2The market structure where there is a single supplier of a good or service for which there is no close substitute isOligopolyPerfect competitionMonopolyMonopolistic competition
3Small Town U.S.A. has no airport, no train service, and no water transportation systems. It only has Greyhound Transportation. In Small Town U.S.A., GreyhoundIs an example of long distance mass transportation monopolyIs an example of pure competition in mass transportation industry.Is an example of mass transportation monopolistic competitionIs an example of pure oligopoly
4For a firm to become a monopoly in an industry Barriers to entry must existThe firm must charge higher prices than its competitorsThe firm must produce a faulty productThe firm will engage in unfair practices to drive all competitors out of the market
5The market structure where there is a single supplier of a good or service for which there is no close substitute is…..A price searcherA monopolyA tariffThe most economically efficient market structure
7Entry barriers are most significant in Pure competitionMonopolistic competitionOligopolyPure monopoly
8Considering the spectrum of market structures and moving from pure competition to pure monopoly we can say that:Entry barriers get lower but exit gets more difficult.Entry becomes harder but exit becomes easierEntry gets harder and the number of firms dwindlesNone of the above
9A barrier to entry isA term used to explain why monopolies always make economic profitsA restriction on the profits that a monopoly can makeThe situation when the government produces a good instead of relying on private firms to produce the goodA restriction on starting a business
10Some industries exist where, in order to enter the industry a firm must incur a large fixed cost before being able to start producing. Which of the following statements is true?This situation usually means that the government steps in and provides firms with startup costs.The government always produces these goodsThis creates barriers to entry and firms will earn monopoly profitsThis industry will attract a lot firms
11All of the following are considered a barrier to entry into a market EXCEPT Ownership of resources without close substitutesWhen firms can only earn a normal rate of return in a marketEconomies of scaleWhen there is a large capital investment necessary to get into the market
13Shortly after the turn of the century, U. S Shortly after the turn of the century, U.S. steel owned most of the iron ore reserves in the country. This is an example ofMonopoly due to government restrictionsA barrier to entry from owning an important resourceA barrier to entry from scale economiesMonopoly due to large capital requirements
31Which of the following is not true about a cartel? Members earn higher-than-competitive profitsMembers experience large economies of scale relative to industry demandCartels will set common prices for their membersMembers of a cartel will have production quotas
32Refer to the above figure Refer to the above figure. Which of the following statements is true about the demand curves for an individual firm in a perfectly competitive industry and a monopoly?Panel A is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.Panel C is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.Panel C is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.Panel B is the demand curve for a perfectly competitive firm and Panel A is the demand curve for a monopoly.
39An important difference between perfect competition and monopoly is A monopoly is profitable and a perfect competitor is not.The monopoly faces a downward sloping demand curve and the perfect competitor faces a horizontal demand curve.The monopoly faces an inelastic demand curve and the perfect competitor faces an elastic demand curve.A monopoly is not regulated by the market, while a perfect competitor is regulated by the market
40Which of the following statements is true about the relationship between a firm’s demand curve under perfect competition and monopoly?Under perfect competition the demand curve is perfectly elastic while under monopoly the demand curve has elastic, unitary and inelastic portions.Under monopoly the demand curve is perfectly elastic while under perfect competition the demand curve has elastic, unitary and inelastic portionsThe demand curves for a monopoly and perfect competition are always inelasticWe can define a demand curve under perfect competition but not in monopoly.
42To induce an increase in the quantity demanded of its product, a monopolist must reduce the…. Quality of its product and thereby generate a downward shift its ATC curve.Price of its product and thereby generate a rightward shift in its demand curvePrice of its product and thereby generate a rightward movement along its demand curveQuality of its product and thereby generate a downward movement along its ATC curve.
43Successive downward movements along the demand curve for the product of a monopolist always generate successive….Increases in the monopolist’s marginal revenueIncreases in the monopolist’s average total costs.Decreases in the additional per-unit costs incurred by the monopolistDecreases in the additional per-unit revenues earned by the monopolist
44A monopolist wishing to increase its profit has just discovered that lowering its price and selling more output yielded the desired result. Profit increased. Based on this, we can conclude that the cost of the additional production is…..Greater than the revenue from the additional productionPrecisely equal to the revenue from the additional productionLess than the revenue from the additional productionThere is no way to answer this because you have not given us the marginal revenue and marginal cost data
56For a monopolist the reason that marginal revenue is less than price is…. Due to the perfectly elastic demand curve that the monopolist faces.Because the monopolist must lower the price of the good in order to sell an additional unit.Due to the U-shaped average revenue curve.Because of the lack of competition in the market.