經(jīng)濟學原理對應練習 15.doc

Chapter 15/Monopolyv673Chapter 15MonopolyMultiple Choice1.Which of the following statements is correct?a.A competitive firm is a price maker and a monopoly is a price taker.b.A competitive firm is a price taker and a monopoly is a price maker.c.Both competitive firms and monopolies are price takers.d.Both competitive firms and monopolies are price makers.ANS: BPTS: 1DIF: 1REF: 15-1TOP: MonopolyMSC: Interpretive2.Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town. Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs to restaurants. Assuming that Angelo is maximizing his profit, which of the following statements is true?a.Meatball prices will be less than marginal cost.b.Meatball prices will equal marginal cost.c.Meatball prices will exceed marginal cost.d.Meatball prices will be a function of supply and demand and will therefore oscillate around marginal costs.ANS: CPTS: 1DIF: 2REF: 15-1TOP: PricingMSC: Interpretive3.A monopolys marginal cost willa.be less than its average fixed cost.b.be less than the price per unit of its product.c.exceed its marginal revenue.d.equal its average total cost.ANS: BPTS: 1DIF: 2REF: 15-1TOP: Marginal costMSC: Interpretive4.Which of the following statements is (are) true of a monopoly?(i)A monopoly has the ability to set the price of its product at whatever level it desires.(ii)A monopolys total revenue will always increase when it increases the price of its product.(iii)A monopoly can earn unlimited profits.a.(i) onlyb.(ii) onlyc.(i) and (ii)d.(ii) and (iii)ANS: APTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Interpretive5.Young Johnny inherited the only local cable TV company in town after his father passed away. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assuming that Johnny understands the true power of his new monopoly, he is probably most excited about which of the following statements?(i)He will be able to set the price of cable TV service at whatever level he wishes.(ii)The customers will be forced to purchase cable TV service at whatever price he wants to set.(iii)He will be able to achieve any profit level that he desires.a.(i) onlyb.(ii) onlyc.(i) and (iii)d.All of the above are correct.ANS: APTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Interpretive6.Which of the following is an example of a barrier to entry?(i)A key resource is owned by a single firm.(ii)The costs of production make a single producer more efficient than a large number of producers.(iii)The government has given the existing monopoly the exclusive right to produce the good.a.(i) and (ii)b.(ii) and (iii)c.(i) onlyd.All of the above are examples of barriers to entry.ANS: DPTS: 1DIF: 1REF: 15-1TOP: Barriers to entryMSC: Interpretive7.Which of the following are necessary characteristics of a monopoly?(i)The firm is the sole seller of its product.(ii)The firms product does not have close substitutes.(iii)The firm generates a large economic profit.(iv)The firm is located in a small geographic market.a.(i) and (ii)b.(i) and (iii)c.(ii) and (iv)d.(i), (ii), and (iii)ANS: APTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Interpretive8.A fundamental source of monopoly market power arises froma.perfectly elastic demand.b.perfectly inelastic demand.c.barriers to entry.d.availability of free natural resources, such as water or air.ANS: CPTS: 1DIF: 2REF: 15-1TOP: Barriers to entryMSC: Interpretive9.Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is oftena.not in the best interest of society.b.one that fails to maximize total economic well-being.c.inefficient.d.All of the above are correct.ANS: DPTS: 1DIF: 2REF: 15-1TOP: WelfareMSC: Interpretive10.A natural monopoly occurs whena.the product is sold in its natural state (such as water or diamonds).b.there are economies of scale over the relevant range of output.c.the firm is characterized by a rising marginal cost duction requires the use of free natural resources, such as water or air.ANS: BPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive11.An industry is a natural monopoly when(i)the government assists the firm in maintaining the monopoly.(ii)a single firm owns a key resource.(iii)a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.a.(ii) onlyb.(iii) onlyc.(i) and (ii)d.(ii) and (iii)ANS: BPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive12.When a natural monopoly exists, it isa.always cost effective for government-owned firms to produce the product.b.never cost effective for one firm to produce the product.c.always cost effective for two or more private firms to produce the product.d.never cost effective for two or more private firms to produce the product.ANS: DPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Definitional13.The defining characteristic of a natural monopoly isa.constant marginal cost over the relevant range of output.b.economies of scale over the relevant range of output.c.constant returns to scale over the relevant range of output.d.diseconomies of scale over the relevant range of output.ANS: BPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Definitional14.Natural monopolies differ from other forms of monopoly because theya.are not subject to barriers to entry.b.are not regulated by government.c.generally dont make a profit.d.are generally not worried about competition eroding their monopoly position in the market.ANS: DPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive15.Patent and copyright laws are major sources ofa.natural ernment-created monopolies.c.resource monopolies.d.antitrust regulation.ANS: BPTS: 1DIF: 1REF: 15-1TOP: PatentsMSC: Interpretive16.Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification fora.resource monopolies.b.natural ernment-created monopolies.d.breaking up monopolies into smaller firms.ANS: CPTS: 1DIF: 1REF: 15-1TOP: PatentsMSC: Interpretive17.When a firms average total cost curve continually declines, the firm is ernment-created monopoly.b.natural monopoly.c.revenue monopoly.d.All of the above are correct.ANS: BPTS: 1DIF: 1REF: 15-1TOP: Natural monopolyMSC: Definitional18.The simplest way for a monopoly to arise is for a single firm toa.decrease its price below its competitors prices.b.decrease production to increase demand for its product.c.make pricing decisions jointly with other firms.d.own a key resource.ANS: DPTS: 1DIF: 1REF: 15-1TOP: MonopolyMSC: Interpretive19.A government-created monopoly arises ernment spending in a certain industry gives rise to monopoly power.b.the government exercises its market control by encouraging competition among sellers.c.the government gives a firm the exclusive right to sell some good or service.d.Both a and c are correct.ANS: CPTS: 1DIF: 2REF: 15-1TOP: PatentsMSC: Interpretive20.Allowing an inventor to have the exclusive rights to market her new invention will lead to(i)a product that is priced higher than it would be without the exclusive rights.(ii)desirable behavior in the sense that inventors are encouraged to invent.(iii)higher profits for the inventor.a.(i) and (ii)b.(ii) and (iii)c.(i) and (iii)d.(i), (ii), and (iii)ANS: DPTS: 1DIF: 2REF: 15-1TOP: PatentsMSC: Interpretive21.Drug companies are allowed to be monopolists in the drugs they discover in order toa.allow drug companies to charge a price that is equal to their marginal cost.b.discourage new firms from entering the drug market.c.encourage research.d.allow the government to earn patent revenue.ANS: CPTS: 1DIF: 2REF: 15-1TOP: PatentsMSC: Interpretive22.Authors are allowed to be monopolists in the sale of their books in order toa.encourage authors to write more and better books.b.correct for the negative externalities that the internet and television impose.c.satisfy literary advocacy groups that exercise their lobbying mote a society in which people think for themselves and learn from whichever books they please.ANS: APTS: 1DIF: 2REF: 15-1TOP: CopyrightsMSC: Interpretive23.Which of the following statements is true about patents and copyrights?(i)They both have benefits and costs.(ii)They lead to higher prices.(iii)They enhance the ability of monopolists to earn above-average profits.a.(i) and (ii)b.(ii) and (iii)c.(ii) onlyd.(i), (ii), and (iii)ANS: DPTS: 1DIF: 2REF: 15-1TOP: PatentsMSC: InterpretiveFigure 15-124.Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?a.Ownership of a key resource by a single firmb.Natural monopolyc.Government-created monopolyd.A patent or copyright monopolyANS: BPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Analytical25.Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage ofa.economies of scale.b.diseconomies of scale.c.diminishing marginal product.d.increasing marginal cost.ANS: APTS: 1DIF: 1REF: 15-1TOP: Economies of scaleMSC: Analytical26.Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firma.must lie entirely above the average total cost curve.b.must lie entirely below the average total cost curve.c.must be upward sloping.d.does not exist.ANS: BPTS: 1DIF: 3REF: 15-1TOP: Marginal costMSC: Analytical27.When an industry is a natural monopoly,a.it is characterized by constant returns to scale.b.it is characterized by diseconomies of scale.c.a larger number of firms may lead to a lower average cost.d.a larger number of firms will lead to a higher average cost.ANS: DPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Definitional28.If the distribution of water is a natural monopoly, then(i)multiple firms will each have to pay large fixed costs to develop their own network of pipes.(ii)allowing for competition among different firms in the water-distribution industry is efficient.(iii)a single firm can serve the market at the lowest possible average total cost.a.(i) and (ii)b.(ii) and (iii)c.(i) and (iii)d.(iii) onlyANS: CPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive29.A firm that is a natural monopolya.is not likely to be concerned about new entrants eroding its monopoly power.b.is taking advantage of economies of scale.c.would experience a higher average total cost if more firms entered the market.d.All of the above are correct.ANS: DPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive30.Additional firms often do not try to compete with a natural monopoly becausea.they fear retaliation in the form of pricing wars from the natural monopolist.b.they are unsure of the size of the market in general.c.they know they cannot achieve the same low costs that the monopolist enjoys.d.the natural monopoly doesnt make a huge profit.ANS: CPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive31.The laws governing patents and copyrightsa.can lead to monopolies.b.are intended to serve private interests, not the public interest.c.have costs, but no benefits.d.eliminate the need for firms to engage in research and development.ANS: APTS: 1DIF: 2REF: 15-1TOP: PatentsMSC: InterpretiveScenario 15-1Consider a transportation corporation named C.R. Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment, due to the profitability of the corporation.32.Refer to Scenario 15-1. Which of the following statements are most likely to be true?(i)New entrants to the market know they will earn a smaller piece of the market than C.R. Evans currently has.(ii)C.R. Evans is most likely experiencing increasing average total cost.(iii)C.R. Evans is a natural monopoly.a.(i) and (ii)b.(ii) and (iii)c.(i) and (iii)d.(i), (ii), and (iii)ANS: CPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive33.Refer to Scenario 15-1. C.R. Evans will continue to be a monopolist in the subway transportation industry only ifa.population growth leads to an overcrowding of the subway cars.b.there are no new entrants to the market.c.demand for transportation services decreases.d.All of the above are correct.ANS: BPTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Interpretive34.The fundamental cause of monopoly isa.incompetent management in competitive firms.b.the zero-profit feature of long-run equilibrium in competitive markets.c.advertising.d.barriers to entry.ANS: DPTS: 1DIF: 1REF: 15-1TOP: Barriers to entryMSC: Interpretive35.Which of the following items is a primary source of barriers to entry?a.The costs of production make a single firm more efficient than a large number of firms.b.A single firm hires all the people who have the management skills that are important in the industry.c.Contracts among firms prohibit them from competing with one another in the production and sale of certain products.d.All of the above are correct.ANS: APTS: 1DIF: 2REF: 15-1TOP: Barriers to entryMSC: Interpretive36.Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, hasa.less incentive to advertise than it would otherwise have.b.less market power than it would otherwise have.c.more control over the price of diamonds than it would otherwise have.d.higher profits than it would otherwise have.ANS: BPTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Interpretive37.A benefit to society of the patent and copyright laws is that those lawsa.help to keep prices down.b.help to prevent a single firm from acquiring ownership of a key resource.c.encourage creative activity.d.discourage excessive amounts of output of certain products.ANS: CPTS: 1DIF: 1REF: 15-1TOP: PatentsMSC: Interpretive38.When a single firm can supply a product to an entire market at a smaller cost than could two or more firms, the industry is called aa.resource industry.b.exclusive ernment monopoly.d.natural monopoly.ANS: DPTS: 1DIF: 1REF: 15-1TOP: Natural monopolyMSC: Definitional39.A natural monopoly arises whena.there are constant returns to scale over the relevant range of output.b.there are economies of scale over the relevant range of output.c.one firm owns a key natural resource.d.the government gives a single firm the exclusive right to produce a particular good or service.ANS: BPTS: 1DIF: 1REF: 15-1TOP: Natural monopolyMSC: Definitional40.When a firm has a natural monopoly, the firmsa.marginal cost always exceeds its average total cost.b.total cost curve is horizontal.c.average total cost curve is downward sloping.d.marginal cost curve must lie above the firms average total cost curve.ANS: CPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive41.Which of the following is not a reason for the existence of a monopoly?a.Sole ownership of a key resourceb.Patentsc.Copyrightsd.Diseconomies of scaleANS: DPTS: 1DIF: 1REF: 15-1TOP: MonopolyMSC: Interpretive42.Which of the following would be most likely to have monopoly power?a.A long-distance telephone service providerb.A local cable TV providerc.A large department stored.A gas stationANS: BPTS: 1DIF: 2REF: 15-1TOP: MonopolyMSC: Applicative43.A firm that is the sole seller of a product without close substitutes isa.perfectly competitive.b.monopolistically competitive.c.an oligopolistd.a monopolistANS: DPTS: 1DIF: 1REF: 15-1TOP: MonopolyMSC: Definitional44.If government officials break a natural monopoly up into several smaller firms, petition will force firms to attain economic profits rather than accounting petition will force firms to produce surplus output, which drives up price.c.the average costs of production will increase.d.the average costs of production will decrease.ANS: CPTS: 1DIF: 2REF: 15-1TOP: Natural monopolyMSC: Interpretive45.Sizable economic profits can persist over time under monopoly if the duces that output where average total cost is at a maximum.b.is protected by barriers to entry.c.operates as a price taker rather than a price maker.d.realizes revenues that exceed variable costs.ANS: BPTS: 1DIF: 1REF: 15-1TOP: Barriers to entryMSC: Interpretive46.Most markets are not monopolies in the real world becausea.firms usually face downward-