Question 1

The government's regulation of pollution

Accepted Answer

A)  Is justified because of natural monopoly
B)  Is justified by poorly defined property rights
C)  Is justified by concentration ratios
D)  Is not likely to improve on the market outcome
E)  Cannot be defended on economic grounds

Question 2

The best estimate of the dead-weight welfare loss due to monopoly is biased downward because it does not take into account

Accepted Answer

A)  Reductions in product quality
B)  Higher costs of production
C)  Decreases in product variety
D)  All of the above
E)  None of the above

Question 3

The monopolization of a previously competitive industry will lead to restricted production and higher prices.

Accepted Answer

A) True 
 B)False  True

Question 4

The supply curve for a monopoly

Accepted Answer

A)  Is its marginal revenue curve
B)  Is its total revenue curve
C)  Is its marginal cost curve
D)  Is its total cost curve
E)  Does not exist

Question 5

Corporations

Accepted Answer

A)  Are legal entities separate from their owners
B)  Are owned by stockholders
C)  Finance their operations through many small investors
D)  Account for 20% of all businesses in the United States
E)  All of the above

Question 6

Which of the following is an example of nonprice competition?

Accepted Answer

A)  Advertising
B)  Changing the design of a product
C)  Incorporating new technology in a product
D)  Improving the quality of a product
E)  All of the above

Question 7

The Following Questions Refer to the graph below,showing a monopoly market. 
-For the firm shown on the graph,profit maximization occurs at what price and quantity?

Accepted Answer

A)  $20 and 50
B)  $15 and 70
C)  $15 and 50
D)  $10 and 50
E)  $10 and 70

Question 8

The dead-weight welfare loss due to monopoly

Accepted Answer

A)  Results from the monopolist's tendency to reduce output below the competitive level
B)  Is a measure of the cost to society from the monopolistic misallocation of resources
C)  Is estimated to be about 1% of GDP per year
D)  Is a loss to consumers not offset by anyone else's gain
E)  All of the above

Question 9

Monopoly firms typically have lower costs than competitive firms because they receive bulk-buying discounts for their inputs.

Accepted Answer

A) True 
 B)False  False

Question 10

Ford Motors more closely resembles a monopoly than does your local electric company.

Accepted Answer

A) True 
 B)False

Question 11

Monopoly power in the U.S.does not pose a significant economic problem.

Accepted Answer

A) True 
 B)False

Question 12

When the value of a product to a consumer is enhanced when others also consume the good,economies of scale exist.

Accepted Answer

A) True 
 B)False

Question 13

The Following Questions Refer to the graph below,showing a monopoly market. 
-Monopolization of this market leads to a deadweight loss equal to

Accepted Answer

A)  $0
B)  $50
C)  $100
D)  $150
E)  Cannot be determined

Question 14

The Following Questions Refer to the following graph.For each question,disregard any irrelevant lines. 3,X1 B) P3,X2 C) P2,X3 D) P1,X2 E) P1,X4" class="answers-bank-image d-inline" rel="preload" >
-Now suppose the same market is monopolizeD.Equilibrium market price and output would be

Accepted Answer

A)  P3,X1
B)  P3,X2
C)  P2,X3
D)  P1,X2
E)  P1,X4

Question 15

Which of the following provides the strongest economic justification for regulation?

Accepted Answer

A)  Natural monopoly
B)  Excess consumer information
C)  Shortages and high prices
D)  All of the above
E)  None of the above

Question 16

Monopolies in the U.S.economy are estimated to reduce GDP by about 1% per year.

Accepted Answer

A) True 
 B)False

Question 17

Concentration ratios are used to measure the

Accepted Answer

A)  Potential monopoly power within an industry
B)  Strength of the demand for an industry's product
C)  Potential monopoly power of a firm
D)  Degree of competition between firms in different markets
E)  Level of perfection in a competitive market A

Question 18

The Following Questions Refer to the table below. 
-Assume that no firm in this industry accounts for less than 5% of industry sales.What is the largest number of firms that could be in this industry?

Accepted Answer

A)  6
B)  7
C)  8
D)  9
E)  10

Question 19

Some would argue that one of the primary benefits of possessing a monopoly is

Accepted Answer

A)  The chance to erect entry barriers
B)  The opportunity to live the quiet life
C)  The ability to restrict output
D)  The chance to create deadweight losses
E)  The ability to jack up prices to consumers

Question 20

Shortages are important evidence that firms are exercising monopoly power.

Accepted Answer

A) True 
 B)False

Exam 8: The Economics of Monopoly Power: Can Markets Be Controlled

The government's regulation of pollution

Correct AnswerverifiedShow Answer

The best estimate of the dead-weight welfare loss due to monopoly is biased downward because it does not take into account

Correct AnswerverifiedShow Answer

The monopolization of a previously competitive industry will lead to restricted production and higher prices.

Correct AnswerverifiedTrue

The supply curve for a monopoly

Correct AnswerverifiedShow Answer

Corporations

Correct AnswerverifiedShow Answer

Which of the following is an example of nonprice competition?

Correct AnswerverifiedShow Answer

The Following Questions Refer to the graph below,showing a monopoly market. -For the firm shown on the graph,profit maximization occurs at what price and quantity?

Correct AnswerverifiedShow Answer

The dead-weight welfare loss due to monopoly

Correct AnswerverifiedShow Answer

Monopoly firms typically have lower costs than competitive firms because they receive bulk-buying discounts for their inputs.

Correct AnswerverifiedFalse

Ford Motors more closely resembles a monopoly than does your local electric company.

Correct AnswerverifiedShow Answer

Monopoly power in the U.S.does not pose a significant economic problem.

Correct AnswerverifiedShow Answer

When the value of a product to a consumer is enhanced when others also consume the good,economies of scale exist.

Correct AnswerverifiedShow Answer

The Following Questions Refer to the graph below,showing a monopoly market. -Monopolization of this market leads to a deadweight loss equal to

Correct AnswerverifiedShow Answer

The Following Questions Refer to the following graph.For each question,disregard any irrelevant lines. -Now suppose the same market is monopolizeD.Equilibrium market price and output would be

Correct AnswerverifiedShow Answer

Which of the following provides the strongest economic justification for regulation?

Correct AnswerverifiedShow Answer

Monopolies in the U.S.economy are estimated to reduce GDP by about 1% per year.

Correct AnswerverifiedShow Answer

Concentration ratios are used to measure the

Correct AnswerverifiedA

The Following Questions Refer to the table below. -Assume that no firm in this industry accounts for less than 5% of industry sales.What is the largest number of firms that could be in this industry?

Correct AnswerverifiedShow Answer

Some would argue that one of the primary benefits of possessing a monopoly is

Correct AnswerverifiedShow Answer

Shortages are important evidence that firms are exercising monopoly power.

Correct AnswerverifiedShow Answer

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False

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