Marketing Manager

Topics: Economics, Monopoly, Marginal cost Pages: 15 (1495 words) Published: January 17, 2011
25)
Which of the following is true of a natural monopoly?
25)
______
A)
Its long-run average cost curve slopes upward as it intersects the demand curve. B)
Economies of scale exist to only a very low level of output. C)
The firm is not protected by any barrier to entry.
D)
The firm can supply the entire market at a lower cost than could two or more firms.

[pic]

26)
Prime Pharmaceuticals has developed a new asthma medicine, for it has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if it is a single-price monopoly, Prime Pharmaceuticals will produce ________ inhalers and set a price of ________ for each inhaler. 26)

______
A)
8 million; $6
B)
16 million; $2
C)
8 million; $2
D)
10 million; $5

[pic]

27)
La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is 27)

______
A)
$336,000.
B)
$624,000.
C)
$312,000.
D)
$168,000.

28)
Which of the following statements is true?
28)
______
A)
A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly. B)
A perfectly competitive industry produces less output and charges the same price as a single-price monopoly. C)
A perfectly competitive industry produces less output and charges a lower price than a single-price monopoly. D)
A perfectly competitive industry produces more output and charges the same price as a single-price monopoly.

29)
Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________. 29)
______
A)
lowering its price and increasing its output
B)
shutting down
C)
raising its price and decreasing its output
D)
lowering its price and decreasing its output

30)
A public franchise is
30)
______
A)
an exclusive right granted to an inventor of a product.
B)
a unique source of raw materials.
C)
a government issued license required to practice a profession. D)
an exclusive right granted to a firm to supply a good or service.

31)
Rent seeking is devoted to the creation of
31)
______
A)
competitive industries.
B)
monopolies.
C)
more elastic demand.
D)
human capital.

[pic]

32)
If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be 32)
______
A)
$250.00.
B)
$22.50.
C)
$0.
D)
$90.00.

33)
If the price elasticity of demand is greater than 1, a monopoly's 33)
______
A)
marginal revenue is negative.
B)
total revenue decreases when the firm lowers its price.
C)
marginal revenue is zero.
D)
total revenue increases when the firm lowers its price.

[pic]

34)
Given the market demand and cost data in the above figure, the existence of a monopoly firm producing 8 million cubic feet of natural gas makes it possible to produce natural gas at a long-run average cost of 34)

______
A)
10 cents per cubic foot.
B)
40 cents per cubic foot.
C)
30 cents per cubic foot.
D)
20 cents per cubic foot.

35)
Compared to a single-price monopoly, the price charged by a perfectly competitive industry with the same costs 35)
______
A)
is higher than the monopoly's price.
B)
is the same as the monopoly's price.
C)
could be higher than, lower than, or the same as the monopoly's price....
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