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Homework answers / question archive / University of Arkansas – ECON 2013 Chapter 15: In Class Problems 1) A monopolist faces A) a perfectly elastic demand curve

University of Arkansas – ECON 2013 Chapter 15: In Class Problems 1) A monopolist faces A) a perfectly elastic demand curve

Economics

University of Arkansas – ECON 2013

Chapter 15: In Class Problems

1) A monopolist faces

A) a perfectly elastic demand curve.

B) a perfectly inelastic demand curve.

C) a horizontal demand curve.

D) a downward-sloping demand curve.

 

2) Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

A) Each must lower its price to sell more output.

B) Each sets a price for its product that will maximize its revenue.

C) Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.

D) Each maximizes profits by producing a quantity for which price equals marginal cost.

 

3) Governments grant patents to encourage

A) research and development on new products.

B) competition.

C) low prices.

D) firms to form public enterprises.

 

4) To have a monopoly in an industry there must be

A) barriers to entry so high that no other firms can enter the industry.

B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years.

C) an inelastic demand for the industry's product.

D) a public franchise, making the monopoly the exclusive legal provider of a good or service.

 

5) A natural monopoly is most likely to occur in which of the following industries?

A) the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years

B) the diamond mining and marketing industry because one firm can control a key resource

C) the software industry because of the importance of network externalities

D) an industry where fixed costs are very large relative to variable costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6) Refer to Figure 15-2. To maximize profit, the firm will produce

A) Q1.

B) Q2.

C) Q3.

D) Q4.

 

7) Refer to Figure 15-2. The firm's profit-maximizing price is

A) P1.

B) P2.

C) P3.

D) P4.

 

8) Refer to Figure 15-2. If the firm's average total cost curve is ATC2, the firm will

A) suffer a loss.

B) break even.

C) make a profit.

D) face competition.

 

9) Refer to Figure 15-2. If the firm's average total cost curve is ATC3, the firm will

A) suffer a loss.

B) break even.

C) make a profit.

D) face competition.

 

 

 

 

 

 

10) Refer to Figure 15-9. What is the economically efficient output level?

A) 600 units

B) 800 units

C) 940 units

D) 1160 units

 

 

 

 

11) Refer to Figure 15-10. What is the area that represents consumer surplus under a monopoly?

A) the triangle P0P1F

B) the triangle P0P2E

C) the trapezium P1P2EF

D) the rectangle P1P3HF

 

12) Refer to Figure 15-10. What is the area that represents producer surplus under a monopoly?

A) the triangle 0P2E

B) the triangle 0P3H

C) the trapezium 0P1FH

D) the rectangle P1P3HF

 

13) Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area

A)  FHE.

B) FGE.

C) GEH.

D) FQ1Q2E.

 

 

 

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