Question 1

The figure below shows the demand curve and the long run average cost curve for an electric company.
This market is a natural monopoly because

Accepted Answer

A)   the long run average cost curve is U-shaped
B)   when producing large quantities, the long run average cost is greater than demand
C)   when producing small quantities, the demand is higher than long run average cost
D)   the demand curve intersects the long run average cost curve at a point where the long run average cost curve is downward slopingE) A) and D)
F) A) and C)

Question 2

A natural monopoly occurs when the quantity demanded is _______ the minimum quantity it takes to be at the bottom of the long-run average cost curve.

Accepted Answer

A)   greater than
B)   less than
C)   equal to
D)   a or c aboveE) A) and D)
F) B) and C)

Question 3

The two primary factors determining monopoly market power are the firm's

Accepted Answer

A)   revenues and size of its customer base
B)   demand curve and its cost structure
C)   variable cost curve and its fixed cost structure
D)   demand curve and level of wealth within its marketE) A) and C)
F) A) and B)

Question 4

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale,

Accepted Answer

A)   the firm is a natural monopoly.
B)   there are close substitutes for the good the firm produces.
C)   firm is a single-price monopoly.
D)   firm is well protected from competition by a legal barrier.E) A) and B)
F) None of the above

Question 5

When a monopolist increases sales by one unit,

Accepted Answer

A)   it gains some marginal revenue from selling that extra unit.
B)   more low priced sales cause negative marginal revenues.
C)   every other unit must now be sold at a lower price.
D)   it loses some marginal revenue and all of the above.E) A) and D)
F) All of the above

Question 6

The form of legal protection intended to prevent reproduction of original works is referred to as _______ law.

Accepted Answer

A)   patent
B)   trademark
C)   copyright
D)   trade secretE) B) and C)
F) A) and C)

Question 7

For a monopolistic firm, the demand for its product is

Accepted Answer

A)   unitary elastic
B)   completely elastic
C)   completely inelastic
D)   neither b or cE) None of the above
F) C) and D)

Question 8

The slope of the demand curve for a monopoly firm is

Accepted Answer

A)   horizontal, parallel to the x-axis
B)   vertical, parallel to the y-axis
C)   upward sloping
D)   downward slopingE) C) and D)
F) B) and C)

Question 9

Which one of the following is the most accurate description of a monopolist?

Accepted Answer

A)   a sole producer of a narrowly defined product class, such as brown, Grade A eggs produced in Eagle County, Colorado
B)   a firm that is very large relative to all its competitors within a narrow product class
C)   a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry
D)   a large, multinational firm that produces a single product in a narrow product classE) None of the above
F) B) and C)

Question 10

Occasionally, _______ may lead to pure monopoly; in other market conditions, they may limit competition _______.

Accepted Answer

A)   barriers to entry; to a few oligopoly firms
B)   barriers to entry; to a natural monopoly
C)   deregulation; requiring new patent law
D)   deregulation; requiring new copyright lawE) B) and C)
F) A) and B)

Question 11

By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the _______.

Accepted Answer

A)   telecommunications sector
B)   postal services sector
C)   banking sector
D)   nuclear power sectorE) B) and C)
F) A) and B)

Question 12

Which of the following denotes the typical shape of the monopolist's total cost curve?

Accepted Answer

A)   total costs decrease and become flatter as output rises
B)   total costs rise and grow steeper as output rises
C)   higher output levels create the typical downward sloping cost curve
D)   total costs are typically constant and are shown by a straight horizontal lineE) A) and D)
F) A) and C)

Question 13

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting

Accepted Answer

A)   the number of inventors.
B)   unit production costs.
C)   entry into the market.
D)   demand for the product.E) B) and C)
F) B) and D)

Question 14

The table below shows a monopolist's demand curve and the cost information for the production of its good. What will their profits equal?

Accepted Answer

A)   $1,200
B)   $1,600
C)   $1,000
D)   $600E) B) and C)
F) None of the above

Question 15

The typical pattern of costs for a monopoly can be analyzed by using:
I. total cost
II. fixed cost
III. variable cost
IV. marginal cost
V. average cost
VI. average variable cost

Accepted Answer

A)   I, II, and III
B)   I, III and IV
C)   I, II, III, IV, and VI
D)   all of the aboveE) A) and B)
F) A) and C)

Question 16

Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm's profits equal?

Accepted Answer

A)   $2.50
B)   $1.50
C)   $1.25
D)   $0.50E) A) and D)
F) All of the above

Question 17

Which of the following is most likely to be a monopoly?

Accepted Answer

A)   local fast-food restaurant
B)   local electricity distributor
C)   local bathroom fixtures shop
D)   local television broadcasterE) A) and C)
F) A) and B)

Question 18

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then

Accepted Answer

A)   they will strive to reach efficiencies only they know how to make.
B)   that firm could set up barriers to entry to discourage competition.
C)   government will deregulate to ensure the company's monopoly.
D)   the factors of market demand and supply will set the price.E) B) and D)
F) B) and C)

Question 19

In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely

Accepted Answer

A)   have a patent giving it exclusive legal rights to make, use, and sell for a limited time.
B)   raise prices, cut production, and realize positive economic profits.
C)   have legal protection to prevent copying its methods of production for commercial use.
D)   acquire rights for its investors to produce and sell their product.E) B) and D)
F) B) and C)

Question 20

Which of the following is most unlikely to present a barrier to entry into a market?

Accepted Answer

A)   market forces
B)   patent laws
C)   technological advantages
D)   deregulationE) B) and C)
F) A) and D)

Exam 9: Monopoly

Which of the following is most unlikely to present a barrier to entry into a market?

Correct AnswerverifiedShow Answer

Which one of the following is the most accurate description of a monopolist?

Correct AnswerverifiedShow Answer

By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the _______.

Correct AnswerverifiedShow Answer

The table below shows a monopolist's demand curve and the cost information for the production of its good. What will their profits equal?

Correct AnswerverifiedShow Answer

The two primary factors determining monopoly market power are the firm's

Correct AnswerverifiedShow Answer

The form of legal protection intended to prevent reproduction of original works is referred to as _______ law.

Correct AnswerverifiedShow Answer

The figure below shows the demand curve and the long run average cost curve for an electric company. This market is a natural monopoly because

Correct AnswerverifiedShow Answer

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then

Correct AnswerverifiedShow Answer

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale,

Correct AnswerverifiedShow Answer

Occasionally, _______ may lead to pure monopoly; in other market conditions, they may limit competition _______.

Correct AnswerverifiedShow Answer

A natural monopoly occurs when the quantity demanded is _______ the minimum quantity it takes to be at the bottom of the long-run average cost curve.

Correct AnswerverifiedShow Answer

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting

Correct AnswerverifiedShow Answer

In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely

Correct AnswerverifiedShow Answer

Which of the following denotes the typical shape of the monopolist's total cost curve?

Correct AnswerverifiedShow Answer

The typical pattern of costs for a monopoly can be analyzed by using: I. total cost II. fixed cost III. variable cost IV. marginal cost V. average cost VI. average variable cost

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a monopoly?

Correct AnswerverifiedShow Answer

For a monopolistic firm, the demand for its product is

Correct AnswerverifiedShow Answer

Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm's profits equal?

Correct AnswerverifiedShow Answer

When a monopolist increases sales by one unit,

Correct AnswerverifiedShow Answer

The slope of the demand curve for a monopoly firm is

Correct AnswerverifiedShow Answer

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Occasionally, _ may lead to pure monopoly; in other market conditions, they may limit competition _.

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