Question

1. In a perfectly competitive firm and a perfectly price discriminating monopolistic face the same demand and cost curves, then a.the competitive firm will attain resource-allocative efficiency but the monopolist will not b.the competitive firm will attain resource allocative efficiency but the monopolist may or may not depending upon the demand for its product c.the competitive firm will not attain resource allocative efficiency but the monopolist will d.noth the competitive firm and the monopolist will attain resource allocative efficiency e.neither the competitive firm, not the monopolist will attain resource allocative efficiency

2. In general electric, gas, and water companies are examples of ____ monopolies a.unregulated b.patent c.natural d.government

3. At the quantity where a single price monopolist maximizes profit, price will be a.equal to marginal-cost b.equal to marginal revenue c.greater than marginal cost d.less than marginal cost e.less than marginal revenue

4. Which of the following is true of price and marginal revenue for the first unit of output sold by a monopolist? A.price is greater than marginal revenue b.price is less than marginal revenue c.price is equal to marginal revenue d.a or b depending on whether it is a single price or a price discriminating monopolist

5. A single price monopolist a.must lower price on all previous units to sell an additional unit of output b.is a price taker c.finds that its marginal revenue and price are the same for the first unit of the good it sells d.necessarilt faces a perfectly inelastic demand curve e.a and c

6. One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is a.search for its profit-maximizing price b.advertise c.minimize its losses d.produce the quantity of output at which P=MC e. Produce a high-quality product

7. Which of the following statements is true a.the motivation for the rent-seeking is not the same as the motivation for profit-seeking b.economic rent is a payment in excess of opportunity cost c.the deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly, instead, it is one of the costs of not having a monopoly d.rent seeking is almost always an irrational activity as far as the rent-seekers are concerned e.a and d

8. The ______ Acts, passed by the British Parliament in the 1760s imposed taxes on a variety of products imported into the American colonies. a.smooth Hawley tariff b.tea c.townsend d.british east India

9. In a monopolistic competitive market which of the following factors probably does not give rise to product differentiation? A.packing of the product b.brand names c.loyalty of customers to a particular producer d.quality difference e.the small number of sellers

10. Which of the following industries is the best real-world example of monopolistic competition? A.soft drinks b.electricity generation c.automobiles d.computer software

11. The monopolistic competitive firm faces a ____ demand curve. A.horizontal b.vertical c.downward sloping d.upward sloping

Answer 1

1.Option D

The benefit of price discrimination to the monopolist is greater profits, of course, but it also increases productive and allocative efficiency because more product is produced and is made available to a greater market than would otherwise be provided by the monopoly.Because MC=MB, allocative efficiency in a perfectly competitive industry must occur at the equilibrium output level determined by the intersection of demand and supply.

2. Option C

A natural monopoly occurs when the most efficient number of firms in the industry is one.A natural monopoly will typically have very high fixed costs meaning that it is impractical to have more than one firm producing the good.

3.Option C

In monopoly when price is set above the marginal cost the monopolist earns positive economic profit.Because a monopoly has market power, it can set a monopoly price that is above the firm's marginal cost.

4.Option A

Marginal revenue is the extra revenue generated when a monopoly sells one more unit of output. In a monopoly, the marginal revenue is lower than the price because the demand curve is downward sloping. When prices go down, more units of the product are bought.