Need economics help with some multiple questions
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
A monopoly is a seller of a product
1)
_______
A)
without a well-defined demand curve.
B)
with many substitutes.
C)
without a close substitute.
D)
with a perfectly inelastic demand.
2)
If we use a narrow definition of monopoly, then a monopoly is defined as a firm
2)
_______
A)
that can ignore the actions of all other firms because it produces a superior product compared to its rivals’ products.
B)
that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.
C)
that has the largest market share in an industry.
D)
that has been granted special production rights by the government.
3) In 2011, Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business. Microsoft’s primary complaint was that
3)
_______
A)
Google is the only Internet search engine available to Windows operating system users.
B)
Google owns the Internet advertising companies that pay for ads on search engine sites, and has prohibited ads from being sold to competitors.
C)
the European Union contracts exclusively with Google for its Internet search engine use.
D)
Google was using its dominant position as an Internet search engine to exclude competitors.
4)
Compared to a monopolistic competitor, a monopolist faces
4)
_______
A)
a more elastic demand curve.
B)
a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices.
C)
a more inelastic demand curve.
D)
a demand curve that has a price elasticity coefficient of zero.
5)
Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?
5)
_______
A)
Each must lower its price to sell more output.
B)
Each sets a price for its product that will maximize its revenue.
C)
Each maximizes profits by producing a quantity for which price equals marginal cost.
D)
Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.
6) The Google search engine has a market share of ________ in the United States and ________ in Europe.
6)
_______
A)
70 percent; 90 percent
B)
45 percent; 15 percent
C)
90 percent; 25 percent
D)
50 percent; 50 percent
7)
Which one of the following about a monopoly is false?
7)
_______
A)
A monopoly could break even in the long run.
B)
A monopoly could make profits in the long run.
C)
A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.
D)
A monopoly status could be temporary.
8)
A United States government patent lasts
8)
_______
A)
forever.
B)
50 years.
C)
20 years.
D)
7 years.
9)
Governments grant patents to
9)
_______
A)
encourage low prices.
B)
encourage competition.
C)
compensate firms for research and development costs.
D)
encourage firms to reveal secret production techniques.
10)
For a natural monopoly to exist
10)
______
A)
a firm’s long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand.
B)
a firm’s long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level.
C)
a firm must continually buy up its rivals.
D)
a firm must have a government-imposed barrier.
11)
There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?
11)
______
A)
control of a key resource
B)
economies of scale
C)
public franchise
D)
network externalities
Figure 15–1
12)
Refer to Figure 15–1. Which of the following statements about the firm depicted in the diagram is true?
12)
______
A)
The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises.
B)
The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises.
C)
The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.
D)
The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximizes its profits.
13)
A natural monopoly is most likely to occur in which of the following industries?
13)
______
A)
the software industry because of the importance of network externalities
B)
an industry where fixed costs are very large relative to variable costs
C)
the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years
D)
the diamond mining and marketing industry because one firm can control a key resource
14)
A monopolist’s profit maximizing price and output correspond to the point on a graph
14)
______
A)
where price is as high as possible.
B)
where total costs are the smallest relative to price.
C)
where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.
D)
where average total cost is minimized.
15)
Because a monopoly’s demand curve is the same as the market demand curve for its product
15)
______
A)
the monopoly is a price taker.
B)
the monopoly must lower its price to sell more of its product.
C)
the monopoly’s marginal revenue equals its price.
D)
the monopoly’s average total cost always falls as it increases its output.
Figure 15–2
Figure 15-2 above shows the demand and cost curves facing a monopolist.
16)
Refer to Figure 15–2. To maximize profit, the firm will produce
16)
______
A)
Q1.
B)
Q2.
C)
Q3.
D)
Q4.
17)
Refer to Figure 15–2. The firm’s profit-maximizing price is
17)
______
A)
P1.
B)
P2.
C)
P3.
D)
P4.
18)
Refer to Figure 15–2. If the firm’s average total cost curve is ATC1, the firm will
18)
______
A)
suffer a loss.
B)
break even.
C)
make a profit.
D)
face competition.
19)
Refer to Figure 15–2. If the firm’s average total cost curve is ATC2, the firm will
19)
______
A)
suffer a loss.
B)
break even.
C)
make a profit.
D)
face competition.
20)
Refer to Figure 15–2. If the firm’s average total cost curve is ATC3, the firm will
20)
______
A)
suffer a loss.
B)
break even.
C)
make a profit.
D)
face competition.
Table 15–1
|
Price per Unit |
Quantity Demanded (units) |
Total Cost of Production (dollars) |
|
$85 |
10 |
$530 |
|
80 |
11 |
540 |
|
75 |
12 |
550 |
|
70 |
13 |
560 |
|
65 |
14 |
575 |
|
60 |
15 |
595 |
|
55 |
16 |
625 |
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
21)
Refer to Table 15–1. What is the marginal revenue from the sale of the 12th unit?
21)
______
A)
$75
B)
$50
C)
$20
D)
-$5
22)
Refer to Table 15–1. What is the firm’s profit-maximizing output and what is the price charged to sell this output?
22)
______
A)
P = $70; Q = 13
B)
P = $85; Q = 10
C)
P = $65; Q = 14
D)
P = $80; Q = 11
23)
Refer to Table 15–1. What is the amount of the firm’s profit?
23)
______
A)
$335
B)
$350
C)
$880
D)
$910
24)
Long-run economic profits would most likely exist in which market structure?
24)
______
A)
monopoly and oligopoly
B)
monopoly only
C)
monopoly and monopolistic competition
D)
monopoly, monopolistic competition and oligopoly
Figure 15–4
Figure 15-4 shows the demand and cost curves for a monopolist.
25)
Refer to Figure 15–4. What is the profit-maximizing/loss-minimizing output level?
25)
______
A)
600 units
B)
800 units
C)
940 units
D)
1,160 units
26)
Refer to Figure 15–4. What is the price charged for the profit-maximizing output level?
26)
______
A)
$13
B)
$21
C)
$27
D)
$34
27)
Which of the following is true for a monopolist?
27)
______
A)
Being the only seller in the market, the monopolist faces a perfectly elastic demand curve.
B)
Being the only seller in the market, the monopolist faces the market demand curve.
C)
Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve.
D)
Being the only seller in the market, the monopolist faces a downward sloping demand curve that lies below the marginal revenue curve.
28)
A price maker is
28)
______
A)
a consumer who participates in an auction where she announces her willingness to pay for a product.
B)
a person who actively seeks out the best price for a product that he or she wishes to buy.
C)
a firm that has some control over the price of the product it sells.
D)
a firm that is able to sell any quantity at the highest possible price.
29)
Wendell can sell five motor homes per week at a price of $22,000. If he lowers the price of motor homes to $20,000 per week he will sell six motor homes. What is the marginal revenue of the sixth motor home?
29)
______
A)
$10,000
B)
$12,000
C)
$20,000
D)
$22,000
30)
If a monopolist’s marginal revenue is $35 per unit and its marginal cost is $25, then
30)
______
A)
to maximize profit the firm should continue to produce the output it is producing.
B)
to maximize profit the firm should decrease output.
C)
to maximize profit the firm should increase output.
D)
Not enough information is given to say what the firm should do to maximize profit.
Figure 15–4
Figure 15-4 shows the demand and cost curves for a monopolist.
31)
Refer to Figure 15–4. What is the amount of the monopoly’s total revenue?
31)
______
A)
$21,600
B)
$20,400
C)
$19,740
D)
$7,800
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