Multiple Choice
Chapter 15
Monopoly
1. Monopolies use their market leverage to a. charge prices that equal minimum average total cost. b. attain normal profits in the long run. c. restrict output and increase price. d. dump excess supplies of their product on the market.
ANSWER: c restrict output and increase price.
SECTION: 1 OBJECTIVE: 1
2. If government officials break a natural monopoly up into several smaller firms, then a. competition will force firms to attain economic profits rather than accounting profits. b. competition 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.
ANSWER: c the average costs of production will increase.
SECTION: 1 OBJECTIVE: 1
3. Sizable economic profits can persist over time under monopoly if the monopolist a. produces 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.
ANSWER: b is protected by barriers to entry.
SECTION: 1 OBJECTIVE: 1
4. Most markets are not monopolies in the real world because a. firms usually face downward-sloping demand curves. b. supply curves slope upward. c. price is usually set equal to marginal cost by firms. d. there are reasonable substitutes for most goods.
ANSWER: d there are reasonable substitutes for most goods.
SECTION: 1 OBJECTIVE: 1
5. Patents grant a. permanent monopoly status to creators of scientific inventions. b. permanent monopoly status to creators of any intellectual property. c. temporary monopoly status to creators of scientific inventions. d. temporary monopoly status to creators of any intellectual property.
ANSWER: c temporary monopoly status to creators of
Monopoly
1. Monopolies use their market leverage to a. charge prices that equal minimum average total cost. b. attain normal profits in the long run. c. restrict output and increase price. d. dump excess supplies of their product on the market.
ANSWER: c restrict output and increase price.
SECTION: 1 OBJECTIVE: 1
2. If government officials break a natural monopoly up into several smaller firms, then a. competition will force firms to attain economic profits rather than accounting profits. b. competition 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.
ANSWER: c the average costs of production will increase.
SECTION: 1 OBJECTIVE: 1
3. Sizable economic profits can persist over time under monopoly if the monopolist a. produces 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.
ANSWER: b is protected by barriers to entry.
SECTION: 1 OBJECTIVE: 1
4. Most markets are not monopolies in the real world because a. firms usually face downward-sloping demand curves. b. supply curves slope upward. c. price is usually set equal to marginal cost by firms. d. there are reasonable substitutes for most goods.
ANSWER: d there are reasonable substitutes for most goods.
SECTION: 1 OBJECTIVE: 1
5. Patents grant a. permanent monopoly status to creators of scientific inventions. b. permanent monopoly status to creators of any intellectual property. c. temporary monopoly status to creators of scientific inventions. d. temporary monopoly status to creators of any intellectual property.
ANSWER: c temporary monopoly status to creators of