to sell the productive efficient output or the fair return output, it will A) incur a loss of $7,250. B) incur a loss of $1,250. C) earn a zero profit. D) earn a profit of $4,000.