Liberty University Stuff: Liberty University ECON 213 quiz 10 solutions answers right

Liberty University ECON 213 quiz 10 solutions answers right

How many versions: 11 different versions

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Question 1 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.

As production increases, the price consumers are willing to pay for the good:

Question 2 Refer to the accompanying figure to answer the questions that follow.

When a competitive market comes under the control of a monopoly, the price changes from:

Question 3 When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to:

Question 4 Licensing:

Question 5 Patents and copyright law:

Question 6 The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

Question 7 At low price levels, demand tends to be _________ and the price effect is _________, relative to the output effect.

Question 8 Breaking up a company that has a natural monopoly would:

Question 9 The government oversight and management of monopolies:

Question 10 Patents and copyrights can:

Question 11 The _________ means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

Question 12 To maximize profits, a monopolist chooses the quantity where:

Question 13 When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

Question 14 The price effect refers to how:

Question 15 Apple and Google apply for hundreds of patents every year. These patents:

Question 16 One argument against patent and copyright laws is that they:

Question 17 Barriers to entry:

Question 18 Three natural barriers to entry are:

Question 19 The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________.

Question 20 If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

Question 1 Refer to the accompanying figure to answer the questions that follow.

Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

Question 2 One way the government can restore competitiveness in a market is through:

Question 3 Antitrust laws are designed to:

Question 4 Refer to the accompanying figure. The revenue received by the profitmaximizing monopolist in this market is represented by:

Question 5 Refer to the accompanying figure to answer the questions that follow.

When a competitive market comes under the control of a monopoly, the quantity changes from:

Question 6 To maximize profits, a monopolist chooses the quantity where:

Question 7 One benefit from tariffs would be:

Question 8 A tariff is a(n):

Question 9 Refer to the accompanying figure to answer the questions that follow.

If a firm is producing a quantity of 150 and charging a price of $13, it:

Question 10 Because the demand curve for a monopolist is downward sloping:

Question 11 A monopoly:

Question 12 If cable companies were in a highly competitive market, you would expect:

Question 13 If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

Question 14 Stephen’s Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost them less than trying to modernize its facility to compete with foreign steel prices. Stephen’s Steel Mill will:

Question 15 Economies of scale is an example of:

Question 16 Inefficient output and price, few choices, and rent seeking are all problems associated with:

Question 17 The price effect refers to how:

Question 18 Which pricing rule generates the greatest welfare for society?

Question 19 After a patent on a product expires,

Question 20 Refer to the accompanying figure to answer the questions that follow.

When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

Question 1 Most economists are against monopolies because:

Question 2 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. As production increases, the price consumers are willing to pay for the good:

Question 3 Lobbying the government to place harsh tariffs on imports is a form of:

Question 4 Refer to the accompanying figure to answer the questions that follow. When this firm is producing at the profitmaximizing price and quantity, its total revenue is:

Question 5 The government oversight and management of monopolies:

Question 6 The equation of a firm’s marginal revenue curve is estimated to be P = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profitmaximizing price for this firm is:

Question 7 Barriers to entry:

Question 8 To maximize profits, a monopolist chooses the quantity where:

Question 9 Control of resources is an example of:

Question 10 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

Question 11 Christopher’s Campground is the only campground located in Abilene, Texas. Christopher’s Campground’s demand curve is:

Question 12 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the output effect leads to an increase of _________ in revenue.

Question 13 When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

Question 14 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 15 Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?

Question 16 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. The profitmaximizing price for this firm is:

Question 17 The marginal revenue lies _________ the demand curve because there is a(n) _________ effect whenever the price is lowered.

Question 18 If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should:

Question 19 When marginal revenue intersects marginal cost on a graph:

Question 20 Inefficient output and price, few choices, and rent seeking are all problems associated with:

Question 1 When resources are used to secure monopoly rights through the political process:

Question 2 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. The profit made by this profitmaximizing firm is:

Question 3 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 4 Patents and copyrights can:

Question 5 At low price levels, demand tends to be _________ and the price effect is _________, relative to the output effect.

Question 6 The _________ means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

Question 7 Refer to the accompanying figure to answer the questions that follow. Which of the following is the most efficient price and quantity combination for society?

Question 8 Refer to the accompanying figure to answer the questions that follow. The figure shows which type of market?

Question 9 Refer to the accompanying figure. The revenue received by the profitmaximizing monopolist in this market is represented by:

Question 10 The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

Question 11 The demand curve for Angel’s Airport Shuttle is downwardsloping. With only this information, it can be concluded that Angel’s Airport Shuttle:

Question 12 Problems raising capital is an example of:

Question 13 When marginal revenue is negative, the:

Question 14 Control of resources, problems raising capital, and economies of scale are all examples of:

Question 15 Refer to the accompanying figure to answer the questions that follow. The consumer surplus associated with this profitmaximizing monopoly is represented by areas:

Question 16 When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to:

Question 17 Papa Joe’s Car Dealership is the only dealership in Victorville, California. The owner, Papa Joe: experiences large economies of scale. Because he is the only seller of cars in the town,

Question 18 Willow Park is a small community in Texas with only one gas station. The price of gasoline in Willow Park most likely:

Question 19 Refer to the accompanying figure to answer the questions that follow. The profitmaximizing price and quantity are:

Question 20 Two governmentcreated barriers to entry are:

Question 1 A monopoly:

Question 2 When marginal revenue is negative, the:

Question 3 If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:

Question 4 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

Question 5 The equation of a firm’s marginal revenue curve is estimated to be P = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profitmaximizing price for this firm is:

Question 6 Which of the following is a characteristic of a monopoly but not of a competitive market?

Question 7 One way the government can restore competitiveness in a market is through:

Question 8 Refer to the accompanying figure to answer the questions that follow. The profit when a firm is profitmaximizing is:

Question 9 Economies of scale is an example of:

Question 10 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 11 Taxi medallions are an example of:

Question 12 One argument against patent and copyright laws is that they:

Question 13 A pricemaker:

Question 14 Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?

Question 15 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. The profit made by this profitmaximizing firm is:

Question 16 When marginal revenue is positive, the:

Question 17 Both monopolies and competitive firms:

Question 18 Inefficient output and price, few choices, and rent seeking are all problems associated with:

Question 19 Refer to the accompanying figure to answer the questions that follow. Which of the following is the most efficient price and quantity combination for society?

Question 20 The best way to limit competition is to:

1. A monopoly:

a.	always makes a profit.
b.	can force consumers to purchase what it is selling.
c.	is characterized by a single seller who produces a well-defined product for which there are no good substitutes.
d.	always has naturally created barriers.
e.	always has government-created barriers.

2. Monopolists:

a.	enjoy market power for their specific product.
b.	have no market power for their specific product.
c.	will never experience a loss.
d.	always experience economies of scale.
e.	exist in all markets.

3. Barriers to entry:

a.	measure the ability of firms to set the price for a good.
b.	do not exist for monopolies.
c.	always lead to profits.
d.	restrict the entry of new firms into the market.
e.	exist for perfectly competitive firms.

4. Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must:

a.	have something unique to sell and it must be able to estimate its demand curve.
b.	have something unique to sell and it must have a way to prevent potential competitors from entering the market.
c.	be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market.
d.	be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market.
e.	have something unique to sell and it must be able to segregate its consumers.

5. The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

a.	lower; lower
b.	higher; higher
c.	higher; lower
d.	lower; higher
e.	higher; the same

6. Control of resources, problems raising capital, and economies of scale are all examples of:

a.	government-created barriers.
b.	market structures.
c.	patents and copyright laws.
d.	price-makers.
e.	natural barriers.

7. Three natural barriers to entry are:

a.	control of resources, economies of scale, and licensing.
b.	economies of scale, problems raising capital, and control of resources.
c.	problems raising capital, patents and copyright law, and licensing.
d.	control of resources, patents and copyright law, and economies of scale.
e.	control of resources, economies of scale, and licensing.

8. Control of resources is an example of:

a.	an externality.
b.	consumer surplus.
c.	a government-created barrier.
d.	a natural barrier.
e.	rent-seeking.

9. The best way to limit competition is to:

a.	lobby for a government-created barrier.
b.	charge a low price.
c.	produce a high quantity.
d.	control a resource that is essential in the production process.
e.	minimize costs.

10. Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?

a.	control of resources
b.	problems raising capital
c.	economies of scale
d.	licensing
e.	patents and copyright law

11. Problems raising capital is an example of:

a.	a natural barrier.
b.	consumer surplus.
c.	a government-created barrier.
d.	an externality.
e.	rent-seeking.

12. Raising capital to compete against an entrenched monopolist:

a.	is very easy.
b.	is unnecessary.
c.	can be done only through private investors.
d.	is very difficult.
e.	can be done only through banks.

13. Thomas has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately he cannot find someone to lend him enough money to market his product to consumers. Thomas is facing which kind of barrier to entry?

a.	control of resources
b.	problems raising capital
c.	economies of scale
d.	licensing
e.	patents and copyright law

14. Economies of scale exist:

a.	only for monopolists.
b.	when long-run average total costs increase.
c.	when long-run average total costs decrease.
d.	when long-run average total costs are constant.
e.	when governments create barriers to entry.

15. Economies of scale is an example of:

a.	rent-seeking
b.	consumer surplus.
c.	a government-created barrier.
d.	an externality.
e.	a natural barrier.

16. A natural monopoly:

a.	exists when many sellers experience lower average total costs than potential competitors do.
b.	exists when a firm has sole ownership of a natural resource.
c.	is an example of a government-created barrier.
d.	is needed to make a profit in the long run.
e.	exists when a single seller experiences lower average total costs than any potential competitor.

17. In the soda industry, production costs per unit continue to fall as the firm expands. In this type of industry, smaller rivals trying to enter the industry:

a.	will easily be able to gain market power.
b.	have lower average costs.
c.	do not have high fixed costs.
d.	will have much higher average costs.
e.	experience a government-created barrier.

18. Two government-created barriers to entry are:

a.	licensing and economies of scale.
b.	economies of scale and patent system/copyright law.
c.	licensing and patent system/copyright law.
d.	economies of scale and control of resources.
e.	licensing and control of resources.

19. Market-created and government-created barriers:

a.	are the same thing.
b.	are regarded by all economists as bad.
c.	increase competition in markets.
d.	create monopolies.
e.	are problems solved only by government intervention.

20. Licensing:

a.	is a natural barrier.
b.	creates more competition.
c.	causes more varieties of goods and services at different price levels.
d.	creates an opportunity for corruption.
e.	always results in zero economic profits.

21. In instances when having a single firm in the market makes sense, governments _________ to minimize negative externalities.

a.	will grant a patent or copyright
b.	require licenses
c.	deregulate industries
d.	hand out subsidies
e.	break down barriers to entry

22. Apple and Google apply for hundreds of patents every year. These patents:

a.	allow Apple and Google to produce goods with no risk of monetary loss.
b.	provide incentives for Apple and Google to spend large amounts of money up front on research and development of new products.
c.	create more competition among Apple, Google, and other tech firms than would occur without government intervention.
d.	make it easy for Apple and Google products to be similar.
e.	make it easy for other firms to compete with Apple and Google.

23. Patents and copyright law:

a.	are natural barriers.
b.	create more competition.
c.	mean more varieties of goods and services at different price levels.
d.	assure inventors that no one else will sell their idea.
e.	always result in zero economic profits.

24. Patents and copyrights can:

a.	create strong incentives to develop new drugs.
b.	provide heavy competition in markets.
c.	never lead to deadweight loss.
d.	assure firms that their products will make a profit.
e.	be considered natural barriers.

25. After a patent on a product expires,

a.	other firms must wait to mimic the product.
b.	all negative and positive externalities are internalized.
c.	rivals can start to mimic the product.
d.	no other firms can mimic the product.
e.	no further profits are able to be made by the original producer of the good.

26. One argument against patent and copyright laws is that they:

a.	provide incentives to invest in research and development.
b.	protect intellectual property.
c.	hinder creativity.
d.	increase competition.
e.	limit exposure that can benefit companies and individuals.

27. Both monopolies and competitive firms:

a.	are price-takers.
b.	are price-makers.
c.	face barriers to entry.
d.	make long-run economic profits.
e.	try to maximize profits.

28. A price-maker:

a.	is a characteristic held by a perfectly competitive firm.
b.	must set the price at the market price.
c.	has some control over the price it charges.
d.	can sell its product at any price.
e.	will always make economic profits.

29. The price effect refers to how:

a.	lower prices affect the quantity sold.
b.	firms can set their prices.
c.	firms choose their quantity.
d.	lower prices affect revenue.
e.	lower output affects the price.

30. The output effect refers to how:

a.	lower prices affect the quantity sold.
b.	firms can set their prices.
c.	firms choose their quantity.
d.	lower prices affect revenue.
e.	lower output affects the price.

31. The profit-maximizing rule for a monopolist is:

a.	marginal revenue = marginal cost.
b.	price = marginal cost.
c.	price = marginal revenue.
d.	average total cost = marginal revenue.
e.	average total cost = marginal cost.

32. Which of the following can fall below the x axis when graphing price/cost against quantity?

a.	demand curve
b.	marginal cost curve
c.	total cost curve
d.	fixed cost curve
e.	marginal revenue curve

33. The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________.

a.	horizontal; downward-sloping
b.	horizontal; horizontal
c.	downward-sloping; upward-sloping
d.	downward-sloping; horizontal
e.	upward-sloping; downward-sloping

34. The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________.

a.	perfectly inelastic; downward-sloping
b.	horizontal; perfectly inelastic
c.	downward-sloping; perfectly elastic
d.	downward-sloping; horizontal
e.	perfectly elastic; downward-sloping

35. Because the demand curve for a monopolist is downward sloping:

a.	there is no limit on the monopolist’s ability to make a profit.
b.	the monopolist can sell its product at any price it wants.
c.	the monopolist can sell as many units of its product as it wants.
d.	the monopolist is a price-taker.
e.	the monopolist has many price-output combinations.

36. The marginal revenue lies _________ the demand curve because there is a(n) _________ effect whenever the price is lowered.

a.	above; price
b.	below; price
c.	below; output
d.	above; output
e.	on; price

37. When marginal revenue is negative, the:

a.	lost revenues associated with the price effect outweigh the revenue gains created by the output effect.
b.	lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect.
c.	output effect is relatively small compared to the price effect.
d.	firm is maximizing revenues.
e.	firm cannot be maximizing profits.

38. At high price levels, demand tends to be _________ and the price effect is _________, relative to the output effect.

a.	inelastic; small
b.	inelastic; large
c.	elastic; small
d.	elastic; large
e.	inelastic; insignificant

39. At low price levels, demand tends to be _________ and the price effect is _________, relative to the output effect.

a.	inelastic; small
b.	inelastic; large
c.	elastic; small
d.	elastic; large
e.	elastic; insignificant

40. Christopher’s Campground is the only campground located in Abilene, Texas. Christopher’s Campground’s demand curve is:

a.	perfectly elastic.
b.	perfectly inelastic.
c.	horizontal.
d.	the market demand curve.
e.	upward-sloping.

41. If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

a.	increase production and lower the price to maximize profits.
b.	decrease production and increase the price to maximize profits.
c.	continue producing at the current price to maximize profits.
d.	increase production and increase the price to maximize profits.
e.	decrease production and decrease the price to maximize profits.

42. If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should:

a.	increase production and lower the price to maximize profits.
b.	decrease production and increase the price to maximize profits.
c.	continue producing at the current price to maximize profits.
d.	increase production and increase the price to maximize profits.
e.	decrease production and decrease the price to maximize profits.

43. If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:

a.	increase production and lower the price to maximize profits.
b.	decrease production and increase the price to maximize profits.
c.	continue producing at the current price to maximize profits.
d.	increase production and increase the price to maximize profits.
e.	decrease production and decrease the price to maximize profits.

Refer to the accompanying figure to answer the questions that follow.

44. This firm:

a.	is in a competitive market.
b.	can make a profit.
c.	does not want to maximize profit.
d.	cannot make a profit.
e.	is not a monopoly because it is incurring a loss.

45. This profit-maximizing firm’s total profit is equal to:

a.	$160.
b.	–$160.
c.	$320.
d.	–$320.
e.	$100.

46. The profit-maximizing price and quantity are:

a.	$34 and 20, respectively.
b.	$26 and 20, respectively.
c.	$18 and 20, respectively.
d.	$18 and 30, respectively.
e.	$13 and 20, respectively.

47. The demand curve for Angel’s Airport Shuttle is downward-sloping. With only this information, it can be concluded that Angel’s Airport Shuttle:

a.	is the only firm in the market for airport shuttles.
b.	is currently maximizing profits.
c.	is a price-maker.
d.	makes economic profits.
e.	should produce where the demand curve crosses marginal cost.

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.

48. As production increases, the price consumers are willing to pay for the good:

a.	increases and then decreases.
b.	decreases and then increases.
c.	stays the same.
d.	increases.
e.	decreases.

49. The profit-maximizing quantity for this firm is:

a.	0 (zero).
b.	1.
c.	3.
d.	4.
e.	5.

50. The profit-maximizing price for this firm is:

a.	$15.
b.	$5.
c.	$7.
d.	$9.
e.	$13.

51. The profit made by this profit-maximizing firm is:

a.	$8.
b.	$4.
c.	$3.
d.	$7.
e.	$9.

52. The equation of a firm’s marginal revenue curve is estimated to be price = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profit-maximizing quantity for this firm is:

a.	5.
b.	10.
c.	15.
d.	50.
e.	40.

53. When a monopolist lowers its price from $80 to $70, the quantity it is able to sell increases from 100 to 150. The change in revenue associated with the output effect is equal to:

a.	$3,500.
b.	–$3,500.
c.	$500.
d.	–$500.
e.	$4,000.

54. When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to:

a.	$3,500.
b.	–$3,500.
c.	$1,000.
d.	–$1,000.
e.	$4,000.

55. When marginal revenue is positive, the:

a.	lost revenues associated with the price effect outweigh the revenue gains created by the output effect.
b.	lost revenues associated with the price effect are outweighed by the revenue gains created by the output effect.
c.	output effect is relatively small compared to the price effect.
d.	firm is maximizing revenues.
e.	firm cannot be maximizing profits.

Refer to the accompanying figure to answer the questions that follow.

56. When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

a.	$20
b.	$15
c.	$900
d.	$600
e.	$450

57. When the price changes from $50 to $30, the output effect leads to an increase of _________ in revenue.

a.	$20
b.	$15
c.	$900
d.	$600
e.	$450

58. At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is:

a.	below marginal cost.
b.	above marginal cost.
c.	above average total cost.
d.	below average total cost.
e.	equal to marginal cost.

59. The equation of a firm’s marginal revenue curve is estimated to be P = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profit-maximizing price for this firm is:

a.	$5.
b.	$10.
c.	$15.
d.	$50.
e.	$40.

60. Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?

a.	A monopoly contains many firms.
b.	A monopoly produces an efficient level of output.
c.	A monopoly may earn long-run economic profits.
d.	A monopoly has no market power.
e.	A monopoly is a price-taker.

61. To maximize profits, a monopolist chooses the quantity where:

a.	revenues are maximized.
b.	marginal revenue equals zero.
c.	marginal cost equals zero.
d.	marginal revenue equals marginal cost.
e.	costs are minimized.

62. Which of the following is a characteristic of a monopoly but not of a competitive market?

a.	A monopoly contains many firms.
b.	price > marginal cost
c.	price < marginal cost
d.	price = marginal cost
e.	A monopoly is a price-taker.

63. A big difference between a competitive firm and a monopolist is that a monopolist:

a.	does not charge a price equal to marginal revenue.
b.	does not set marginal revenue equal to marginal cost to maximize profits.
c.	does not try to maximize profits.
d.	can always make positive economic profits.
e.	cannot set its price at the market price.

Refer to the accompanying figure to answer the questions that follow.

64. The profit-maximizing price and quantity are:

a.	$25 and 100, respectively.
b.	$25 and 150, respectively.
c.	$13 and 100, respectively.
d.	$10 and 100, respectively.
e.	$10 and 150, respectively.

65. When this firm is producing at the profit-maximizing price and quantity, its total revenue is:

a.	$1,000.
b.	$1,950.
c.	$2,500.
d.	$3,750.
e.	$5,000.

66. If a firm is producing a quantity of 150 and charging a price of $13, it:

a.	should continue to produce 150 units but lower the price to $10 to maximize profits.
b.	should continue to produce 150 units but raise the price to $25 to maximize profits.
c.	should lower production to 100 units but keep charging $13 to maximize profits.
d.	should lower production to 100 units and raise the price to $25 to maximize profits.
e.	is already maximizing profits and should not change the price or quantity produced.

67. If a firm is producing a quantity of 100 and charging a price of $10, it:

a.	should continue to produce 100 units but raise the price to $13 to maximize profits.
b.	should increase production to 150 units but raise the price to $25 to maximize profits.
c.	should continue to produce 100 units but raise the price to $25 to maximize profits.
d.	should increase production to 100 units and raise the price to $13 to maximize profits.
e.	is already maximizing profits and should not change the price or quantity produced.

68. If a firm is producing a quantity of 100 and charging a price of $25, it:

a.	should raise production to 150 units but lower the price to $10 to maximize profits.
b.	should raise production to 150 units and continue to charge $25 to maximize profits.
c.	should keep production at 100 units but lower the price to $13 to maximize profits.
d.	should keep production at 100 units and lower the price to $10 to maximize profits.
e.	is already maximizing profits and should not change the price or quantity produced.

Refer to the accompanying figure to answer the questions that follow.

69. The profit-maximizing price and quantity are:

a.	$25 and 1,000, respectively.
b.	$40 and 1,500, respectively.
c.	$45 and 1,500, respectively.
d.	$50 and 1,000, respectively.
e.	$70 and 1,000, respectively.

70. The total revenue when a firm is profit-maximizing is:

a.	$70,000.
b.	$50,000.
c.	$67,500.
d.	$60,000.
e.	$25,000.

71. The total cost when a firm is profit-maximizing is:

a.	$70,000.
b.	$50,000.
c.	$67,500.
d.	$60,000.
e.	$25,000.

72. The profit when a firm is profit-maximizing is:

a.	$70,000.
b.	$50,000.
c.	$20,500.
d.	$20,000.
e.	$25,000.

73. Refer to the accompanying figure. The revenue received by the profit-maximizing monopolist is:

a.	$900.
b.	$150.
c.	$300.
d.	$100.
e.	$450.

74. When marginal revenue intersects marginal cost on a graph:

a.	profits are maximized for a monopoly but not for a competitive firm.
b.	profits are maximized for a competitive firm but not for a monopoly.
c.	a monopolist prices the good at that point.
d.	a monopolist always makes an economic profit.
e.	a monopolist must go up to the demand curve to find the price.

75. Refer to the accompanying figure. The revenue received by the profit-maximizing monopolist in this market is represented by:

a.	A + B + C + D + F + G + I + J.
b.	B + D + G + E + H.
c.	I + J.
d.	C + D + F + G + I + J.
e.	E + H.

76. Market failure occurs:

a.	when the output level of the firm is efficient.
b.	when the output level of the firm is inefficient.
c.	when firms do not maximize profits.
d.	only in the presence of a monopoly.
e.	only in the presence of externalities.

77. Inefficient output and price, few choices, and rent seeking are all problems associated with:

a.	externalities.
b.	competitive markets.
c.	monopolies.
d.	scarcity.
e.	trade.

78. When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

a.	increases; stays the same
b.	increases; increases
c.	decreases; stays the same
d.	increases; decreases
e.	decreases; decreases

79. Willow Park is a small community in Texas with only one gas station. The price of gasoline in Willow Park most likely:

a.	never changes.
b.	is lower than in the big cities in Texas.
c.	is determined by competitive market forces.
d.	is higher than in the big cities in Texas.
e.	produces a surplus of gasoline.

80. Monopolies result in a(n) __________ level of output and provide __________ choice to consumers.

a.	inefficient; less
b.	inefficient; more
c.	efficient; less
d.	efficient; more
e.	high; more

81. Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:

a.	it costs the owners of the baseball teams more money to buy the beer from distributors.
b.	demand is much higher at a baseball game than at a bar.
c.	baseball team owners have market power and can charge a higher price when they are the only sellers of the beer.
d.	the government forces the owner of baseball teams to charge a high price.
e.	the owners’ baseball teams are not profit-maximizing.

Refer to the accompanying figure to answer the questions that follow.

82. When a competitive market comes under the control of a monopoly, the price changes from:

a.	D to E.
b.	C to B.
c.	C to A.
d.	B to A.
e.	A to C.

83. When a competitive market comes under the control of a monopoly, the quantity changes from:

a.	D to E.
b.	E to D.
c.	C to A.
d.	B to A.
e.	A to B.

84. Deadweight loss results in a monopoly because:

a.	the monopolist charges a price equal to marginal cost, which is higher than the price charged in a competitive market.
b.	the monopolist produces a quantity that is higher than the quantity produced in a competitive market.
c.	the monopolist makes a positive economic profit in the short run.
d.	the monopolist charges a price below marginal cost.
e.	some consumers who would benefit from a competitive market lose out.

Refer to the accompanying figure to answer the questions that follow.

85. The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

a.	A + B.
b.	B + D + G + E + H.
c.	D + G.
d.	J.
e.	E + H.

86. The consumer surplus associated with this profit-maximizing monopoly is represented by areas:

a.	A + B.
b.	B + D + G + E + H.
c.	F + G + H + I.
d.	A + B + C + D + E.
e.	E + H.

87. Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

a.	A + B
b.	B + D + G + E + H
c.	C + D
d.	A + B + C + D + E
e.	E + H

Refer to the accompanying figure to answer the questions that follow.

88. The deadweight loss associated with this profit-maximizing monopoly is equal to:

a.	$900.
b.	$600.
c.	$300.
d.	$100.
e.	$450.

89. Consumer surplus associated with a profit-maximizing monopoly is equal to:

a.	$900.
b.	$600.
c.	$300.
d.	$100.
e.	$450.

90. The consumer surplus that is transferred to the monopolist as a result of the monopolist taking over the market is:

a.	$900.
b.	$150.
c.	$300.
d.	$100.
e.	$450.

91. When a town has a single cable provider:

a.	the cable company usually offers many different cable packages to satisfy customers’ wants.
b.	customers must buy some cable channels that they don’t want in order to get the channels that they do want.
c.	the government regulates the cable provider’s offerings.
d.	the cable provider is a price-taker.
e.	the consumers experience no consumer surplus.

92. Papa Joe’s Car Dealership is the only dealership in Victorville, California. The owner, Papa Joe: experiences large economies of scale. Because he is the only seller of cars in the town,

a.	Papa Joe has market power.
b.	Papa Joe has no market power and must price at marginal cost.
c.	Papa Joe can charge any price he wants and will still sell the number of cars that maximize his profits.
d.	consumer surplus is maximized in the car market.
e.	total economic surplus is maximized in the car market.

93. You cannot purchase a cable subscription for single channels like the Food Network or Cartoon Network because cable companies:

a.	act like perfectly competitive firms.
b.	are not interested in maximizing their profits.
c.	have no market power to sell individual channels.
d.	act like monopolies.
e.	are pressured by the government to provide channel packages.

94. Most economists are against monopolies because:

a.	monopolists do not maximize profits.
b.	monopolies produce too much of product.
c.	monopolies offer more choices than are needed.
d.	monopolies can never produce the quantity that a perfectly competitive market would produce.
e.	monopolies do not offer any choice.

95. If cable companies were in a highly competitive market, you would expect:

a.	cable companies to make profits in the long run.
b.	customers to be unhappy about their cable package options.
c.	a company to be willing to sell specific channels as well as packaged options.
d.	cable companies to force you to choose between buying a little more cable than you really need or going without cable altogether.
e.	deadweight loss in the market.

96. Rent-seeking occurs when:

a.	resources are used to deregulate a market through the political process.
b.	resources are used to maximize profits.
c.	resources are used to secure monopoly rights through the political process.
d.	two firms try to enter the same market.
e.	landlords attempt to raise the rent on tenants.

97. When resources are used to secure monopoly rights through the political process:

a.	firms are rent-seeking.
b.	consumers are profit-maximizing.
c.	total surplus is maximized.
d.	the government is deregulating.
e.	prices decrease.

98. Rent-seeking:

a.	is desired by consumers.
b.	is not a type of competition.
c.	is a type of competition that leads to a market price and output.
d.	is a type of competition that leads to an undesirable outcome.
e.	occurs when resources are used to deregulate a market though the political process.

99. Stephen’s Steel Mill has decided that lobbying Congress to pass a tariff on imported steel will cost them less than trying to modernize its facility to compete with foreign steel prices. Stephen’s Steel Mill will:

a.	decide that lobbying is wrong and modernize its facility.
b.	participate in rent-seeking and lobby Congress for the tariff.
c.	lobby Congress for the tariff and modernize its facility.
d.	produce more steel to attract more customers.
e.	lower its price to compete with the imported foreign steel.

100. Economists view rent-seeking as:

a.	a good way to inspire competition between firms.
b.	a good way to incentivize firms to invest in research and development.
c.	essential to solving the problem of scarcity.
d.	a detrimental form of competition.
e.	beneficial to the consumer.

101. Lobbying the government to place harsh tariffs on imports is a form of:

a.	competition.
b.	market failure.
c.	deregulation.
d.	rent-seeking.
e.	natural monopoly.

102. Taxi medallions are an example of:

a.	perfect competition.
b.	a naturally created barrier to entry.
c.	a government-created barrier to entry.
d.	rent-seeking.
e.	economies of scale.

103. Three examples of solutions to the problems of a monopoly are:

a.	harnessing the benefits of competition, reducing trade barriers, and regulating markets.
b.	harnessing the benefits of monopolies, reducing trade barriers, and regulating markets.
c.	harnessing the benefits of competition, increasing trade barriers, and regulating markets.
d.	harnessing the benefits of monopolies, increasing trade barriers, and regulating markets.
e.	harnessing the benefits of competition, increasing trade barriers, and deregulating markets.

104. Harnessing the benefits of competition, reducing trade barriers, and regulating markets are three:

a.	market structures.
b.	problems of the monopolist.
c.	solutions to the problem of scarcity.
d.	solutions to negative and positive externalities.
e.	solutions to the problems of monopoly.

105. The government has exercised control over monopoly practices since the passage of the:

a.	Morrill Land-Grant Act of 1890.
b.	Gold Standard Act.
c.	Crimes Act.
d.	Sherman Act.
e.	Foraker Act of 1900.

106. Antitrust laws are designed to:

a.	promote monopoly practices.
b.	promote competition.
c.	increase prices.
d.	decrease output.
e.	promote awareness of government programs.

107. One possible outcome of promoting competition is:

a.	higher prices.
b.	lower output.
c.	eliminating deadweight loss.
d.	regulated markets.
e.	less efficiency.

108. One way the government can restore competitiveness in a market is through:

a.	patents.
b.	copyrights.
c.	tariffs.
d.	taxes.
e.	antitrust laws.

109. When the government passes antitrust laws in an industry, we see:

a.	higher prices, lower output, and more choices.
b.	lower prices, higher output, and fewer choices.
c.	lower prices, higher output, and more choices.
d.	higher prices, lower output, and fewer choices.
e.	higher prices, higher output, and more choices.

110. A tariff is a(n):

a.	tax on an import.
b.	tax on domestically produced and sold products.
c.	natural barrier to entry.
d.	example of a market structure.
e.	way to promote competition.

111. Reducing trade barriers creates _________ competition, _________ the influence of monopoly, and _________ the efficient use of resources.

a.	less; reduces; promotes
b.	more; reduces; promotes
c.	less; increases; promotes
d.	more; reduces; hinders
e.	more; increases; hinders

112. One benefit from tariffs would be:

a.	the increase in efficiency.
b.	the elimination of deadweight loss.
c.	the increase in consumer surplus.
d.	the protection of domestic businesses.
e.	more imports into the country.

113. By reducing trade barriers, the government:

a.	reduces imports.
b.	increases the price of the imported good.
c.	reduces exports.
d.	decreases efficiency.
e.	decreases deadweight loss.

114. Which pricing rule generates the greatest welfare for society?

a.	marginal cost pricing rule
b.	average cost pricing rule
c.	total cost pricing rule
d.	fixed cost pricing rule
e.	variable cost pricing rule

115. The _________ means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

a.	marginal cost pricing rule
b.	average cost pricing rule
c.	total cost pricing rule
d.	fixed cost pricing rule
e.	variable cost pricing rule

116. It is unrealistic to regulate a natural monopoly at marginal cost pricing because:

a.	the government is not allowed to regulate markets.
b.	marginal cost pricing ends up having the natural monopoly firm earn zero economic profits.
c.	with this type of regulation, the firm will want to shut down, and that outcome is not desirable for society.
d.	regulating a market causes more deadweight loss.
e.	firms do not need to follow regulations from the government.

Refer to the accompanying figure to answer the questions that follow.

117. The figure shows which type of market?

a.	a competitive market in the short run
b.	a competitive market in the long run
c.	a natural monopoly
d.	a monopolistically competitive market in the long run
e.	a monopolistically competitive market incurring an economic loss

118. Which of the following is the profit-maximizing price and quantity combination?

a.	A and E
b.	B and F
c.	C and G
d.	D and H
e.	A and H

119. Which of the following is the most efficient price and quantity combination for society?

a.	A and E
b.	B and F
c.	C and G
d.	D and H
e.	D and E

120. At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?

a.	A and E
b.	B and F
c.	C and G
d.	D and H
e.	D and E

Refer to the accompanying figure to answer the questions that follow.

121. A profit-maximizing firm without any price regulations would make __________ in profits.

a.	$1,500
b.	–$720
c.	$720
d.	–$240
e.	$240

122. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

a.	$1,500
b.	–$720
c.	$720
d.	–$240
e.	$240

123. If this firm is profit-maximizing, society would experience _________ in deadweight loss.

a.	$0
b.	$112.50
c.	$720
d.	$525
e.	$240

124. If this firm is regulated at a point where it is making zero economic profits, society would experience __________ in deadweight loss.

a.	$0
b.	$112.50
c.	$720
d.	$525
e.	$240

125. Breaking up a company that has a natural monopoly would:

a.	result in higher production costs.
b.	result in lower production costs.
c.	benefit society.
d.	result in lower prices for consumers.
e.	increase government tax revenue.

126. One way the government could regulate a natural monopoly at the marginal cost level would be to:

a.	allow the natural monopoly to produce at the profit-maximizing point.
b.	tax the monopoly.
c.	place a tariff on the monopoly.
d.	give the monopoly a patent.
e.	subsidize the monopoly.

127. A privately owned firm that is regulated by the government is very similar to a firm that the government owns because:

a.	both make economic profits.
b.	neither have a profit motive.
c.	both minimize costs.
d.	both result in no deadweight loss.
e.	neither earn economic profits.

128. The government oversight and management of monopolies:

a.	is illegal in most cases.
b.	never increases efficiency.
c.	always increases efficiency.
d.	is problematic because government agencies do not care about deadweight loss.
e.	is problematic because there are no incentives to keep costs in check.

Both monopolies and competitive firms

Refer to the accompanying figure to answer the questions that follow.
If this firm is profit-maximizing, society would experience _________ in deadweight loss

At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is

Monopolists

When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

One argument against patent and copyright laws is that they

Rent-seeking occurs when

Monopolies result in a(n) __________ level of output and provide __________ choice to consumers

Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created

The profit-maximizing rule for a monopolist is

Refer to the accompanying figure to answer the questions that follow.
Consumer surplus associated with a profit-maximizing monopoly is equal to

Refer to the accompanying figure to answer the questions that follow.
The profit-maximizing price and quantity are

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should

Refer to the accompanying figure to answer the questions that follow.
The total revenue when a firm is profit-maximizing is

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.
The profit made by this profit-maximizing firm is

Refer to the accompanying figure to answer the questions that follow.
When this firm is producing at the profit-maximizing price and quantity, its total revenue is

When marginal revenue is negative, the

When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to

Licensing

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.
The profit-maximizing quantity for this firm is

Question 1

By reducing trade barriers, the government:

Question 2

The price effect refers to how:

Question 3

When resources are used to secure monopoly rights through the political process:

Question 4

Barriers to entry:

Question 5

Reducing trade barriers creates _________ competition, _________ the influence of monopoly, and _________ the efficient use of resources.

Question 6

A big difference between a competitive firm and a monopolist is that a monopolist:

Question 7

The equation of a firm’s marginal revenue curve is estimated to be price = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profitmaximizing quantity for this firm is:

Question 8

Patents and copyrights can:

Question 9

Rentseeking:

Question 10

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.

The profitmaximizing quantity for this firm is:

Question 11

Economists view rentseeking as:

Question 12

If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

Question 13

Raising capital to compete against an entrenched monopolist:

Question 14

Taxi medallions are an example of:

Question 15

The government oversight and management of monopolies:

Question 16

Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:

Question 17

When a town has a single cable provider:

Question 18

Refer to the accompanying figure to answer the questions that follow.

The total cost when a firm is profitmaximizing is:

Question 19

Problems raising capital is an example of:

Question 20

Refer to the accompanying figure to answer the questions that follow.

A profitmaximizing firm without any price regulations would make __________ in profits.

If firms in a competitive market are making positive economic profits, you would expect firms to

A good economist will ignore _________ and focus on _________ when it comes to making the right decisions

The presence of many buyers and sellers is an important characteristic of competitive markets because it allows:

Which of the following lists the three main characteristics of a competitive market?

The marginal cost curve is the short-run supply curve:

Marginal revenue is the change in total:

Firms will break even if the price they charge is:

Firms will always make a positive economic profit if the price they charge is:

Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?

Two government-created barriers to entry are:

The accompanying payoff matrix depicts the possible outcomes for two players involved in a game of Rock, Paper, Scissors. If a player receives a payoff of 1, the player wins; if the player receives a payoff of –1, the player loses; if both players receive 0 (zero), the players tie. If Stan chooses scissors and Kyle chooses rock, Stan’s payoff is __________ and Kyle’s payoff is __________.

Refer to the accompanying table. If Keisha keeps quiet, Larry will spend __________ years in jail if he confesses and __________ years in jail if he also keeps quiet.

Three natural barriers to entry are:

To maximize profits, a monopolist chooses the quantity where:

Which of the following is a characteristic of a monopoly but not of a competitive market?

At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is:

A monopoly:

Because the demand curve for a monopolist is downward sloping:

Question 1

Select one:

a. licensing

b. economies of scale

c. control of resources

d. problems raising capital

e. patents and copyright law

Question 2

Problems raising capital is an example of:

Select one:

a. consumer surplus.

b. a government-created barrier.

c. a natural barrier.

d. communism

e. an externality.

Question 3

Thomas has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately he cannot find someone to lend him enough money to market his product to consumers. Thomas is facing which kind of barrier to entry?

Select one:

a. economies of scale

b. patents and copyright law

c. licensing

d. problems raising capital

e. control of resources

Question 4

Economies of scale exist:

Select one:

a. when long-run average total costs decrease.

b. when long-run average total costs are constant.

c. when governments create barriers to entry.

d. when long-run average total costs increase.

e. only for monopolists.

Question 5

A natural monopoly:

Select one:

a. exists when many sellers experience lower average total costs than potential competitors do.

b. exists when a firm has sole ownership of a natural resource.

c. is needed to make a profit in the long run.

d. is an example of a government-created barrier.

e. exists when a single seller experiences lower average total costs than any potential competitor.

Question 6

Both monopolies and competitive firms:

Select one:

a. are price-makers.

b. make long-run economic profits.

c. are price-takers.

d. face barriers to entry.

e. try to maximize profits.

Question 7

The profit-maximizing rule for a monopolist is:

Select one:

a. average total cost = marginal cost.

b. average total cost = marginal revenue.

c. price = marginal revenue.

d. price = marginal cost.

e. marginal revenue = marginal cost.

Question 8

The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________.

Select one:

a. horizontal; perfectly inelastic

b. downward-sloping; horizontal

c. perfectly inelastic; downward-sloping

d. perfectly elastic; downward-sloping

e. downward-sloping; perfectly elastic

Question 9

If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:

Select one:

a. increase production and lower the price to maximize profits.

b. increase production and increase the price to maximize profits.

c. continue producing at the current price to maximize profits.

d. decrease production and increase the price to maximize profits.

e. decrease production and decrease the price to maximize profits.

Question 10

Which of the following is a characteristic of a monopoly but not of a competitive market?

Select one:

a. price > marginal cost

b. price = marginal cost

c. price < marginal cost

d. A monopoly is a price-taker.

e. A monopoly contains many firms.

Question 11

Refer to the accompanying figure to answer the questions that follow.

If a firm is producing a quantity of 100 and charging a price of $25, it:

Select one:

a. should raise production to 150 units but lower the price to $10 to maximize profits.

b. should keep production at 100 units but lower the price to $13 to maximize profits.

c. should keep production at 100 units and lower the price to $10 to maximize profits.

d. is already maximizing profits and should not change the price or quantity produced.

e. should raise production to 150 units and continue to charge $25 to maximize profits.

Question 12

Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:

Select one:

a. baseball team owners have market power and can charge a higher price when they are the only sellers of the beer.

b. demand is much higher at a baseball game than at a bar.

c. it costs the owners of the baseball teams more money to buy the beer from distributors.

d. the owners’ baseball teams are not profit-maximizing.

e. the government forces the owner of baseball teams to charge a high price.

Question 13

Refer to the accompanying figure to answer the questions that follow.

When a competitive market comes under the control of a monopoly, the price changes from:

Select one:

a. A to C.

b. C to A.

c. B to A.

d. D to E.

e. C to B.

Question 14

Refer to the accompanying figure to answer the questions that follow.

Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

Select one:

a. A + B

b. C + D

c. 87

d. B + D + G + E + H

e. A + B + C + D + E

Question 15

Most economists are against monopolies because:

Select one:

a. monopolies offer more choices than are needed.

b. monopolists do not maximize profits.

c. monopolies can never produce the quantity that a perfectly competitive market would produce.

d. monopolies produce too much of product.

e. monopolies do not offer any choice.

Question 16

If cable companies were in a highly competitive market, you would expect:

Select one:

a. customers to be unhappy about their cable package options.

b. deadweight loss in the market.

c. cable companies to force you to choose between buying a little more cable than you really need or going without cable altogether.

d. a company to be willing to sell specific channels as well as packaged options.

e. cable companies to make profits in the long run.

Question 17

Rent-seeking occurs when:

Select one:

a. resources are used to deregulate a market through the political process.

b. resources are used to maximize profits.

c. two firms try to enter the same market.

d. resources are used to secure monopoly rights through the political process.

e. landlords attempt to raise the rent on tenants.

Question 18

When the government passes antitrust laws in an industry, we see:

Select one:

a. lower prices, higher output, and fewer choices.

b. higher prices, higher output, and more choices.

c. higher prices, lower output, and more choices.

d. lower prices, higher output, and more choices.

e. higher prices, lower output, and fewer choices.

Question 19

Refer to the accompanying figure to answer the questions that follow.

The figure shows which type of market?

Select one:

a. a monopolistically competitive market incurring an economic loss

b. a monopolistically competitive market in the long run

c. a competitive market in the long run

d. a natural monopoly

e. a competitive market in the short run

Question 20

One way the government could regulate a natural monopoly at the marginal cost level would be to:

Select one:

a. allow the natural monopoly to produce at the profit-maximizing point.

b. give the monopoly a patent.

c. subsidize the monopoly.

d. place a tariff on the monopoly.

e. tax the monopoly.

1. Opportunity cost is the ______________ alternative forfeited when a choice is made.

a. least-valued

b. highest-valued

c. most recently considered

d. most convenient

e. first

2. You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept:

A) resources are scarce.

B) the real cost of something is what you must give up to get it.

C) “How much” is a decision at the margin.

D) there are gains from trade.

3. Positive economics:

A) describes opinions and perspectives on how the world should work.

B) is based on opinion polls.

C) describes how the world does work

D) is the same as normative economics.

4. Economists use models to explain real-life situations because:

A) such models tend to be exactly what is occurring in each situation.

B) assumptions found in such models tend to make the problem more difficult.

C) simplifications and assumptions often yield answers that can help to explain the more difficult real-life situations

D) they do not; real-life situations are not relevant to the building of models.

5. Bob can hire someone to paint his house for $2,000, or he can do it himself at no out-of-pocket cost. It will take him 5 days. Bob earns $500 a day when he works outside the home. Which option has the greater economic cost?

a. hiring a painter

b. painting the house himself

c. they are the same cost

d. not enough information to decide—one needs to know the marginal cost

6. When one producer has a comparative advantage in production,

a. she can produce more output than someone else using the same quantity of resources.

b. she can produce a good at a lower opportunity cost than someone else.

c. she will not benefit from trade with other producers.

d. she is unable to reach her production possibilities frontier (PPF).

e. she will only trade with others who have the same comparative advantage.

7. The slope of a production possibilities frontier

a. has no economic relevance or meaning.

b. is always constant.

c. is always varying.

d. measures the opportunity cost of producing one more unit of a good

8. Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to:

A) shift inward to the left.

B) shift outward to the right

C) remain unchanged.

D) become vertical.

9. Which point(s) in the PPF above are unattainable?

a) Point A because it is outside the production possibilities frontier

b) All the points because the production of each has an opportunity cost.

c) None of the points because they all are feasible.

d) Points B, C, and D because they are on the production possibilities frontier.

e) Point E because it is inside the production possibilities frontier.

10. Michael and Angelo are both artists who can create sculptures or paint paintings each day. The following table describes their maximum outputs per day. Does either person have an absolute advantage?

	Sculptures	Paintings
Michael	10	5
Angelo	6	2

a. Yes, Michael has an absolute advantage in both sculptures and paintings

b. Yes, Angelo has an absolute advantage in both sculptures and paintings.

c. Yes, Michael has an absolute advantage in paintings, and Angelo has an absolute advantage in sculptures.

d. Yes, Michael has an absolute advantage in sculptures, and Angelo has an absolute advantage in paintings.

e. No, neither has an absolute advantage.

11. Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. What is Angelo’s opportunity cost of a sculpture?

	Sculptures	Paintings
Michael	10	5
Angelo	6	2

1/2 painting
1/3 painting
3 paintings
1/3 sculpture
6/10 sculpture

12. The accompanying figure depicts the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?

a. 3 pizzas for 1 stromboli

b. 1 pizza for 1 stromboli

c. 10 pizzas for 2 stromboli

d. 1 pizza for 1/2 stromboli

e. 1 pizza for 1/4 of a stromboli

Figure: Production Possibility Frontier Curve for Tealand

13. (Figure: Production Possibility Frontier for Tealand) In the figure, Tealand is producing at point C on its production possibility frontier. What is the opportunity cost in Tealand of increasing the production of tea from 20 million cups to 30 million cups?

A. 10 million cups of tea

B. 5 million scones

C. 10 million scones

D. The answer is impossible to determine from the information given.

14. Consider the production possibilities frontier below. Which line(s) represents a change in technology for producing good A?

a. 1

b. 2

c. both

d. neither

15. Consider the production possibilities frontier below. Which line(s) represents a change in the economy’s resources?

a. 1

b. 2

c. both

d. neither

16. Use the accompanying diagram to answer the question.

An increase in the number of buyers would cause the demand curve to:

a. shift from D to D2.

b. remain at D.

c. shift from D to D1.

d. shift from D1 to D.

e. shift from D1 to D2.

Figure: Demand and Supply of Gasoline

17. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. The initial equilibrium price and quantity (at intersection of S1 and D) of gasoline are:

A.$2.00 and 450 gallons.

B. $1.50 and 400 gallons.

C. $2.00 and 200 gallons.

D. $2.50 and 300 gallons

18. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the initial equilibrium of S1 and D, any price lower than ________ will create pressure for the price to ________.

A. $2.00; fall

B. $2.50; rise

C. $3.00; rise

D. $2.50; fall

19. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S1 to S2 is:

A. better technology in the production of gasoline

B. increased demand.

C. lower labor productivity in gasoline production.

D. increased prices of substitutes for gasoline.

20. “In 2008, air travel decreased substantially despite significant reductions in ticket prices.” If this information is correct, it indicates that the law of demand did not apply to air travel in 2008.

A. True

B. False

21. A supply curve is:

a. downward sloping because suppliers prefer lower costs

b. upward sloping because suppliers prefer lower costs

c. upward sloping because suppliers will offer for sale more at a higher price

d. downward sloping because suppliers will offer more for sale at a higher price

22. The demand curve shift shown in the figure above was caused by a(n):

a. increase in the input cost of the good.

b. increase in the price of a substitute of the good.

c. decrease in the number of firms selling the good.

d. decrease in the number of buyers in the market for the good.

e. expectation that the future price of this good will be higher than it currently is.

23. According to the diagram above, if the price is at $10, there is a:

a. shortage of 15 units.

b. surplus of 15 units

c. shortage of 30 units.

d. surplus of 30 units.

e. surplus of 22 units.

24. When both supply and demand shift to the left,

a. the equilibrium price will always rise.

b. the equilibrium price will always fall.

c. the equilibrium quantity will always fall.

d. the equilibrium quantity will always rise.

e. the equilibrium quantity is indeterminate.

25. According to the figure below, at the price of $5:

a. the equilibrium quantity is 500.

b. the quantity demanded is 500.

c. the demand is 500.

d. there is a surplus.

e. there is a shortage.

26. When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:

a. perfectly inelastic.

b. inelastic.

c. unitary elastic.

d. elastic.

e. perfectly inelastic.

27. What good is most likely to have an income elasticity of demand equal to 0.3?

a. medication

b. take-out dinner

c. used clothing

d. laptop

e. a download on iTunes

28. Demand for Coca-Cola is _____ price elastic than cola products in general.

a. More

b. less

c. equally

29. Peanut butter and jelly are complements. If a tax is imposed on peanut butter, how will that affect the market for jelly?

a. Demand for jelly will increase along with the price.

b. Demand for jelly will decrease along with the price

c. The supply of jelly will increase and the price will decrease.

d. Both the supply and demand for jelly will increase along with the price.

e. The supply of jelly will decrease and the price will increase.

30. Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases,

a. we would see the demand curve for Coke shift to the right.

b. we would see the demand curve for Coke shift to the left.

c. we would see no change in the demand for Coke.

d. we would see the demand curve for Pepsi shift to the right.

e. we would see the demand curve for Pepsi shift to the left.

31. Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

a. The demand curve for traditional cameras shifts to the right.

b. The supply curve for traditional cameras shifts to the right.

c. The demand curve for traditional cameras shifts to the left.

d. The supply curve for traditional cameras shifts to the left.

32. A recent news story reported that ice cream producers will increase the supply of ice cream during the summer. Summer is traditionally a time of increased demand for ice cream. How would an economist expect the price and quantity of ice cream to change from the spring to the summer given knowledge of these two changes in the market for ice cream?

A. An increase in the price and quantity.

B. An increase in the price and an unpredictable change in the quantity.

C. An unknown change in both the price and quantity.

D. An unknown change in the price and an increase in the quantity.

33. Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

A) sellers bear the entire burden of the tax.

B) buyers bear the entire burden of the tax.

C) the tax burden will be shared equally between buyers and sellers.

D) buyers share the burden of the tax with government.

34. If demand is more elastic than supply then:

A) sellers bear more of the burden of the tax.

B) buyers bear more of the burden of the tax.

C) the tax burden will be shared equally between buyers and sellers.

D) buyers share the burden of the tax with government.

35. In 1990 the U.S. government imposed a special sales tax on yachts with a price of at least $100,000. The tax was repealed in 1993 since it generated far less revenue than expected and led to significant job losses in the yacht building industry. The sales tax was unsuccessful because:

a) the supply and the demand for yachts were relatively elastic.

b) the supply and the demand for yachts were relatively inelastic.

c) the tax rate was too low.

d) yachts are a necessity.

36. Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

A) demand

B) supply

C) production possibilities

D) marginal cost

Use this information for questions 36.1-36.3. Alfred has a willingness to pay for one car of $35,000. The second car offers him a marginal benefit of $25,000. A third car is worth $10,000, and his willingness to pay for a fourth is 0. The market price for the car is $24,999.

36.1 Alfred’s willingness to pay for the marginal car is falling. This pattern is called

a. opportunity cost

b. diminishing marginal utility

c. price effect

d. consumer surplus

36.2. At the market price, Alfred would buy ___ cars.

a. 0

b. 1

c. 2

d. 3

e. 4

36.3 At this market price, his consumer surplus is

a. 35,000

b. 24,999

c. 1

d. 10,002

Figure 4-6 above shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.

37. Refer to Figure 4-6. What area represents consumer surplus prior to the imposition of the price floor?

A) A + B + E

B) A + B + C

C) A + B + C + D + E

D) E + F

38. Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor?

A) A + B + E

B) A + B

C) A + B + E + F

D) A

39. The costs of a market activity paid for by an individual NOT engaged in the market activity are:

a. external costs.

b. internal costs.

c. free-rider costs.

d. social costs.

e. common costs.

40. The total costs of a market activity paid for by individuals in the market as well as individuals not engaged in the market activity are:

a. external costs.

b. internal costs.

c. free-rider costs.

d. social costs.

e. common costs.

41. A firm’s willingness to supply their product in the short run is represented on a graph by:

a. the market supply curve.

b. the entire marginal cost (MC) curve.

c. the marginal revenue (MR) curve.

d. the part of the marginal cost (MC) curve above minimum average total cost (ATC).

e. the part of the marginal cost (MC) curve above minimum average variable cost (AVC).

42. Rachel quit her job as a chef making $30,000 per year to start her own restaurant in New York City. The first year, Rachel's restaurant earned $120,000 in revenue. Rachel pays $50,000 per year in wages to the waitresses and hostess, $20,000 per year to buy food and other supplies. She paid $10,000 for rent and utilities, instead of earning 10% on that money in a bank CD. What is Rachel's economic profit for the year?

A) $0

B) $9,000

C) $40,000

D) $80,000

43. What directly drives the entry and exit of firms?

a. Revenues

b. Costs

c. Profits and losses

d. Marginal product of labor

44. The law of diminishing returns states that

a) dividing the tasks to be performed through division of labor will increase the marginal product of labor.

b) the long-run average cost of production falls as output increases.

c) adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline.

d) producing more output by adding more of a variable input will eventually cause the marginal cost of production to decline.

e) adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the fixed input to decline.

45. According to the accompanying figure, if a firm is producing a quantity of 100 and charging a price of $10,

a. the firm should continue to produce 100 units but raise the price to $13 to maximize profits.

b. the firm should increase production to 150 units but raise the price to $25 to maximize profits.

c. the firm should continue to produce 100 units but raise the price to $25 to maximize profits.

d. the firm should increase production to 100 units and raise the price to $13 to maximize profits.

e. the firm is already maximizing profits and should not change the price or quantity produced.

46. Which of the following is not a characteristic of a perfectly competitive market structure?

A) There are a very large number of firms that are small compared to the market.

B) All firms sell identical products.

C) There are no restrictions to entry by new firms.

D) There are restrictions on exit of firms.

47. Both individual buyers and sellers in perfect competition

A) can influence the market price by their own individual actions.

B) can influence the market price by joining with a few of their competitors.

C) have to take the market price as a given.

D) have the market price dictated to them by government.

48. In economics, we assume that firms make decisions in order to:

a. maximize revenues.

b. minimize cost

c. maximize profit.

d. maximize production

e. maximize the marginal product of labor

49. A firm reflected in the following graph expanded its scale of production and found that its average costs did not change. Which of the curves shown would reflect this situation?

a. LRATC1 and LRATC2

b. LRATC3

c. LRATC2

d. LRATC1

e. LRATC1 and LRATC3

50. A firm’s economic profit will always be less than its accounting profit because:

a. accounting profit considers explicit costs, which economic profit does not.

b. economic profit considers implicit costs, which accounting profit does not

c. economic profit is always zero, no matter what kind of firm it is.

d. accounting profit considers implicit costs, which economic profit does not.

e. accounting profit is always positive, no matter what kind of firm it is.

51. Competitive markets exist when:

a. there are so many buyers and sellers that each has only a small impact on the market price and the market output

b. there are more buyers than sellers, giving the buyers market power.

c. there are more sellers than buyers, giving the sellers market power.

d. accounting profits become zero because of price wars.

e. prices are so low that everyone who wants the good or service gets the good or service.

52. According to the figure below, this firm’s short-run supply curve is represented by:

a. the average total cost (ATC) curve above $20.

b. the marginal cost (MC) curve above $15.

c. the marginal cost (MC) curve above $8.

d. the marginal cost (MC) curve above $20.

Figure: Long-Run Average Cost

53. Look at the figure Long-Run Average Cost. This firm has ________ in the output region from 0 to A.

A. decreasing returns to scale

B. constant returns to scale

C. increasing returns to scale

D. negative costs of production

54. (Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has ________ in the output region from B to C.

A. constant returns to scale

B. decreasing returns to scale

C. increasing returns to scale

D. falling marginal cost

55. According to the figure, when this firm is producing at the profit-maximizing price and quantity, its total revenue is:

a. $1,000

b. $1,950

c. $2,500

d. $3,750

e. $5,000

56. Which statement about firms’ economic profits is true?

a. Monopolists and perfectly competitive firms can earn profit in the short run only.

b. Monopolists can earn profit in the long run; perfectly competitive can earn profit in the short run only.

c. Monopolists and perfectly competitive firms can earn profit in the long run only.

d. All firms always earn profit, else they would exit the market.

Total revenue minus total cost equalSelect one:a. producer surplus.b. dividends.c. consumer surplus.d. profit.e. retained earnings.

Steve owns a bike store. He currently sells 1,200 bikes per year. If he doubles the size of his store so he can sell 2,400 bikes per year and his long-run average total cost per bike decreases, we know that Steve is experiencingSelect one:a. diseconomies of scale.b. diminishing marginal product.c. increasing marginal product.d. economies of scalE.e. constant returns to scale.

Lauren is the owner of a bakery that earns zero economic profit. Last year her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. From this we know that her total explicit costs wereSelect one:a. $80,000.b. $92,000.c. $15,000.d. $77,000.e. $53,000.

If you were told that a firm earns positive accounting profit and nothing else, what would you know is true about its economic profit?Select one:a. Its economic profit is positive, because whenever accounting profit is positive, so is economic profit.b. Its economic profit cannot be determined without knowing about the firm’s implicit costs.c. Its economic profit is zero, because all firms earn zero economic profit regardless of the industry.d. Its economic profit is equal to its accounting profit.e. Its economic profit is negative, because its accounting profit is probably not high enough to earn positive economic profit.

The change in total output divided by the change in input is known asSelect one:a. marginal product.b. marginal cost.c. specialization.d. total product.e. marginal profit.

If a firm hires another worker and her marginal product of labor is negative, we know that the firm’s total output isSelect one:a. increasing.b. decreasing.c. equal to the marginal product of that worker.d. unchanged.e. 0 (zero).

Steve owns a bike store. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costs are $450,000 per year. Last year Steve sold 1,200 bikes. This means that his average total cost was ________ per bikeSelect one:a. $625b. $1,000c. $375d. $1,200e. $600

When the average total cost curve is at its minimum, we know thatSelect one:a. the average variable cost curve intersects the average total cost curve.b. the average variable cost curve is above the average total cost curve.c. the marginal cost curve intersects the average total cost curve.d. the marginal cost curve is above the average total cost curve.e. the average fixed cost curve is above the marginal cost curve.

Should a firm always produce the level of output where marginal cost is lowest?

Select one:a. Yes: that is the level of output where costs will be lowest.b. No: that is the level of output where employees are most efficient.c. No: firms should produce where marginal cost equals average variable cost.d. No: that might be the best choice, but it depends on the firm’s profits.e. Yes: any other level of output will have higher marginal cost.

According to the table below, profits are maximized when producing:

qty TR TC

0 0 3

1 5 5

2 10 9

3 15 13

4 20 19

Select one:a. 0 (zero) units.b. 1 unit.c. 2 units.d. 3 units.e. 4 units.

According to the figure below, if the firm is maximizing profits, profit is represented by the area:

The market for candles is perfectly competitive and is currently in equilibrium. If candles are later linked to more houses catching on fireSelect one:a. in the short run, firms will experience economic profits; but in the long run, firms will leave the market, bringing economic profits back down to zero.b. in the short run, firms will experience economic profits; but in the long run, firms will enter the market, bringing economic profits back down to zero.c. in the short run, firms will incur economic losses; but in the long run, firms will leave the market, bringing economic profits back up to zero.d. in the short run, firms will incur economic losses; but in the long run, firms will enter the market, bringing economic profits back up to zero.e. in both the short run and the long run, firms will experience zero economic profits.

Marginal revenue is

Kimberly owns a cupcake shop in Newport Beach, CaliforniA. The market for cupcakes is very competitivE. At Kimberly’s current production level, her marginal cost is $25 and her marginal revenue is $29. To maximize profits, Kimberly shouldSelect one:a. decrease production.b. keep production the same.c. increase the price.d. decease the price.e. increase production.

Tom’s Campgrounds is a firm conducting business in a competitive market. Tom realizes he is making a loss and is trying to decide whether or not to shut down or stay open. He should stay openSelect one:a. regardless of the price being charged.b. if the price being charged is less than his minimum average variable cost (AVC).c. if his revenues do not cover his variable costs.d. if his revenues cover his variable costs.e. as long as he is making revenue.

Jim and Lisa own a dog-grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in the dog-grooming service market. JL Groomers experiences normal cost curves with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers will make positive economic profits ifSelect one:a. the market price is $14.b. the market price is between $14 and $22.c. the market price is below $14.d. the market price is $22.e. the market price is above $22.

Which of the following lists the three main characteristics of a competitive market?

Select one:a. many buyers and sellers, similar products, easy entry into the marketb. many buyers and few sellers, similar products, easy entry into the marketc. many buyers and sellers, differentiated products, easy entry into the marketd. many buyers and sellers, similar products, barriers to entry into the markete. many buyers and few sellers, unique products, barriers to entry into the market

A firm will shut down in the long-run ifSelect one:a. the price is above the minimum average total cost (ATC).b. the price is equal to the minimum average total cost (ATC).c. the price is anywhere above the minimum average variable cost (AVC).d. the price is anywhere below the minimum average total cost (ATC).e. the firm is making zero economic profits.

Sunk costs:

Select one:a. should be taken into consideration when making decisions about future production.b. are costs that have been incurred as a result of past decisions.c. cause the profit-maximizing rule to no longer be useful.d. are future costs that you have to incur.e. are included only in economic profits.

If Nicole’s Knick-Knacks is a perfectly competitive firm and is making zero economic profitsSelect one:a. firms will enter the market.b. firms will exit the market.c. Nicole’s Knick-Knacks will stay in the market.d. the market supply curve will shift to the left.e. the market supply curve will shift to the right.

The following table represents costs and production for a monopolist. The profit made by a profit-maximizing firm isSelect one:a. $8.b. $4.c. $3.d. $7.e. $9.

According to the accompanying figure, if a firm is producing a quantity of 100 and charging a price of $10,

Select one:a. the firm should continue to produce 100 units but raise the price to $13 to maximize profits.b. the firm should increase production to 150 units but raise the price to $25 to maximize profits.c. the firm should continue to produce 100 units but raise the price to $25 to maximize profits.d. the firm should increase production to 100 units and raise the price to $13 to maximize profits.e. the firm is already maximizing profits and should not change the price or quantity produced.

According to the accompanying figure, consumer surplus associated with a profit-maximizing monopoly is equal to:

Select one:a. $900.b. $600.c. $300.d. $100.e. $450.

Select one:a. control of resourcesb. problems raising capitalc. economies of scaled. licensinge. patents and copyright law

It is unrealistic to regulate a natural monopoly at marginal cost pricing because:

Select one:a. the government is not allowed to regulate markets.b. marginal cost pricing ends up having the natural monopoly firm earn zero economic profits.c. with this type of regulation the firm will want to shut down, and that outcome is not desirable for society.d. regulating a market causes more deadweight loss.e. firms do not need to follow regulations from the government.

Patents and copyright law:

Select one:a. are natural barriers.b. create more competition.c. cause more varieties of goods and services at different price levels.d. assure inventors that no one else will sell their idea.e. always result in zero economic profits.

Two conditions allow a single seller to become a monopolist. Those two conditions are:

Select one:a. the firm must have something unique to sell and it must be able to estimate their demand curve.b. the firm must have something unique to sell and must have a way to prevent potential competitors from entering the market.c. the firm must be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market.d. the firm must be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market.e. the firm must have something unique to sell and must be able to segregate its consumers.

Christopher’s Campground is the only campground located in Abilene, Texas. Christopher’s Campground’s demand curve is:

Select one:a. perfectly elastic.b. perfectly inelastic.c. horizontal.d. the market demand curve.e. upward sloping.

To maximize profits, a monopolist chooses the quantity where:

Select one:a. revenues are maximized.b. marginal revenue equals zero.c. marginal cost equals zero.d. marginal revenue equals marginal cost.e. costs are minimized.

Beer prices at Major League Baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:

Select one:a. it costs the owners of the baseball teams more money to buy the beer from distributors.b. demand is much higher at a baseball game than at a bar.c. since the baseball team owners are the only sellers of beer, they have market power and can charge a higher price.d. the government forces the owner of baseball teams to charge a high price.e. the owners’ baseball teams are not profit maximizing.

The best way to limit competition is to:

Select one:a. charge a low price.b. control a resource that is essential in the production process. c. lobby for a government-created barrier.d. produce a high quantity.e. minimize costs.

The typical result of monopoly is ____________ prices and __________ output than we find in a competitive market.

Select one:a. lower; lowerb. lower; higherc. higher; higherd. higher; lower e. higher; the same

Monopolies and competitive firms:

a. are both price makers. b. both try to maximize profits.c. both face barriers to entry.d. both can make long-run economic profits.e. are both price takers.

The demand curve for Angel’s Airport Shuttle is downward sloping. With only this information, it can be concluded that Angel’s Airport Shuttle:

Select one:a. is a price maker.b. will make economic profits.c. is currently maximizing profits.d. is the only firm in the market for airport shuttles. e. should produce where the demand curve crosses marginal cost.

The output effect refers to:

Select one:a. how lower prices affect the quantity sold.b. how lower output affects the price.c. how firms choose their quantity.d. how lower prices affect revenue.e. how firms can set their prices.

The following table represents costs and production for a monopolist. The profit-maximizing quantity for this firm is:

Select one:a. 1. b. 3.c. 4.d. 0 (zero).e. 5.

The marginal revenue lies __________ the demand curve because there is a(n) __________ effect whenever the price is lowered.

Select one:a. on; priceb. below; pricec. below; outputd. above; outpute. above; price

When a town has a single cable provider,

Select one:a. the consumers experience no consumer surplus.b. the government regulates the cable provider’s offerings.c. customers must buy some cable channels that they don’t want in order to get the channels that they do want.d. the cable provider is a price taker.e. the cable company usually offers many different cable packages to satisfy customers’ wants.

When resources are used to secure monopoly rights through the political process,

Select one:a. consumers are profit maximizing.b. the government is deregulating.c. firms are rent seeking.d. prices decrease.e. total surplus is maximized.

According to the figure below, if this firm is profit maximizing, society would experience __________ in deadweight loss.

Select one:a. $240b. $0c. $525d. $720e. $112.50

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Tuesday, July 4, 2017

Liberty University ECON 213 quiz 10 solutions answers right

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