Question 1

Microsoft faces very little competition from other firms for its Windows software.Why isn't the price of the software $1,000 per copy?&#10;A) because the government would not allow such a high price&#10;B) because stockholders would not allow such a high price&#10;C) because the company would sell so few copies that they would earn higher profits by selling at a lower price&#10;D) All of the above are correct.

Accepted Answer

Microsoft is able to charge a high price for its Windows software because it has a monopoly on the market. However, if it were to charge $1,000 per copy, it would likely sell very few copies, as most consumers would not be willing to pay such a high price. By setting a lower price, Microsoft is able to sell more copies and ultimately earn higher profits. The government and stockholders may also have a say in pricing decisions, but ultimately it is the market demand that drives prices.

Question 2

The DeBeers company faces very little competition from other firms in the wholesale diamond market.Why isn't the price of the wholesale diamonds $10,000 per carat?&#10;A) because the government would not allow such a high price&#10;B) because stockholders would not allow such a high price&#10;C) because the company would sell so few copies that they would earn higher profits by selling at a lower price&#10;D) All of the above are correct.

Accepted Answer

The company would sell very few diamonds if the price was set too high, leading them to earn higher profits by selling at a lower price. This is the basic principle of demand and supply. The high price of $10,000 per carat would limit the number of consumers who could afford it or who would be willing to pay such a high price. As a result, the company would have to reduce the price to increase sales volume and, hence, their profits. Therefore, the price of wholesale diamonds is set by the market demands and the company's strategies, not by external factors like government regulations or stockholders' preferences.

Question 3

Which of the following would be most likely to have monopoly power?&#10;A) a long-distance telephone service provider&#10;B) a local cable TV provider&#10;C) a large department store&#10;D) a gas station

Accepted Answer

A local cable TV provider is most likely to have monopoly power because they are often the only provider of cable TV services in a given area, which limits competition and gives them more control over pricing and service quality. The other options listed have more competitors in their respective industries, making it less likely for them to have monopoly power.

Question 4

Which of the following would be most likely to have monopoly power?&#10;A) a national florist&#10;B) an online bookstore&#10;C) a local restaurant&#10;D) a local electrical cooperative

Accepted Answer

A local electrical cooperative is the most likely to have monopoly power as they often hold exclusive rights to provide electricity in a particular area through government regulation. This makes it difficult for other companies to enter the market and compete, giving the cooperative significant market power. The other options are less likely to have monopoly power as there are likely to be other similar businesses in the market.

Question 5

Because a monopolist does not face competition from other firms,the outcome in a market with a monopoly&#10;A) does not illustrate profit maximization.&#10;B) is often not in the best interest of society.&#10;C) is characterized by unlimited profits.&#10;D) would be improved if the government produced the product rather than a private firm.

Accepted Answer

A monopoly can use their market power to charge higher prices and produce less output, resulting in a loss of consumer surplus and potentially harming society as a whole. Without competition, there is no pressure to lower prices or improve quality. Therefore, the outcome in a market with a monopoly is often not in the best interest of society.

Question 6

The fundamental source of monopoly power is&#10;A) barriers to entry.&#10;B) profit.&#10;C) decreasing average total cost.&#10;D) a product without close substitutes.

Accepted Answer

Barriers to entry prevent new firms from entering the market and competing with established firms. This lack of competition allows the established firm to maintain a monopoly and charge higher prices. This is the fundamental source of monopoly power. The other options may contribute to a firm's ability to maintain a monopoly, but they are not the root cause.

Question 7

A benefit of a monopoly is&#10;A) lower prices.&#10;B) a wide variety of similar products.&#10;C) decreasing long-run average total costs.&#10;D) greater creativity by authors who can copyright their novels.

Accepted Answer

A benefit of a monopoly is that it can lead to greater creativity by authors who can copyright their novels, as they have exclusive rights to their work and can earn more profits without competition. However, this benefit may not extend to all industries or products, and in general, monopolies tend to have negative effects on consumers and the overall market.

Question 8

Which of the following is a characteristic of a monopoly?&#10;A) low fixed costs as a portion of total costs&#10;B) free entry and exit&#10;C) barriers to entry&#10;D) declining marginal cost

Accepted Answer

Monopoly is characterized by barriers to entry, which prevent other firms from entering the market and thus monopolists have the power to act as price makers. A and D are not characteristics of a monopoly as low fixed costs and declining marginal cost are features of perfect competition. B is also incorrect as free entry and exit is a characteristic of a perfectly competitive market.

Question 9

A benefit of a monopoly is&#10;A) efficient production.&#10;B) decreasing long-run marginal costs.&#10;C) profit that can be invested in research and development.&#10;D) All of the above are correct.

Accepted Answer

While a monopoly may not have efficient production or decreasing long-run marginal costs, it does have the ability to earn higher profits, which can be invested in research and development. This can lead to technological advancements and innovation in the industry.

Question 10

Suppose most people regard emeralds,rubies,and sapphires as close substitutes for diamonds.Then DeBeers,a large diamond company,has&#10;A) less incentive to advertise than it would otherwise have.&#10;B) less market power than it would otherwise have.&#10;C) more control over the price of diamonds than it would otherwise have.&#10;D) higher profits than it would otherwise have.

Accepted Answer

If emeralds, rubies, and sapphires are close substitutes for diamonds, then DeBeers would have less market power than it would otherwise have. This is because consumers have more options to choose from, making it easier for them to switch to a substitute if DeBeers' prices are too high. As a result, DeBeers would have less control over the market and less ability to influence prices.

Question 11

Which of the following statements is correct?&#10;A) Both a competitive firm and a monopolist are price takers.&#10;B) Both a competitive firm and a monopolist are price makers.&#10;C) A competitive firm is a price taker, whereas a monopolist is a price maker.&#10;D) A competitive firm is a price maker, whereas a monopolist is a price taker.

Accepted Answer

The answer of Which of the following statements is correct?&#10;A)...

Question 12

Because monopoly firms do not have to compete with other firms,the outcome in a market with a monopoly is often&#10;A) not in the best interest of society.&#10;B) one that fails to maximize total economic well-being.&#10;C) inefficient.&#10;D) All of the above are correct.

Accepted Answer

The answer of Because monopoly firms do not have to...

Question 13

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where&#10;A) marginal cost equals price, while a monopolist produces where price exceeds marginal cost.&#10;B) marginal cost equals price, while a monopolist produces where marginal cost exceeds price.&#10;C) price exceeds marginal cost, while a monopolist produces where marginal cost equals price.&#10;D) marginal cost exceeds price, while a monopolist produces where marginal cost equals price.

Accepted Answer

The answer of One difference between a perfectly competitive firm...

Question 14

Which of the following are necessary characteristics of a monopoly?
(i)The firm is the sole seller of its product.
(ii)The firm's 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) only
B) (i) and (iii) only
C) (i), (ii), and (iii) only
D) (i), (ii), (iii), and (iv)

Accepted Answer

The answer of Which of the following are necessary characteristics...

Question 15

Which of the following is not a characteristic of a monopoly?&#10;A) barriers to entry&#10;B) one seller&#10;C) one buyer&#10;D) a product without close substitutes

Accepted Answer

The answer of Which of the following is not a...

Question 16

A perfectly competitive market&#10;A) may not be in the best interests of society, whereas a monopoly market promotes general economic well-being&#10;B) promotes general economic well-being, whereas a monopoly market may not be in the best interests of society.&#10;C) and a monopoly market are equally likely to promote general economic well-being.&#10;D) is less likely to promote general economic well-being than a monopoly market.

Accepted Answer

The answer of A perfectly competitive market&#10;A) may not be...

Question 17

A monopoly market is characterized by&#10;A) many buyers and sellers.&#10;B) &#34;natural&#34; products.&#10;C) barriers to entry.&#10;D) a Nash equilibrium.

Accepted Answer

The answer of A monopoly market is characterized by&#10;A) many...

Question 18

The simplest way for a monopoly to arise is for a single firm to&#10;A) decrease its price below its competitors' prices.&#10;B) decrease production to increase demand for its product.&#10;C) make pricing decisions jointly with other firms.&#10;D) own a key resource.

Accepted Answer

The answer of The simplest way for a monopoly to...

Question 19

A monopoly&#10;A) can set the price it charges for its output and earn unlimited profits.&#10;B) takes the market price as given and earns small but positive profits.&#10;C) can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.&#10;D) can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

Accepted Answer

The answer of A monopoly&#10;A) can set the price it...

Question 20

Which of the following is not a reason for the existence of a monopoly?&#10;A) sole ownership of a key resource&#10;B) patents&#10;C) copyrights&#10;D) diseconomies of scale

Accepted Answer

The answer of Which of the following is not a...

Question 21

A government-created monopoly arises when&#10;A) government spending in a certain industry gives rise to monopoly power.&#10;B) the government exercises its market control by encouraging competition among sellers.&#10;C) the government gives a firm the exclusive right to sell some good or service.&#10;D) Both a and c are correct.

Accepted Answer

The answer of A government-created monopoly arises when&#10;A) government spending...

Question 22

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 monopolist the exclusive right to produce the good.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Which of the following is an example...

Question 23

Which of the following is not an example of a barrier to entry?&#10;A) Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.&#10;B) A college student starts a part-time tutoring business.&#10;C) A novelist obtains a copyright for her new book.&#10;D) A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Accepted Answer

The answer of Which of the following is not an...

Question 24

Most markets are not monopolies in the real world because&#10;A) firms usually face downward-sloping demand curves.&#10;B) supply curves slope upward.&#10;C) firms usually equate price with marginal cost.&#10;D) there are reasonable substitutes for most goods.

Accepted Answer

The answer of Most markets are not monopolies in the...

Question 25

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 monopolist the exclusive right to produce the good.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Which of the following is an example...

Question 26

Which of the following statements is true about patents and copyrights?
(i)They 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) only
B) (ii) and (iii) only
C) (ii) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Which of the following statements is true...

Question 27

Which of the following is not an example of a barrier to entry?&#10;A) Al owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.&#10;B) Meredith owns the copyright to a popular song. She receives royalties every time a radio station plays her song.&#10;C) Matt sells computers to his state government for use in their legislative sessions. He has sold computers for ten years.&#10;D) Anne owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.

Accepted Answer

The answer of Which of the following is not an...

Question 28

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 monopolist the exclusive right to produce the good.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Which of the following is an example...

Question 29

The fundamental cause of monopoly is&#10;A) incompetent management in competitive firms.&#10;B) the zero-profit feature of long-run equilibrium in competitive markets.&#10;C) advertising.&#10;D) barriers to entry.

Accepted Answer

The answer of The fundamental cause of monopoly is&#10;A) incompetent...

Question 30

Which of the following is not an example of a barrier to entry?&#10;A) A soybean farmer is the first in her county to use a new brand of fertilizer.&#10;B) Microsoft obtains a copyright for its Windows operating system.&#10;C) A pharmaceutical company obtains a patent for a new medication to treat migraine headaches.&#10;D) A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Accepted Answer

The answer of Which of the following is not an...

Question 31

Patent and copyright laws are major sources of&#10;A) natural monopolies.&#10;B) government-created monopolies.&#10;C) resource monopolies.&#10;D) antitrust regulation.

Accepted Answer

The answer of Patent and copyright laws are major sources...

Question 32

Sizable economic profits can persist over time under monopoly if the monopolist&#10;A) produces that output where average total cost is at a maximum.&#10;B) is protected by barriers to entry.&#10;C) operates as a price taker rather than a price maker.&#10;D) earns revenues that exceed variable costs.

Accepted Answer

The answer of Sizable economic profits can persist over time...

Question 33

A firm that is the sole seller of a product without close substitutes is&#10;A) perfectly competitive.&#10;B) monopolistically competitive.&#10;C) an oligopolist.&#10;D) a monopolist.

Accepted Answer

The answer of A firm that is the sole seller...

Question 34

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 monopolist the exclusive right to produce the good.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Which of the following is an example...

Question 35

The laws governing patents and copyrights&#10;A) promote monopolies.&#10;B) are intended to serve private interests, not the public's interest.&#10;C) have costs but not benefits.&#10;D) eliminate the need for firms to engage in research and development.

Accepted Answer

The answer of The laws governing patents and copyrights&#10;A) promote...

Question 36

Which of the following is not an example of a barrier to entry?&#10;A) Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.&#10;B) A pharmaceutical company obtains a patent for a specific high blood pressure medication.&#10;C) A musician obtains a copyright for her original song.&#10;D) An entrepreneur opens a popular new restaurant.

Accepted Answer

The answer of Which of the following is not an...

Question 37

Patents,copyrights,and trademarks&#10;A) are examples of government-created monopolies.&#10;B) are examples of barriers to entry.&#10;C) allow their owners to charge higher prices.&#10;D) All of the above are correct.

Accepted Answer

The answer of Patents,copyrights,and trademarks&#10;A) are examples of government-created monopolies.&#10;B)...

Question 38

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for&#10;A) resource monopolies.&#10;B) natural monopolies.&#10;C) government-created monopolies.&#10;D) breaking up monopolies into smaller firms.

Accepted Answer

The answer of Encouraging firms to invest in research and...

Question 39

A fundamental source of monopoly market power arises from&#10;A) perfectly elastic demand.&#10;B) perfectly inelastic demand.&#10;C) barriers to entry.&#10;D) availability of &#34;free&#34; natural resources, such as water or air.

Accepted Answer

The answer of A fundamental source of monopoly market power...

Question 40

Which of the following statements is not correct?&#10;A) Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.&#10;B) Monopolists typically charge higher prices than competitive firms.&#10;C) Monopolists typically produce larger quantities of output than competitive firms.&#10;D) Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.

Accepted Answer

The answer of Which of the following statements is not...

Question 41

An industry is a natural monopoly when&#10;(i)the government assists the firm in maintaining the monopoly.&#10;(ii)a single firm owns a key resource.&#10;(iii)a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.&#10;A) (ii) only&#10;B) (iii) only&#10;C) (i) and (ii) only&#10;D) (ii) and (iii) only

Accepted Answer

The answer of An industry is a natural monopoly when&#10;(i)the...

Question 42

Granting a pharmaceutical company a patent for a new medicine will lead to
(i)a product that is priced higher than it would be without the exclusive rights.
(ii)incentives for pharmaceutical companies to invest in research and development.
(iii)higher quantities of output than without the patent.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) and (iii) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Granting a pharmaceutical company a patent for...

Question 43

Which of the following is a characteristic of a natural monopoly?&#10;A) Average cost exceeds marginal cost over large regions of output.&#10;B) Increasing the number of firms increases each firm's average total cost.&#10;C) One firm can supply output at a lower cost than two firms.&#10;D) All of the above are correct.

Accepted Answer

The answer of Which of the following is a characteristic...

Question 44

Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.&#10;Refer to Scenario 15-2.MCM will continue to be a monopolist in the electricity industry only if&#10;A) population growth leads to an increased demand for electricity.&#10;B) there are no new entrants to the market.&#10;C) the price of natural gas decreases.&#10;D) All of the above are correct.

Accepted Answer

The answer of Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative...

Question 45

Figure 15-1&#10;  &#10;Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm must&#10;A) lie entirely above the average total cost curve.&#10;B) lie entirely below the average total cost curve.&#10;C) be U-shaped.&#10;D) be horizontal.

Accepted Answer

The answer of Figure 15-1&#10;  &#10;Refer to Figure 15-1.Considering...

Question 46

Figure 15-1&#10;  &#10;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?&#10;A) ownership of a key resource by a single firm&#10;B) natural monopoly&#10;C) government-created monopoly&#10;D) a patent or copyright monopoly

Accepted Answer

The answer of Figure 15-1&#10;  &#10;Refer to Figure 15-1.The...

Question 47

Scenario 15-1&#10;Consider 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.&#10;Refer to Scenario 15-1.Which of the following statements is most likely to be true?&#10;(i)New entrants to the market know they will have a smaller market share than C.R.Evans currently has.&#10;(ii)C.R.Evans is most likely experiencing decreasing average total cost.&#10;(iii)C.R.Evans is a natural monopoly.&#10;A) (i) and (ii) only&#10;B) (ii) and (iii) only&#10;C) (i) and (iii) only&#10;D) (i), (ii), and (iii)

Accepted Answer

The answer of Scenario 15-1&#10;Consider a transportation corporation named C.R....

Question 48

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) only
B) (ii) and (iii) only
C) (i) and (iii) only
D) (i), (ii), and (iii)

Accepted Answer

The answer of Allowing an inventor to have the exclusive...

Question 49

Figure 15-1&#10;  &#10;Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm&#10;A) must lie entirely above the average total cost curve.&#10;B) must lie entirely below the average total cost curve.&#10;C) must be upward sloping.&#10;D) does not exist.

Accepted Answer

The answer of Figure 15-1&#10;  &#10;Refer to Figure 15-1.Considering...

Question 50

Which of the following is a characteristic of a natural monopoly?&#10;A) Fixed costs are typically a small portion of total costs.&#10;B) Average total cost declines over large regions of output.&#10;C) The product sold is a natural resource such as diamonds or water.&#10;D) All of the above are correct.

Accepted Answer

The answer of Which of the following is a characteristic...

Question 51

Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.&#10;Refer to Scenario 15-2.Which of the following statements is most likely to be true?&#10;(i)New entrants to the market know they will have a smaller market share than MCM currently has.&#10;(ii)MCM would experience higher profits if it were government-run.&#10;(iii)MCM is a natural monopoly.&#10;A) (i) and (ii) only&#10;B) (ii) and (iii) only&#10;C) (i) and (iii) only&#10;D) (i), (ii), and (iii)

Accepted Answer

The answer of Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative...

Question 52

Patent and copyright laws encourage&#10;A) creative activity.&#10;B) research and development.&#10;C) competition among firms.&#10;D) Both a and b are correct.

Accepted Answer

The answer of Patent and copyright laws encourage&#10;A) creative activity.&#10;B)...

Question 53

A natural monopoly occurs when&#10;A) the product is sold in its natural state, such as water or diamonds.&#10;B) there are economies of scale over the relevant range of output.&#10;C) the firm is characterized by a rising marginal cost curve.&#10;D) production requires the use of free natural resources, such as water or air.

Accepted Answer

The answer of A natural monopoly occurs when&#10;A) the product...

Question 54

Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.&#10;Refer to Scenario 15-2.Which of the following statements is most likely to be true?&#10;(i)New entrants to the market know they will have a smaller market share than MCM currently has.&#10;(ii)MCM is most likely experiencing rising marginal cost.&#10;(iii)MCM is most likely experiencing declining average total cost.&#10;(iv)MCM is a natural monopoly.&#10;A) (i) and (ii) only&#10;B) (i) and (iii) only&#10;C) (i), (iii) and (iv) only&#10;D) (i), (ii), (iii), and (iv)

Accepted Answer

The answer of Scenario 15-2&#10;Consider a local, privately-owned electrical cooperative...

Question 55

Figure 15-1&#10;  &#10;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 of&#10;A) economies of scale.&#10;B) diseconomies of scale.&#10;C) diminishing marginal product.&#10;D) increasing marginal cost.

Accepted Answer

The answer of Figure 15-1&#10;  &#10;Refer to Figure 15-1.The...

Question 56

Drug companies are allowed to be monopolists in the drugs they discover in order to&#10;A) allow drug companies to charge a price that is equal to their marginal cost.&#10;B) discourage new firms from entering the drug market.&#10;C) encourage research.&#10;D) allow the government to earn patent revenue.

Accepted Answer

The answer of Drug companies are allowed to be monopolists...

Question 57

Scenario 15-1&#10;Consider 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.&#10;Refer to Scenario 15-1.Which of the following statements is most likely to be true?&#10;(i)New entrants to the market know they will have a smaller market share than C.R.Evans currently has.&#10;(ii)C.R.Evans is most likely experiencing increasing average total cost.&#10;(iii)C.R.Evans is a natural monopoly.&#10;A) (i) and (ii) only&#10;B) (ii) and (iii) only&#10;C) (i) and (iii) only&#10;D) (i), (ii), and (iii)

Accepted Answer

The answer of Scenario 15-1&#10;Consider a transportation corporation named C.R....

Question 58

Authors are allowed to be monopolists in the sale of their books in order to&#10;A) encourage authors to write more and better books.&#10;B) correct for the negative externalities that the Internet and television impose.&#10;C) satisfy literary advocacy groups that exercise their lobbying power.&#10;D) promote a society in which people think for themselves and learn from whichever books they please.

Accepted Answer

The answer of Authors are allowed to be monopolists in...

Question 59

Patent and copyright laws encourage&#10;A) creative activity.&#10;B) lower prices due to decreasing average total costs.&#10;C) competition among firms.&#10;D) All of the above are correct.

Accepted Answer

The answer of Patent and copyright laws encourage&#10;A) creative activity.&#10;B)...

Question 60

A benefit to society of the patent and copyright laws is that those laws&#10;A) help to keep prices down.&#10;B) help to prevent a single firm from acquiring ownership of a key resource.&#10;C) encourage creative activity.&#10;D) discourage the production of inefficient products.

Accepted Answer

The answer of A benefit to society of the patent...

Question 61

When an industry is a natural monopoly,&#10;A) it is characterized by constant returns to scale.&#10;B) it is characterized by diseconomies of scale.&#10;C) a larger number of firms may lead to a lower average cost.&#10;D) a larger number of firms will lead to a higher average cost.

Accepted Answer

The answer of When an industry is a natural monopoly,&#10;A)...

Question 62

A firm that is a natural monopoly&#10;A) is not likely to be concerned about new entrants eroding its monopoly power.&#10;B) is taking advantage of diseconomies of scale.&#10;C) would experience a lower average total cost if more firms entered the market.&#10;D) All of the above are correct.

Accepted Answer

The answer of A firm that is a natural monopoly&#10;A)...

Question 63

Natural monopolies differ from other forms of monopoly because they are&#10;A) not subject to barriers to entry.&#10;B) not regulated by government.&#10;C) unable to sustain long-run profits.&#10;D) are generally not worried about competition eroding their monopoly position in the market.

Accepted Answer

The answer of Natural monopolies differ from other forms of...

Question 64

When a firm experiences continually declining average total costs,&#10;A) the firm is a price taker.&#10;B) society is better served by having one firm supply the product.&#10;C) the firm will earn higher profits than if average total costs are increasing.&#10;D) All of the above are correct.

Accepted Answer

The answer of When a firm experiences continually declining average...

Deck 15: Monopoly.