Economics review 11
Quiz by Ruru j
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29 questions
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- Q1Blammo Industries is a profit maximizer that sells custom made hats and is the only producer in a market. It charges some customers more than other customers because the hats bought by some buyers cost Blammo more to produce than the hats purchased by other buyers.Blammo industries does not have a constant marginal cost curveBlammo Industries is a price discriminating monopolist.Blammo industries operates in an industry with barriers to entry.Blammo industries has a downward sloping demand curve.30sEditDelete
- Q2Which of the following is true about a perfect price discriminating monopolist?It produces the same quantity as a perfect competitive firm with the same costs.It minimizes average total cost.It creates dead weight loss by producing a quantity where price is greater than marginal cost.It charges the same price to all buyers.30sEditDelete
- Q3What kind of monopoly exists when a firm controls a manufacturing method or invention?natural monopolygovernment monopolygeographic monopolytechnological monopoly30sEditDelete
- Q4The government grants patentsto allow inventors to recover the costs of developing the invention or technologyso a single company can apply economies of scalebecause it is the most efficient way of providing some servicesto make sure that consumers in isolated areas are served30sEditDelete
- Q5Why must monopolies be careful not to set prices too high?The equilibrium price of the product will rise.Due to market competitors.Demand for the product will drop.Production costs will increase.30sEditDelete
- Q6Monopolistic competition occurs whenthere are no close substitutes for a productconsumers reject brand name productssellers offer similar, but not standardized productssellers cannot differentiate products30sEditDelete
- Q7____ are not an example of natural monopoly.Electricity providers.Gas providers.Water providersCell phone service Providers.30sEditDelete
- Q8Why can a natural monopoly be advantageous for consumers?The efficiency results in lower average costs for the consumer.The efficiency results in more consistent service for the consumer.Natural monopolies ensure that everyone is provided with basic resources like electricity, water, and transportation.Consumers do not have to bother choosing between competing companies.30sEditDelete
- Q9A market structure where one company is the single source for a product is called a __________.Economy of scalePure monopolyLegal barrierPublic utility30sEditDelete
- Q10What controls exist to help discourage monopolies in the U.S. economy?The free market encourages competition, and competition will limit monopolies.Government regulations.Monopolies are completely illegal.Citizens can vote to dissolve a company that holds a monopoly.30sEditDelete
- Q11A key feature of a natural monopoly is that . . .It will always produce at a level of output where P = MC.It must always earn super-normal profitsIt will be state-owned.One firm can supply the entire market at lower prices than any two or more firms30sEditDelete
- Q12What is the biggest risk associated with monopolies?They limit consumer choice, so they are discouraged.A company with a monopoly can pick their customers, even if they discriminate against someone based on their race, gender, or religion.Monopolies are typically owned and run by illegal groups like gangs and mobs, so they provide legal protection to criminal activities.The entity with complete market share could increase prices as high as they wanted, since consumers would have nowhere else to go.30sEditDelete
- Q13Which one is NOT one of the factors that need to be met in perfect competition?Knowledge is available to all buyers and sellers, and no one has individual control over the prices.All goods are homogeneous.Buyers and sellers have many barriers to enter or leave the market.Buyers and sellers want to maximize profit.30sEditDelete
- Q14Which of the following is NOT a requirement for a perfectly competitive market?Firms are price takers.Firms sell differentiated products.No single firm has significant market share.30sEditDelete
- Q15Which of these industries is closest to perfect competition?Cell phone providersAirlinesCar washesTV manufacturers30sEditDelete
- Q16If MR > MC, the extra revenue from selling one more unit exceeds the extra costEconomic profit is maximized.The firm should decrease output to increase profit.The firm should increase output to increase profit.30sEditDelete
- Q17If MR < MC, the extra revenue from selling one more unit is less than the extra cost.Economic profit is maximizedThe firm should decrease output to increase profit.The firm should increase output to increase profit.30sEditDelete
- Q18If price equals average total cost a firm ___________.Economic lossbreak-evenincur an economic profit30sEditDelete
- Q19If price is less than average total cost, a firm ____________.Breakevenmakes an economic profitincurs an economic loss30sEditDelete
- Q20Does perfect competition lead to productive efficiency?yesonly n long runnoonly in short run30sEditDelete