Module 12 homework

question

Which of the following is an effect of a monopoly?

answer

Monopoly causes a reduction in consumer surplus

question

In which of the following situations can a firm be considered a monopoly?

answer

When a firm can ignore the actions of all other firms

question

Natural monopoly happens when the:

answer

average total cost curve is decreasing

question

When network externalities are present, it may create a:

answer

barrier to entry for competing technologies due to high switching costs

question

A monopolist will maximize profit at the level of output where:

answer

marginal cost equals marginal revenue

question

In the long run, the monopolist can earn:

answer

zero or positive economic profit

question

A monopoly is a market structure that is characterized by:

answer

A single seller of a good or service that does not have a close substitute.

question

Because the monopolist faces a downward sloping demand curve:

answer

there will be deadweight loss

question

What happens when network externalities are present?

answer

The usefulness of a product increases with the number of consumers who use it.

question

The monopolist charges a price that is __________ the perfectly competitive industry.

answer

higher

question

The monopolist produces an output that is __________ the perfectly competitive industry would produce.

answer

less than

question

Laws aimed at promoting competition among firms are known as:

answer

antitrust laws

question

What is the definition of market power?

answer

The ability of a firm to charge a price greater than marginal cost.

question

Which of the following rights is given to the holder of a patent?

answer

The exclusive right to a new product

question

In which of the following market structures is the firm's demand curve the same as the market demand for the product?

answer

Monopoly

question

A patent gives its holder the exclusive right to a product for a period of __________ from the date the patent is filed with the government.

answer

20 years

question

The downward sloping part of the long run average total cost curve is where the firm is achieving:

answer

economies of scale

question

Price discrimination is the practice of:

answer

Dividing consumers into two or more groups and charging different prices to each group.

question

Governments deal with natural monopolies by:

answer

using regulation to protect consumers

question

The only legal restriction concerning price discrimination is that firms cannot use it to:

answer

drive rivals out of business

question

Which of the following statements regarding natural monopoly is true?

answer

Natural monopoly is most likely to occur in markets where fixed costs are large relative to variable costs.

question

A monopoly has ____ and ____ . Price is set _____
marginal cost.

answer

one seller, many buyers, greater than

question

All of the following describe a monopoly market structure, except

answer

seller is a price-taker.

question

If Nike developed a particularly strong weave to the fabric used in their running shoes, they could petition the government for a ____ in order to protect their profits. If a competitor tried to promote their brand of running shoes by using Nike's theme song in their commercial, Nike could sue for _____ infringement.

answer

patent, copyright

question

Network externalities and economies of scale both can contribute to the formation of a monopoly. However, they differ in that network externalities deal with

answer

increasing benefits and economies of scale deal with decreasing costs.

question

A significant difference between monopolies and competitive firms is that

answer

a monopoly's demand curve is the industry's demand curve, while the competitive firm's demand curve is perfectly elastic.

question

Total revenue for a monopolist is maximized

answer

only if marginal revenue is zero.

question

A monopoly is selling workbooks to students in a college town and is currently maximizing profits by charging $70 per book. the marginal cost of the text book

answer

is less than $70

question

f a profit maximizing monopolist sells 110 paintings at a price of $1,800 each, having bought them from various artists for a total cost of $121,000, the monopolist has a profit of _____.

answer

$77,000

question

Eliminating a monopoly

answer

increases market quantity

question

A social planner would choose the same outcome as that which results in ______ equilibrium, because that outcome ______ social surplus.

answer

the perfectly competitive, maximizes

question

First degree price discrimination

answer

eliminates deadweight loss by producing to where marginal cost equals price.

question

When compared to competition, monopoly prices are _____
and quantity produced is ______. The purpose of antitrust policy is to ______ this situation.

answer

higher, lower, reverse

question

Which of the following are properties of a monopoly? (Check all that apply.)

answer

There is only one seller.
Price-maker.
there are high barriers to entry

question

Which of the following is not a characteristic of monopoly?

answer

produces identical goods

question

For a market to be characterized as a monopoly, there must be ___________.

answer

a single seller that sets the price for all the goods

question

The two types of market power that arise from barriers to entry are ____________.

answer

legal market power and natural market power

question

Suppose the government grants an individual or company the sole right to produce and sell a good or service
In this case, the government is granting a ______

answer

patent

question

Which of the following is not likely covered by a copyright?

answer

a new type of tire or a new drug

question

Compared to a perfectly competitive market, the price in a monopoly market is _____ and quantity is _____

answer

higher, lower

question

If the monopolist loses its monopoly power, price ______ consumer surplus ______, producer surplus______, and social surplus ______

answer

decreases, increases, decreases, increases

question

Social surplus increases because ____________.

answer

deadweight loss is eliminated.

question

Suppose you are an "all-knowing" government planner. Your goal is to regulate a monopolist's price and quantity in order to maximize social welfare but still allow the monopolist to produce.

To accomplish your goal, you would have the monopoly produce where ____________. (Assume costs are such that the firm would not incur a loss)

answer

marginal cost equals demand, and you would price the good at marginal cost.

question

According to the Copyright Act of 1790, a copyright's life was limited to 28 years, including extensions. Today, copyrights are valid for the entire period of the author's life plus another 70 years. A copyright for a book that was published before 1923 is likely to have expired by now, but books published after 1923 are still under copyright protection. Research has shown that, of all the books that are in print today, a larger proportion were published before 1923. This is despite the fact that the number of books being published every year has been steadily increasing.

What do you think could explain the fact that most of the books available today are from the period before 1923?

answer

A copyright gives the owner an exclusive right to a piece of intellectual property, thus allowing them to act as a monopoly. Monopolists typically reduce quantity supplied to drive up the price of the good that they produce.

question

In recent years, some online firms have offered different consumers different prices for the same good. These firms use the consumer's IP address to find what city they are in and then charge a higher price to people in wealthier cities.

This type of pricing behavior is ____________.

answer

third-degree price discrimination.

question

Compared to a monopoly that does not price discriminate, a monopolist who engages in perfect price discrimination will produce ______, output and have and have _____ dead weight loss

answer

more, no

question

The monopolist's price and quantity chosen by the social planner will _____ profits for the monopolist and ______ the social surplus. A monopolist's decision to perfectly price discriminate will _______ profit and he social surplus _______.

answer

lower, maximize, maximize, maximize

1 of 47

question

Which of the following is an effect of a monopoly?

answer

Monopoly causes a reduction in consumer surplus

question

In which of the following situations can a firm be considered a monopoly?

answer

When a firm can ignore the actions of all other firms

question

Natural monopoly happens when the:

answer

average total cost curve is decreasing

question

When network externalities are present, it may create a:

answer

barrier to entry for competing technologies due to high switching costs

question

A monopolist will maximize profit at the level of output where:

answer

marginal cost equals marginal revenue

question

In the long run, the monopolist can earn:

answer

zero or positive economic profit

question

A monopoly is a market structure that is characterized by:

answer

A single seller of a good or service that does not have a close substitute.

question

Because the monopolist faces a downward sloping demand curve:

answer

there will be deadweight loss

question

What happens when network externalities are present?

answer

The usefulness of a product increases with the number of consumers who use it.

question

The monopolist charges a price that is __________ the perfectly competitive industry.

answer

higher

question

The monopolist produces an output that is __________ the perfectly competitive industry would produce.

answer

less than

question

Laws aimed at promoting competition among firms are known as:

answer

antitrust laws

question

What is the definition of market power?

answer

The ability of a firm to charge a price greater than marginal cost.

question

Which of the following rights is given to the holder of a patent?

answer

The exclusive right to a new product

question

In which of the following market structures is the firm's demand curve the same as the market demand for the product?

answer

Monopoly

question

A patent gives its holder the exclusive right to a product for a period of __________ from the date the patent is filed with the government.

answer

20 years

question

The downward sloping part of the long run average total cost curve is where the firm is achieving:

answer

economies of scale

question

Price discrimination is the practice of:

answer

Dividing consumers into two or more groups and charging different prices to each group.

question

Governments deal with natural monopolies by:

answer

using regulation to protect consumers

question

The only legal restriction concerning price discrimination is that firms cannot use it to:

answer

drive rivals out of business

question

Which of the following statements regarding natural monopoly is true?

answer

Natural monopoly is most likely to occur in markets where fixed costs are large relative to variable costs.

question

A monopoly has ____ and ____ . Price is set _____
marginal cost.

answer

one seller, many buyers, greater than

question

All of the following describe a monopoly market structure, except

answer

seller is a price-taker.

question

answer

patent, copyright

question

Network externalities and economies of scale both can contribute to the formation of a monopoly. However, they differ in that network externalities deal with

answer

increasing benefits and economies of scale deal with decreasing costs.

question

A significant difference between monopolies and competitive firms is that

answer

a monopoly's demand curve is the industry's demand curve, while the competitive firm's demand curve is perfectly elastic.

question

Total revenue for a monopolist is maximized

answer

only if marginal revenue is zero.

question

A monopoly is selling workbooks to students in a college town and is currently maximizing profits by charging $70 per book. the marginal cost of the text book

answer

is less than $70

question

f a profit maximizing monopolist sells 110 paintings at a price of $1,800 each, having bought them from various artists for a total cost of $121,000, the monopolist has a profit of _____.

answer

$77,000

question

Eliminating a monopoly

answer

increases market quantity

question

A social planner would choose the same outcome as that which results in ______ equilibrium, because that outcome ______ social surplus.

answer

the perfectly competitive, maximizes

question

First degree price discrimination

answer

eliminates deadweight loss by producing to where marginal cost equals price.

question

When compared to competition, monopoly prices are _____
and quantity produced is ______. The purpose of antitrust policy is to ______ this situation.

answer

higher, lower, reverse

question

Which of the following are properties of a monopoly? (Check all that apply.)

answer

There is only one seller.
Price-maker.
there are high barriers to entry

question

Which of the following is not a characteristic of monopoly?

answer

produces identical goods

question

For a market to be characterized as a monopoly, there must be ___________.

answer

a single seller that sets the price for all the goods

question

The two types of market power that arise from barriers to entry are ____________.

answer

legal market power and natural market power

question

Suppose the government grants an individual or company the sole right to produce and sell a good or service
In this case, the government is granting a ______

answer

patent

question

Which of the following is not likely covered by a copyright?

answer

a new type of tire or a new drug

question

Compared to a perfectly competitive market, the price in a monopoly market is _____ and quantity is _____

answer

higher, lower

question

If the monopolist loses its monopoly power, price ______ consumer surplus ______, producer surplus______, and social surplus ______

answer

decreases, increases, decreases, increases

question

Social surplus increases because ____________.

answer

deadweight loss is eliminated.

question

answer

marginal cost equals demand, and you would price the good at marginal cost.

question

answer

question

answer

third-degree price discrimination.

question

Compared to a monopoly that does not price discriminate, a monopolist who engages in perfect price discrimination will produce ______, output and have and have _____ dead weight loss

answer

more, no

question

answer

lower, maximize, maximize, maximize

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Module 12 homework

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