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Question;41);If a monopolistically competitive seller's marginal cost is $3.56, the firm;will decrease its output;if;A);its marginal revenue is less than $3.56.;B);its marginal revenue is equal to $3.56.;C);its marginal revenue is more than $3.56.;D);its average total cost is equal to $4.00.;E);Both answers B and D are correct.;41);42);In monopolistic competition, profit is maximized by producing so that marginal;revenue;A);equals price.;B);equals average total cost but not marginal cost.;C);equals marginal cost and which are less than price.;D);equals marginal cost and equals price.;E);is negative.;42);43);The absence of barriers to entry in monopolistic competition means that in the;long run firms;A);earn either an economic profit or zero economic profit.;B);earn zero economic profit.;C);incur an economic loss.;D);earn an economic profit.;E);earn either zero economic profit or suffer an economic loss.;43);10;44);With an average cost pricing rule, the quantity produced by the natural;monopoly is;the;quantity produced with a marginal cost pricing rule.;A);less than;B);greater than;C);not comparable to;D);equal to;E);greater than in the long run and less than in the short run than;44);45);Because of the number of firms in monopolistic competition;A);each firm has a large market share.;B);it is possible for the firms to collude.;C);one firm has the ability to dictate market conditions.;D);each firm must carefully monitor what its competitors do.;E);no one firm can dominate the market.;45);46);If a large number of firms are competing, the market could be;A);monopolistic competition or monopoly.;B);perfect competition or monopoly.;C);oligopoly or monopoly.;D);perfect competition or monopolistic competition.;E);monopolistic competition or oligopoly.;46);47);With a natural monopoly;A);no regulation is necessary because it is a natural monopoly.;B);regulation takes the form of breaking the company into several competing firms.;C);regulation takes the form of forcing the company out of business.;D);regulation can take the form of average cost pricing to allow coverage of;costs.;E);regulation takes the form of forcing competition from new firms.;47);48);If a natural monopoly is regulated using;A);a total cost pricing rule, the firm will exit the industry.;B);a marginal cost pricing rule, the firm maximizes its profit.;C);an average cost pricing rule, the firm maximizes its profit.;D);a marginal cost pricing rule, the firm incurs an economic loss.;E);an average cost pricing rule, the firm incurs an economic loss.;48);49);Price cap regulation is defined as regulation that;A);imposes a price ceiling on the regulated firm.;B);is essentially the same as rate of return regulation.;C);uses average cost pricing to ensure costs are covered.;D);uses marginal cost pricing to ensure efficient output.;E);encourages firms to exaggerate costs to increase profits.;49);50);The process of price cap regulation includes which of the following?;i.;a price ceiling.;ii.;marginal cost pricing.;iii.;average cost pricing;A);i and ii B) i and iii C) ii only D) ii and iii E) i only;50);11;51);The above figure represents the market for cable television in Oakland;Florida. Time Warner;Communications;(TWC) is the sole provider of cable television to the residents of this Central;Florida;community. If TWC is left unregulated, what is the price of cable television in;Oakland?;A);$10 B) $20 C) $50 D) $30 E) $40;51);52);The above figure represents the market for cable television in Oakland;Florida. Time Warner;Communications;(TWC) is the sole provider of cable television to the residents of this Central;Florida;community. If TWC is left unregulated, how many households in Oakland are;served?;A);40,000 B) 50,000 C) 10,000 D) 30,000 E) 20,000;52);53);If a regulatory agency sets the price equal to marginal cost for a natural;monopoly, the;A);price is the same as the unregulated monopoly price.;B);firm earns an economic profit, though not the maximum economic profit.;C);firm earns a normal profit.;D);firm earns the maximum economic profit.;E);government might have to provide a subsidy to the firm to keep it in business.;53);54);Capture theory is;A);a model about perfect competition.;B);a theory that explains behavior of competitive firms.;C);an economic theory of regulation.;D);the theory that regulators capture firms' attention by dictating a very low;price.;E);the same as the public interest theory.;54);55);A monopoly creates a deadweight loss because the monopoly;A);sets a price that is too low.;B);produces less than the efficient quantity.;C);produces more than the efficient quantity.;D);does not maximize profit.;E);earns a normal profit.;55);12;56);Which of the following explains why the marginal cost pricing rule results in;an economic loss;for;a natural monopoly?;A);TheATCcurve;is downward sloping throughout the relevant range, therefore theMCis;lower;than theATC.;B);TheMCis;constant and equal to price.;C);Because output is determined by settingMC;equal to the price, consumer surplus is;maximized.;D);The demand curve is downward sloping, therefore price falls as quantity;increases.;E);The firm'sMRis;always less than its price.;56);57);natural monopolies is a commonly used, potential solution to the;problems presented;by;natural monopolies.;A);Giving incentives to firms to become;B);Breaking up firms that are;C);Regulating;D);Refusing to grant patents to;E);Outlawing price discrimination by;57);58);With perfect price discrimination, the level of output;A);is the same as the amount produced by any monopoly that price discriminates.;B);equals the amount produced by a single-price monopoly.;C);is the same as the amount produced in a perfectly competitive market.;D);exceeds the efficient quantity.;E);is unknown.;58);59);Comparing a perfectly competitive market to a single-price monopoly with the same costs, we;see;that;A);the monopoly market always is more efficient in the use of resources.;B);the monopoly market achieves efficiency in resource use while perfectly;competitive;market;does not.;C);both markets are equally efficient in their use of resources.;D);the perfectly competitive market achieves efficiency in resource use while the;monopoly;market;does not.;E);None of the above answers is correct because comparing a perfectly competitive;market to;a;monopoly is impossible.;59);60);When a perfectly competitive industry is taken over by a monopoly, some;consumer surplus is;transferred;to the monopolist in the form of;A);taxes.;B);marginal cost.;C);deadweight loss.;D);economic profit.;E);average variable cost.;60)


Paper#57940 | Written in 18-Jul-2015

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