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Question;51. The problem with;monopolies is their ability;(i) to do away with barriers to;entry.;(ii) to price their product at a;level that exceeds marginal cost.;(iii) to restrict output below;the socially efficient level of production.;a. (i) and (ii);b. (ii) and (iii);c. (iii) only;d. (i), (ii), and (iii);52. One method used to;control the ability of firms to capture monopoly profit in the United States is;through;a. government purchase of products;produced by monopolists.;b. government distribution of a;monopolist's excess production.;c. enforcement of antitrust laws.;d. regulation of firms in highly;competitive markets.;53. The key issue in;determining the efficiency of public versus private ownership of a monopoly is;a. the tendency for efficient;management of publicly owned enterprises.;b. the inability of private;monopolies to get rid of managers that are doing a bad job.;c. the propensity of private;monopolies to generate excessive profits.;d. how ownership of the firm;affects the cost of production.;54. For a long while;electricity producers were thought to be a classic example of a natural;monopoly. People;held this view because;a. the average cost of producing;units of electricity by one producer in a specific region was;lower than if the same quantity;were produced by two or more producers in the same;region.;b. the average cost of producing;units of electricity by one producer in a specific region was;higher than if the same quantity;were produced by two or more produced in the same;region.;c. the marginal cost of producing;units of electricity by one producer in a specific region;was higher than if the same;quantity were produced by two or more producers in the;same region.;d. electricity is a special;non-excludable good that could never be sold in a competitive;market.;55. When deciding what price;to charge consumers, the monopolist may choose to charge them different prices;based on the customers;a. geographical location.;b. age.;c. income.;d. All of the above are correct.;56. Which of the following;may eliminate some or all of the inefficiency that results from monopoly;pricing?;a. The government can regulate;the monopoly.;b. The monopoly can be prohibited;from price discriminating.;c. The monopoly can be forced to;operate at a point where its marginal revenue is equal to;its marginal cost.;d. None of the above would;eliminate any inefficiency associated with a monopoly.;Figure;15-7;The figure below depicts the demand;marginal revenue, and marginal cost curves of a profit-maximizing;monopolist.;57.Refer to Figure;15-7.;If the monopoly firm is NOT allowed to price discriminate, then consumer;surplus;amounts to;a. $0.;b. $500.;c. $1,000.;d. $2,000.;58.Refer to Figure;15-7.;If there are no fixed costs of production, monopoly profit without price;discrimination;equals;a. $500.;b. $1,000.;c. $2,000.;d. $4,000.;59.Refer to Figure;15-7.;If there are no fixed costs of production, monopoly profit with perfect price;discrimination equals;a. $500.;b. $1,000.;c. $2,000.;d. $4,000.;Name;ID: A;14;60. A monopolist faces the;following demand curve;Price Quantity;Demanded;$8 300;$7 400;$6 500;$5 600;$4 700;$3 800;$2 900;$1 1,000;The monopolist has fixed costs of;$1,000 and has a constant marginal cost of $2 per unit. If the monopolist;were able to perfectly price;discriminate, how many units would it sell?;a. 400;b. 500;c. 900;d. 4,200;61. It is not uncommon to;find that prescription drugs sell for more in the United States than they do in;other;countries. Which of the following;statements about this issue is most likely to be true?;a. Drug companies are engaging in;price discrimination, and this practice certainly reduces;global social welfare.;b. Global social welfare could be;improved if the price in the United States were reduced to;the price charged in other;countries.;c. Global social welfare could be;improved if the price in the other countries were;increased to the price charged in;the United States.;d. Drug companies are engaging in;price discrimination, but this might improve global;social welfare if it gives more;people access to the drugs.;62. An airline knows that;there are two types of travelers: business travelers and vacationers. For a;particular;flight, there are 100 business;travelers who will pay $600 for a ticket while there are 50 vacationers who;will;pay $300 for a ticket. There are;150 seats available on the plane. Suppose the cost to the airline of providing;the flight is $20,000, which;includes the cost of the pilots, flight attendants, fuel, etc. How much profit;will;the airline earn if it sets the;price of a ticket at $600?;a. -$5,000;b. $15,000;c. $40,000;d. $70,000;Name;ID: A;15;Table;15-5;Dreher's Designer Shirt Company;a monopolist, has the following cost and revenue information. Assume;that Dreher?s is able to engage;in perfect price discrimination.;COSTS REVENUES;Quantity;Produced;Total;Cost;($);Marginal;Cost;Quantity;Demanded;Price;($);Total;Revenue;Marginal;Revenue;0 100 -- 0 170 --;1 140 1 160;2 184 2 150;3 230 3 140;4 280 4 130;5 335 5 120;6 395 6 110;7 475 7 100;8 575 8 95;63.Refer to Table;15-5.;What are Dreher's Designer Shirt Company's fixed costs?;a. $100;b. $150;c. $354;d. $654;64. There are two types of;imperfectly competitive markets;a. monopoly and monopolistic;competition.;b. monopoly and oligopoly.;c. monopolistic competition and;oligopoly.;d. monopolistic competition and;cartels.;65. Crude oil is primarily;supplied to the world market by a few Middle Eastern countries. Such a market;is an;example of a(n);(i) imperfectly competitive;market.;(ii) monopoly market.;(iii) oligopoly market.;a. (i) and (ii);b. (ii) and (iii);c. (i) and (iii);d. (iii) only;66. If there are many firms;participating in a market, the market is either;a. an oligopoly or;monopolistically competitive.;b. perfectly competitive or;monopolistically competitive.;c. an oligopoly or perfectly;competitive.;d. an oligopoly or a cartel.;Name;ID: A;16;67. A market structure with;only a few sellers, offering similar or identical products, is known as;a. oligopoly.;b. monopoly.;c. monopolistic competition.;d. perfect competition.;Table;16-1;The following table shows the;percentage of output supplied by the top eight firms in four different;industries.;Firm Industry A;Industry B Industry C Industry D;1 0.24 0.46 0.10 0.32;2 0.13 0.24 0.08 0.16;3 0.10 0.10 0.06 0.08;4 0.08 0.05 0.05 0.04;5 0.05 0.04 0.04 0.02;6 0.03 0.03 0.03 0.01;7 0.02 0.02 0.02 0.01;8 0.01 0.01 0.01 0.01;68.Refer to Table;16-1.What is the concentration ratio in Industry B?;a. 5%;b. 46%;c. 85%;d. 95%;69. What do economists call;a market structure in which there are many firms selling products that are;similar;but not identical?;a. Perfect competition;b. Monopoly;c. Monopolistic competition;d. Oligopoly;Name;ID: A;17;Table;16-3;The information in the table;below shows the total demand for premium-channel digital cable TV;subscriptions in a small urban;market. Assume that each digital cable TV operator pays a fixed cost of;$100,000 (per year) to provide;premium digital channels in the market area and that the marginal cost of;providing the premium channel;service to a household is zero.;Quantity Price;(per year);0 $120;3,000 $100;6,000 $ 80;9,000 $ 60;12,000 $ 40;15,000 $ 20;18,000 $ 0;70.Refer to Table;16-3.;Assume that there are two profit-maximizing digital cable TV companies;operating in;this market. Further assume that;they are able to collude on the price and quantity of premium digital channel;subscriptions to sell. As part of;their collusive agreement they decide to take an equal share of the market.;How much profit will each company;make?;a. $40,000;b. $170,000;c. $480,000;d. $540,000;71.Refer to Table;16-3.;Assume that there are two profit-maximizing digital cable TV companies;operating in;this market. Further assume that;they are not able to collude on the price and quantity of premium digital;channel subscriptions to sell.;How many premium digital channel cable TV subscriptions will be sold;altogether when this market;reaches a Nash equilibrium?;a. 3,000;b. 6,000;c. 9,000;d. 12,000;Name;ID: A;18;Table;16-4;Imagine a small town in which;only two residents, Tony and Jill, own wells that produce safe drinking water.;Each week Tony and Jill work;together to decide how many gallons of water to pump, to bring the water to;town, and to sell it at whatever;price the market will bear. To keep things simple, suppose that Tony and Jill;can pump as much water as they;want without cost so that the marginal cost of water equals zero.;The weekly town demand schedule;and total revenue schedule for water is shown in the table below.;Weekly;Quantity;(in gallons);Price;Weekly;Total Revenue;(and Total;Profit);0 $12 $ 0;10 11 110;20 10 200;30 9 270;40 8 320;50 7 350;60 6 360;70 5 350;80 4 320;90 3 270;100 2 200;110 1 110;120 0 0;72.Refer to Table;16-4.;If the market for water were perfectly competitive instead of monopolistic, how;many;gallons of water would be;produced and sold?;a. 70;b. 90;c. 110;d. 120;73.Refer to Table;16-4.;Suppose the town enacts new antitrust laws that prohibit Tony and Jill from;operating;as a monopolist. What will the;new price of water end up being once the Nash equilibrium is reached?;a. $3;b. $4;c. $5;d. $6;74. When oligopolistic firms;interacting with one another each choose their best strategy given the;strategies;chosen by other firms in the;market, we have;a. a cartel.;b. a group of oligopolists;behaving as a monopoly.;c. a Nash equilibrium.;d. the perfectly competitive;outcome.;Name;ID: A;19;75. As the number of firms;in an oligopoly market;a. decreases, the market;approaches the cartel outcome.;b. decreases, the market;approaches the competitive market outcome.;c. increases, the market;approaches the competitive market outcome.;d. increases, the market approaches the monopoly outcome

 

Paper#57951 | Written in 18-Jul-2015

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