a. A competitive firm is a price maker and a monopoly is a price taker.
b. A competitive firm is a price taker and a monopoly is a price maker.
c.Both competitive firms and monopolies are price takers.
d.Both competitive firms and monopolies are price makers.
ANS: B PTS: 1DIF: 1REF: 15-1
TOP: Monopoly MSC: Interpretive
2.Angelo is a wholesale meatball distributor. He lls his meatballs to all the finest Italian restaurants in town.
Nobody can make meatballs like Angelo. As a result, his is the only business in town that lls meatballs to
restaurants. Assuming that Angelo is maximizing his profit, which of the following statements is true?装处怎么挤血
a.Meatball prices will be less than marginal cost.
b.Meatball prices will equal marginal cost.
c.Meatball prices will exceed marginal cost.
d.Meatball prices will be a function of supply and demand and will therefore oscillate around marginal costs. ANS: C PTS: 1DIF: 2REF: 15-1
在线登陆qqTOP: Pricing MSC: Interpretive
3. A monopoly's marginal cost will
a.be less than its average fixed cost.
b.be less than the price per unit of its product.
d.equal its average total cost.
ANS: B PTS: 1DIF: 2REF: 15-1
TOP: Marginal cost MSC: Interpretive
4.Which of the following statements is (are) true of a monopoly?
(i) A monopoly has the ability to t the price of its product at whatever level it desires.
(ii)A monopoly's total revenue will always increa when it increas the price of its product.
(iii)A monopoly can earn unlimited profits.
a.(i) only
b.(ii) only
c.(i) and (ii)
d.(ii) and (iii)
ANS: A PTS: 1DIF: 2REF: 15-1
TOP: Monopoly MSC: Interpretive
5.Young Johnny inherited the only local cable TV company in town after his father pasd away. The company is
completely unregulated by the government and is therefore free to operate as it wishes. Assuming that Johnny understands the true power of his new monopoly, he is probably most excited about which of the following
statements?
(i)He will be able to t the price of cable TV rvice at whatever level he wishes.
(ii)The customers will be forced to purcha cable TV rvice at whatever price he wants to t.
(iii)He will be able to achieve any profit level that he desires.
a.(i) only
b.(ii) only
c.(i) and (iii)
d.All of the above are correct.
ANS: A PTS: 1DIF: 2REF: 15-1
TOP: Monopoly MSC: Interpretive
621
622 Chapter 15/Monopoly
6.Which of the following is an example of a barrier to entry?
(i) A key resource is owned by a single firm.
(ii)The costs of production make a single producer more efficient than a large number of producers.
(iii)The government has given the existing monopoly the exclusive right to produce the good.花木兰怎么玩
a.(i) and (ii)
b.(ii) and (iii)
c.(i) only
d.All of the above are examples of barriers to entry.
ANS: D PTS: 1DIF: 1REF: 15-1
TOP: Barriers to entry MSC: Interpretive
7.Which of the following are necessary characteristics of a monopoly?
(i)The firm is the sole ller of its product.
(ii)The firm's product does not have clo substitutes.
(iii)The firm generates a large economic profit.
(iv)The firm is located in a small geographic market.
a.(i) and (ii)
b.(i) and (iii)
c.(ii) and (iv)
d.(i), (ii), and (iii)
ANS: A PTS: 1DIF: 2REF: 15-1
TOP: Monopoly MSC: Interpretive
8. A fundamental source of monopoly market power aris from
a.perfectly elastic demand.
b.perfectly inelastic demand.
c.barriers to entry.
d.availability of "free" natural resources, such as water or air.
ANS: C PTS: 1DIF: 2REF: 15-1
TOP: Barriers to entry MSC: Interpretive
9.Becau monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is
often
< in the best interest of society.
< that fails to maximize total economic well-being.
c.inefficient.
d.All of the above are correct.
ANS: D PTS: 1DIF: 2REF: 15-1
TOP: Welfare MSC: Interpretive
10. A natural monopoly occurs when
a.the product is sold in its natural state (such as water or diamonds).
b.there are economies of scale over the relevant range of output.
c.the firm is characterized by a rising marginal cost curve.
d.production requires the u of free natural resources, such as water or air.
ANS: B PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Interpretive
11.An industry is a natural monopoly when
(i)the government assists the firm in maintaining the monopoly.
(ii)a single firm owns a key resource.
(iii)a single firm can supply a good or rvice to an entire market at a smaller cost than could two or more firms.
a.(ii) only
b.(iii) only
c.(i) and (ii)
d.(ii) and (iii)
ANS: B PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Interpretive
Chapter 15/Monopoly 623
12.When a natural monopoly exists, it is
a.always cost effective for government-owned firms to produce the product.
c.always cost effective for two or more private firms to produce the product.
ANS: D PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Definitional
13.The defining characteristic of a natural monopoly is
d.diconomies of scale over the relevant range of output.
ANS: B PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Definitional
14.Natural monopolies differ from other forms of monopoly becau they
a.are not subject to barriers to entry.
b.are not regulated by government.
d.are generally not worried about competition eroding their monopoly position in the market.
ANS: D PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Interpretive
15.Patent and copyright laws are major sources of
a.natural monopolies.
d.antitrust regulation.
ANS: B PTS: 1DIF: 1REF: 15-1
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TOP: Patents MSC: Interpretive
16.Encouraging firms to invest in rearch and development and individuals to engage in creative endeavors such as
三落实
writing novels is one justification for
b.natural monopolies.
d.breaking up monopolies into smaller firms.
ANS: C PTS: 1DIF: 1REF: 15-1
TOP: Patents MSC: Interpretive
17.When a firm's average total cost curve continually declines, the firm is a
b.natural monopoly.
d.All of the above are correct.
ANS: B PTS: 1DIF: 1REF: 15-1
TOP: Natural monopoly MSC: Definitional
18.The simplest way for a monopoly to ari is for a single firm to
a.decrea its price below its competitors’ prices.
b.decrea production to increa demand for its product.
c.make pricing decisions jointly with other firms.
d.own a key resourc
e.
ANS: D PTS: 1DIF: 1REF: 15-1质量体系
TOP: Monopoly MSC: Interpretive切片面包
624 Chapter 15/Monopoly
19. A government-created monopoly aris when
b.the government exercis its market control by encouraging competition among llers.
c.the government gives a firm the exclusive right to ll some good or rvice.
d.Both a and c are correct.
ANS: C PTS: 1DIF: 2REF: 15-1
TOP: Patents MSC: Interpretive
20.Allowing an inventor to have the exclusive rights to market her new invention will lead to
(i) a product that is priced higher than it would be without the exclusive rights.
(ii)desirable behavior in the n that inventors are encouraged to invent.
(iii)higher profits for the inventor.
a.(i) and (ii)
b.(ii) and (iii)
c.(i) and (iii)
d.(i), (ii), and (iii)
ANS: D PTS: 1DIF: 2REF: 15-1
TOP: Patents MSC: Interpretive
21.Drug companies are allowed to be monopolists in the drugs they discover in order to
a.allow drug companies to charge a price that is equal to their marginal cost.
b.discourage new firms from entering the drug market.
d.allow the government to earn patent revenu
e.
ANS: C PTS: 1DIF: 2REF: 15-1
TOP: Patents MSC: Interpretive
22.Authors are allowed to be monopolists in the sale of their books in order to
c.satisfy literary advocacy groups that exerci their lobbying power.
d.promote a society in which people think for themlves and learn from whichever books they pleas
e. ANS: A PTS: 1DIF: 2REF: 15-1
TOP: Copyrights MSC: Interpretive
23.Which of the following statements is true about patents and copyrights?
(i)They both have benefits and costs.
(ii)They lead to higher prices.
(iii)They enhance the ability of monopolists to earn above-average profits.
a.(i) and (ii)
b.(ii) and (iii)
c.(ii) only
d.(i), (ii), and (iii)
ANS: D PTS: 1DIF: 2REF: 15-1
TOP: Patents MSC: Interpretive
Chapter 15/Monopoly 625 Figure 15-1
24.Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier
to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?
a.Ownership of a key resource by a single firm
b.Natural monopoly
c.Government-created monopoly
d. A patent or copyright monopoly
ANS: B PTS: 1DIF: 2REF: 15-1
TOP: Natural monopoly MSC: Analytical
25.Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-
maximizing monopolist to take advantage of
b.diconomies of scale.
c.diminishing marginal product.
d.increasing marginal cost.
ANS: A PTS: 1DIF: 1REF: 15-1
TOP: Economies of scale MSC: Analytical
26.Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost
curve for this firm
a.must lie entirely above the average total cost curve.
b.must lie entirely below the average total cost curve.
c.must be upward sloping.
d.does not exist.
ANS: B PTS: 1DIF: 3REF: 15-1
TOP: Marginal cost MSC: Analytical
27.When an industry is a natural monopoly,
a.it is characterized by constant returns to scale.
b.it is characterized by diconomies of scale.
c. a larger number of firms may lead to a lower average cost.
d. a larger number of firms will lead to a higher average cost.
