Question 1

The Big River Power Company is a regulated monopolist with pricing structured such that the stockholders receive a "fair" rate of return based on the firm's unit costs.Can economic thinking predict how the company executive offices are likely to be furnished? Given a choice between Hawaii and downtown Cleveland (20 miles away),where would we expect the Board of Directors to meet?

Accepted Answer

We would expect the firm to ha...

Question 2

From the viewpoint of allocative efficiency,which of the following is a defect of pure monopoly?

Accepted Answer

A)  The monopolist undersupplies the market and charges too high a price.
B)  The monopolist is a revenue maximizer not a profit maximizer.
C)  A monopolist has little incentive to produce efficiently (at a low cost) .
D)  All of the above are true.E) B) and C)
F) None of the above

Question 3

Figure 11-9
 
-From Figure 11-9,indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

Accepted Answer

A)  BFEC
B)  AGEC
C)  BHEC
D)  EFHE) A) and D)
F) All of the above

Question 4

Figure 11-2
 
-What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

Accepted Answer

A)  zero
B)  approximately $10,000
C)  approximately $20,000
D)  approximately $40,000E) All of the above
F) A) and C)

Question 5

To maximize profit,the monopolist,whose cost and demand conditions are shown below,should charge a price of

Accepted Answer

A)  $4.
B)  $5.
C)  $6.
D)  $7.E) A) and B)
F) A) and C)

Question 6

Figure 11-12
 
-Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry.The price of this product is most likely to be

Accepted Answer

A)  greater than P₂.
B)  P₂.
C)  P₁.
D)  in the range between P₁ and P₂.E) A) and B)
F) A) and C)

Question 7

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

Accepted Answer

A)  There is always more than one firm in competitive price-searcher and competitive price-taker markets.
B)  Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods,but a monopoly is not.
C)  In both competitive price-searcher and competitive price-taker markets,the barriers to entry are low;this is not true under a monopoly.
D)  A monopoly firm has a downward-sloping demand curve;firms in the other types of markets do not.E) A) and C)
F) B) and C)

Question 8

When economies of scale are important,imposing competition by splitting a monopolistic firm into many rival units will

Accepted Answer

A)  lead to an increase in the per-unit cost of production in the industry.
B)  not affect per-unit costs but will affect demand conditions.
C)  generally increase the social efficiency of production.
D)  cause the industry demand curve to increase (shift to the right) .E) C) and D)
F) A) and B)

Question 9

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Accepted Answer

A)  the government does not have information about which firms are monopolies.
B)  firms that are monopolies do not have information about their level of profit or about potential competition.
C)  consumers do not have information about which firms are competitive and which firms are monopolies.
D)  regulators do not have information about the demand and marginal costs of the firms that they regulate.E) All of the above
F) B) and D)

Question 10

In general,an organization of sellers designed to coordinate supply decisions so that the joint profits of the members is maximized is called a(n) ____.If they are successful,the total market output and price will most closely approximate the output and price in a(n) ____ market.(Fill in the blanks. )

Accepted Answer

A)  cooperative;open price-taker
B)  cartel;monopoly
C)  cartel;open price-taker
D)  OPEC;competitive price-searcherE) B) and C)
F) C) and D)

Question 11

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
-Refer to Figure 11-17.The marginal revenue curve for a monopoly firm is depicted by curve

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and D)
F) A) and C)

Question 12

Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price.If a firm wanted to break this agreement and not be detected,what would be one way to do this?

Accepted Answer

One answer might be secret price cuts to...

Question 13

Figure 11-3
 
-The cost and demand conditions for a monopolist are depicted in Figure 11-3.If the monopolist is maximizing profit,it will charge a price of

Accepted Answer

A)  $10 and produce an output of 20,000.
B)  $20 and produce an output of 10,000.
C)  $20 and produce an output of 20,000.
D)  more than $20.E) All of the above
F) B) and C)

Question 14

The figure below illustrates the cost and revenue structure for a monopoly firm.
Figure 11-17
 
-Refer to Figure 11-17.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Accepted Answer

A)  Q₁.
B)  Q₂.
C)  Q₃.
D)  Q₄.E) A) and D)
F) C) and D)

Question 15

Which of the following statements is true for a monopolist?

Accepted Answer

A)  a monopolist will charge the highest price for which he can sell units of his product.
B)  unregulated monopolists can gain by producing their chosen output at a low cost.
C)  if a firm has a monopoly,it will always be able to earn economic profit.
D)  none of the above statements are true.E) All of the above
F) A) and B)

Question 16

(I) Oligopolistic firms have an incentive to collude to increase profits.
(II) Oligopolistic firms have an incentive to cheat on collusive agreements to increase profits.

Accepted Answer

A)  I is true;II is false.
B)  I is false;II is true.
C)  Both I and II are false.
D)  Both I and II are true.E) A) and C)
F) A) and B)

Question 17

Figure 11-10
 
-If the monopolist is regulated by the "marginal cost pricing" technique,what price in Figure 11-10 will be charged?

Accepted Answer

A)  P₁
B)  P₂
C)  P₃
D)  P₄E) B) and D)
F) A) and B)

Question 18

Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

Accepted Answer

A)  If I alone cheat,I'm better off;if everyone cheats,I'm worse off.
B)  I can never do better for myself than by following agreed-upon cartel policies.
C)  If everyone cheats,I'm better off and so is everyone else in the cartel.
D)  If I suspect others are planning to cheat,I'll do best for myself by deciding not to cheat.E) None of the above
F) All of the above

Question 19

Which of the following is true?

Accepted Answer

A)  Competitive forces are present even in markets with high barriers to entry.
B)  Quality competition is an unimportant element of the competitive process.
C)  Profitability and high prices discourage technological change and the development of substitute products.
D)  Government regulations have substantially increased the quality of American manufacturing products in recent years.E) B) and C)
F) All of the above

Question 20

Government-operated firms with monopoly power

Accepted Answer

A)  will necessarily meet the criteria of economic efficiency,as long as price equals average total cost.
B)  will always be more efficient than private firms because they do not have to make a profit.
C)  are likely to be inefficient since some of the monopoly power is likely to serve the interests of the governmental managers and employees.
D)  are highly responsive to changes in the preferences of individual consumers since consumers are also voters.E) A) and C)
F) B) and D)

Exam 24: Aprice-Searcher Markets With High Entry Barriers

When economies of scale are important,imposing competition by splitting a monopolistic firm into many rival units will

Correct Answer
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Correct Answer
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We would expect the firm to ha...
View Answer

(I) Oligopolistic firms have an incentive to collude to increase profits. (II) Oligopolistic firms have an incentive to cheat on collusive agreements to increase profits.

Correct Answer
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Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

Correct Answer
verified

Which of the following statements is true for a monopolist?

Correct Answer
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Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price.If a firm wanted to break this agreement and not be detected,what would be one way to do this?

Correct Answer
verified
One answer might be secret price cuts to...
View Answer

To maximize profit,the monopolist,whose cost and demand conditions are shown below,should charge a price of

Correct Answer
verified

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

Correct Answer
verified

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 -Refer to Figure 11-17.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct Answer
verified

From the viewpoint of allocative efficiency,which of the following is a defect of pure monopoly?

Correct Answer
verified

Government-operated firms with monopoly power

Correct Answer
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Figure 11-3 -The cost and demand conditions for a monopolist are depicted in Figure 11-3.If the monopolist is maximizing profit,it will charge a price of

Correct Answer
verified

Figure 11-9 -From Figure 11-9,indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

Correct Answer
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Figure 11-10 -If the monopolist is regulated by the "marginal cost pricing" technique,what price in Figure 11-10 will be charged?

Correct Answer
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Which of the following is true?

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Figure 11-12 -Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry.The price of this product is most likely to be

Correct Answer
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Figure 11-2 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

Correct Answer
verified

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 -Refer to Figure 11-17.The marginal revenue curve for a monopoly firm is depicted by curve

Correct Answer
verified

In general,an organization of sellers designed to coordinate supply decisions so that the joint profits of the members is maximized is called a(n) .If they are successful,the total market output and price will most closely approximate the output and price in a(n) market.(Fill in the blanks. )

Correct Answer
verified

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Correct Answer
verified

Exam 24: Aprice-Searcher Markets With High Entry Barriers

When economies of scale are important,imposing competition by splitting a monopolistic firm into many rival units will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWe would expect the firm to ha...View AnswerShow Answer

(I) Oligopolistic firms have an incentive to collude to increase profits. (II) Oligopolistic firms have an incentive to cheat on collusive agreements to increase profits.

Correct AnswerverifiedShow Answer

Which of the following reflects the incentive structure confronted by a typical firm in a cartel?

Correct AnswerverifiedShow Answer

Which of the following statements is true for a monopolist?

Correct AnswerverifiedShow Answer

Suppose all automobile manufacturers have collusively agreed to sell their cars at a uniform price.If a firm wanted to break this agreement and not be detected,what would be one way to do this?

Correct AnswerverifiedOne answer might be secret price cuts to...View AnswerShow Answer

To maximize profit,the monopolist,whose cost and demand conditions are shown below,should charge a price of

Correct AnswerverifiedShow Answer

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

Correct AnswerverifiedShow Answer

The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 -Refer to Figure 11-17.If the monopoly firm wants to maximize its profit,it should operate at a level of output equal to

Correct AnswerverifiedShow Answer

From the viewpoint of allocative efficiency,which of the following is a defect of pure monopoly?

Correct AnswerverifiedShow Answer

Government-operated firms with monopoly power

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Figure 11-3 -The cost and demand conditions for a monopolist are depicted in Figure 11-3.If the monopolist is maximizing profit,it will charge a price of

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Figure 11-9 -From Figure 11-9,indicate the maximum profit a pure monopolist with the cost and demand conditions above would be able to achieve.

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Figure 11-10 -If the monopolist is regulated by the "marginal cost pricing" technique,what price in Figure 11-10 will be charged?

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Which of the following is true?

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Figure 11-12 -Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry.The price of this product is most likely to be

Correct AnswerverifiedShow Answer

Figure 11-2 -What is the maximum profit per month that the monopolist will be able to earn in Figure 11-2?

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The figure below illustrates the cost and revenue structure for a monopoly firm. Figure 11-17 -Refer to Figure 11-17.The marginal revenue curve for a monopoly firm is depicted by curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?

Correct AnswerverifiedShow Answer

Correct Answer
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We would expect the firm to ha...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
verified
One answer might be secret price cuts to...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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