economics data bank

| August 14, 2017

81)
For a monopoly, marginal revenue is equal to
A)
the price of the product.
B)
the amount people buy between two prices.
C)
the amount people buy at a given price.
D)
the change in total revenue brought about by a one-unit increase in quantity sold.
E)
the price multiplied by the quantity sold.
81)
82)
A single-price
monopoly
A)
is able to raise its price as high as it wants and consumers must still buy
from it because it
is
a monopoly.
B)
can lower its price for only a few select consumers if it wants to increase its
sales.
C)
must practice price discrimination.
D)
must lower the price for all customers if it wants to increase its sales.
E)
will set its price equal to a consumer’s willingness to pay.
82)

83)
In order for a hotel to successfully price discriminate so that senior citizens
are given a discount,
the
hotel must be able to
A)
lower its prices to younger customers too.
B)
prevent senior citizens from reselling their rooms to younger customers.
C)
offset the economic loss from charging senior citizens a lower price by
lowering the
marginal
cost of renting rooms to senior citizens.
D)
shift its demand curve rightward.
E)
determine if a senior citizen can pay a higher price.
83)
84)
A price-discriminating
monopoly is a monopoly that
A)
has a license to sell the product.
B)
sells its output at a single price to all of its customers.
C)
illegally charges different customers different prices for the good it
produces.
D)
sells different units of a good or service at different prices.
E)
has control over the resources used to produce the product.
84)
85)
A single-price
monopoly
A)
sets a single price for all consumers.
B)
asks each consumer what single price they would be willing to pay.
C)
sets a single, different price for each consumer.
D)
sells each unit of its output for the single, highest price that the buyer of
that unit is
willing
to pay.
E)
sets a single, different price for each of two different groups.
85)
86)
Which of the following statements is correct?
A)
Because a monopoly is the only firm in the market, its marginal revenue curve
must be the
same
as the market demand curve.
B)
Monopolies are guaranteed to earn an economic profit.
C)
The market demand and the firm’s demand are the same for a monopoly.
D)
Monopolies have perfectly inelastic demand for the product sold.
E)
Because a monopoly is the only firm in the market, its supply curve is the same
as the
market
demand curve.
86)
87)
Patents
A)
remove legal barriers to entry.
B)
are prohibited in the United States.
C)
are a legal barrier to entry.
D)
decrease the incentive to innovate.
E)
create economies of scale.
87)

88)
A natural monopoly’s average cost curve
i.
intersects the demand curve while the average cost curve slopes downward.
ii.
reaches its minimum before it intersects the demand curve.
iii.
intersects the demand curve below the intersection of the marginal cost curve
and the
demand
curve.
A)
i, ii, and iii.
B)
ii only.
C)
i and iii.
D)
iii only.
E)
i only.
88)
89)
For a natural monopoly, economies of scale
A)
as well as constant returns to scale and diseconomies of scale exist along the
long-run
average
cost curve at least until it crosses the market demand curve..
B)
are totally absent.
C)
and diseconomies of scale exist along the long-run average cost curve at least until it
crosses
the market demand curve.
D)
lead to a legal barrier to entry.
E)
exist along the long-run
average cost curve at least until it crosses the market demand
curve.
89)
90)
A natural monopoly
A)
occurs when one firm controls a natural resource.
B)
arises when one firm can meet the entire market demand at a lower average total
cost than
two
or more firms.
C)
arises as a result of legal barriers to entry.
D)
Both answers A and B are correct.
E)
Both answers A and C are correct.
90)
91)
A natural barrier to entry is defined as a barrier that arises because of
A)
technology that allows economies of scale over the entire relevant range of
output.
B)
patents or licenses that exclude others from producing a good or service.
C)
many firms producing the good and thereby allowing choice for all consumers.
D)
one firm owning a key natural resource.
E)
anticompetitive practices by a firm that keep other firms from producing.
91)
92)
A monopoly
A)
must determine the price it will charge.
B)
cannot price discriminate because such a pricing strategy is illegal in the United
States.
C)
faces extensive competition from firms making close substitutes.
D)
has no control over the price it must charge.
E)
Both answers B and C are correct.
92)
93)
One of the requirements for a monopoly is that
A)
products are high priced.
B)
there is a unique product with no close substitutes.
C)
there are several close substitutes for the product.
D)
there is no barrier to entry.
E)
the product cannot be produced by small firms.
93)
94)
A monopoly is a market with
A)
no barriers to entry.
B)
many substitutes.
C)
one supplier.
D)
many suppliers each producing an identical product.
E)
many suppliers each producing a slightly different product.
94)
95)
Technology reduces the average cost of production, so in the long run
i.
perfectly competitive firms produce at a lower average cost.
ii.
the market price of the good falls.
iii.
firms with older plants either exit the market or adopt the new technology.
A)
i and ii.
B)
i only.
C)
iii only.
D)
i and iii.
E)
i, ii, and iii.
95)
96)
When a firm adopts new technology, generally its
A)
cost curves are unaffected.
B)
cost curves shift downward.
C)
production permanently decreases.
D)
supply curve shifts leftward.
E)
cost curves shift upward.
96)
97)
Suppose a perfectly competitive market is in long-run equilibrium with a price of $12. Then
there
is a permanent increase in demand. As a result, in the short run the market
price ________
and
in the long run the number of firms ________ and the price is ________ the
price was in the
short
run.
A)
falls; decreases; is equal to
B)
rises; does not change; lower than
C)
rises; increases; higher than
D)
rises; increases; lower than
E)
rises; does not change; is equal to
97)
98)
Keith is a perfectly competitive carnation grower. The market price is $2 per
dozen carnations.
Keith’s
average total cost to grow carnations is $2.50 per dozen. In the long run,
Keith will
A)
continue to earn an economic profit.
B)
raise his price to more than $2.50 per dozen carnations.
C)
raise his price to $2.50 per dozen carnations.
D)
exit the industry if the price and his costs do not change.
E)
incur an economic loss.
98)
21
99)
In the long run, existing firms exit a perfectly competitive market
A)
only if economic profits are zero.
B)
only if they incur an economic loss.
C)
if they earn a positive economic profit.
D)
if they either earn only a normal profit or if they incur an economic loss.
E)
if normal profits are greater than zero.
99)
100)
Suppose a perfectly competitive market is in short-run equilibrium. Firms that are incurring
a
________
economic loss ________.
A)
persistent; exit the industry and shift the market supply curve rightward
B)
temporary; decrease their production but definitely stay open
C)
persistent; exit the industry and shift the market supply curve leftward
D)
temporary; exit the industry

E) persistent; increase their output to increase their profit

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