Question 1

(Table: Prices and Demand for New York Rangers Signature Jerseys)  Use Table: Prices and Demand for New York Rangers Signature Jerseys. The New York Rangers have a monopoly on Rangers jerseys. The marginal cost of producing a jersey is $18. If the Rangers increase the number of jerseys they sell from four to five, the price effect is a(n)  _____ in total revenue of _____.

Accepted Answer

A)  decrease; $20
B)  increase; $20
C)  decrease; $8
D)  increase; $8E) B) and C)
F) All of the above

Question 2

In 1984, a judge declared that American Telephone and Telegraph was a monopolist. Assuming that AT&T has a linear demand curve and that it is maximizing its profits at its current level of output, one may conclude that, if AT&T were to increase its price, its total revenue would:

Accepted Answer

A)  rise.
B)  fall.
C)  remain unchanged.
D)  There is insufficient information to make a determination.E) B) and C)
F) A) and C)

Question 3

In a _____ monopoly, the marginal cost falls as production increases. Only one company can survive in the market as new entrants will always be at a cost disadvantage.

Accepted Answer

A)  exploitative
B)  cost-based
C)  natural
D)  strategicE) A) and D)
F) None of the above

Question 4

Which of the following is NOT an outcome of a market where sellers have market power?

Accepted Answer

A)  Larger economic profits
B)  Higher prices
C)  Lower costs
D)  An inefficiently small outputE) A) and D)
F) B) and C)

Question 5

If Penelope, a monopolist, is producing a quantity where MC = P, then profit:

Accepted Answer

A)  is maximized.
B)  is maximized only if MR = P.
C)  can be increased by increasing production.
D)  can be increased by decreasing production.E) None of the above
F) A) and B)

Question 6

A seller's incentive to increase production is reflected in its

Accepted Answer

A)  marginal revenue curve.
B)  demand curve.
C)  market equilibrium price.
D)  market share.E) C) and D)
F) A) and C)

Question 7

When a seller has no market power, its demand curve

Accepted Answer

A)  is horizontal.
B)  is vertical.
C)  has a negative slope.
D)  has a positive slope.E) A) and B)
F) A) and C)

Question 8

Fiona has a monopoly on motorboat rentals on Nantucket Island during the summer. She can rent five boats per week at $21,000 each. If she wants to rent six, she can charge only $20,000 each. The quantity effect of renting the sixth motorboat is:

Accepted Answer

A)  $20,000.
B)  $10,000.
C)  $15,000.
D)  $21,000.E) B) and C)
F) B) and D)

Question 9

(Table: Demand and Total Cost for Asgard)  Use Table: Demand and Total Cost for Asgard. Valkyrie runs a natural monopoly that produces electricity for a small mountain village near Asgard. The table shows the demand facing Valkyrie and Valkyrie's total costs. The marginal revenue of the fifth unit of output is:

Accepted Answer

A)  $200.
B)  $350.
C)  $450.
D)  $150.E) A) and B)
F) None of the above

Question 10

How does a business owner discover the business's demand curve?

Accepted Answer

A)  The owner watches its competitors.
B)  The owner tries out different versions of a product.
C)  The demand curve is found by determining the market equilibrium price.
D)  The owner experiments with different prices for its product.E) A) and C)
F) B) and D)

Question 11

Since a firm operating in a monopolistically competitive market faces a downward-sloping demand curve, it is generally the case that:

Accepted Answer

A)  P = MR.
B)  P 
C)  P> MR.
D)  P = TR.E) A) and B)
F) A) and C)

Question 12

What happens to a seller's demand curve as the seller gains market power?

Accepted Answer

A)  The curve becomes horizontal.
B)  The curve shifts to the left.
C)  The slope of the curve becomes steeper.
D)  The slope of the curve becomes less steep.E) A) and B)
F) A) and D)

Question 13

A firm's ability to raise its product price without losing many customers to competing businesses is known as

Accepted Answer

A)  market power.
B)  competitive power.
C)  marginal revenue.
D)  revenue dependability.E) None of the above
F) A) and B)

Question 14

Suppose that Louise is the only person licensed to rent out tandem bicycles on the boardwalk in her small hometown. When she increases her rentals from 15 tandem bicycles to 16 tandem bicycles, the market rental price declines from $35 per rental to $34 per rental. The marginal revenue of the 16th tandem bicycle is:

Accepted Answer

A)  $1.
B)  $9.
C)  $19.
D)  $29.E) B) and C)
F) A) and C)

Question 15

What is collusion?

Accepted Answer

A)  Cooperation between sellers to increase the level of competition
B)  Regulatory restrictions on the entry of new sellers into an industry
C)  A merger of two sellers
D)  Agreements between sellers to increase their market powerE) B) and C)
F) None of the above

Question 16

A price-taker is a seller that:

Accepted Answer

A)  keeps taking an increasing share of market sales in its market.
B)  sets its price based on the cost of inputs plus an allowance for profit.
C)  takes all available information into consideration in deciding how much to charge above or below the current market price.
D)  charges the current market price for its product.E) A) and C)
F) A) and B)

Question 17

A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?

Accepted Answer

A)  Oligopoly
B)  Monopolistic competition
C)  Monopoly
D)  Perfect competitionE) A) and B)
F) None of the above

Question 18

Which of the following is consistent with current U.S. law on monopolies?

Accepted Answer

A)  Being a monopoly is illegal.
B)  Gaining monopoly or market power through specified exclusionary business practices is illegal.
C)  Monopolizing is legal.
D)  Companies can act to reduce the number of competitors but cannot discourage new entrants.E) B) and C)
F) A) and D)

Question 19

As the quantity sold rises, how does marginal revenue compare to price for a company with market power?

Accepted Answer

A)  Marginal revenue falls further and further below price.
B)  Marginal revenue rises further and further below price.
C)  Marginal revenue remains constant regardless of the price level.
D)  Marginal revenue maintains a constant difference from price.E) A) and D)
F) B) and D)

Question 20

A certain city has four hospitals, and there are no other hospitals within 200 miles. Two of the hospitals are more specialized than the other two because one has a large cardiac unit and the other has a specialized cancer-treatment center. The local market for hospital services is what type of market?

Accepted Answer

A)  Monopoly
B)  Oligopoly
C)  Perfect competition
D)  Monopolistic competitionE) None of the above
F) A) and D)

Exam 14: Market Structure and Market Power

Correct Answer
verified

In a _____ monopoly, the marginal cost falls as production increases. Only one company can survive in the market as new entrants will always be at a cost disadvantage.

Correct Answer
verified

As the quantity sold rises, how does marginal revenue compare to price for a company with market power?

Correct Answer
verified

Since a firm operating in a monopolistically competitive market faces a downward-sloping demand curve, it is generally the case that:

Correct Answer
verified

What happens to a seller's demand curve as the seller gains market power?

Correct Answer
verified

A price-taker is a seller that:

Correct Answer
verified

What is collusion?

Correct Answer
verified

In 1984, a judge declared that American Telephone and Telegraph was a monopolist. Assuming that AT&T has a linear demand curve and that it is maximizing its profits at its current level of output, one may conclude that, if AT&T were to increase its price, its total revenue would:

Correct Answer
verified

Correct Answer
verified

A firm's ability to raise its product price without losing many customers to competing businesses is known as

Correct Answer
verified

When a seller has no market power, its demand curve

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Fiona has a monopoly on motorboat rentals on Nantucket Island during the summer. She can rent five boats per week at $21,000 each. If she wants to rent six, she can charge only $20,000 each. The quantity effect of renting the sixth motorboat is:

Correct Answer
verified

Which of the following is consistent with current U.S. law on monopolies?

Correct Answer
verified

How does a business owner discover the business's demand curve?

Correct Answer
verified

A seller's incentive to increase production is reflected in its

Correct Answer
verified

Which of the following is NOT an outcome of a market where sellers have market power?

Correct Answer
verified

A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?

Correct Answer
verified

If Penelope, a monopolist, is producing a quantity where MC = P, then profit:

Correct Answer
verified

Exam 14: Market Structure and Market Power

Correct AnswerverifiedShow Answer

In a _____ monopoly, the marginal cost falls as production increases. Only one company can survive in the market as new entrants will always be at a cost disadvantage.

Correct AnswerverifiedShow Answer

As the quantity sold rises, how does marginal revenue compare to price for a company with market power?

Correct AnswerverifiedShow Answer

Since a firm operating in a monopolistically competitive market faces a downward-sloping demand curve, it is generally the case that:

Correct AnswerverifiedShow Answer

What happens to a seller's demand curve as the seller gains market power?

Correct AnswerverifiedShow Answer

A price-taker is a seller that:

Correct AnswerverifiedShow Answer

What is collusion?

Correct AnswerverifiedShow Answer

In 1984, a judge declared that American Telephone and Telegraph was a monopolist. Assuming that AT&T has a linear demand curve and that it is maximizing its profits at its current level of output, one may conclude that, if AT&T were to increase its price, its total revenue would:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm's ability to raise its product price without losing many customers to competing businesses is known as

Correct AnswerverifiedShow Answer

When a seller has no market power, its demand curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Fiona has a monopoly on motorboat rentals on Nantucket Island during the summer. She can rent five boats per week at $21,000 each. If she wants to rent six, she can charge only $20,000 each. The quantity effect of renting the sixth motorboat is:

Correct AnswerverifiedShow Answer

Which of the following is consistent with current U.S. law on monopolies?

Correct AnswerverifiedShow Answer

How does a business owner discover the business's demand curve?

Correct AnswerverifiedShow Answer

A seller's incentive to increase production is reflected in its

Correct AnswerverifiedShow Answer

Which of the following is NOT an outcome of a market where sellers have market power?

Correct AnswerverifiedShow Answer

A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?

Correct AnswerverifiedShow Answer

If Penelope, a monopolist, is producing a quantity where MC = P, then profit:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified