Exam 8: Monopoly

A) on the inelastic portion of the demand curve
B) at the level where average cost is minimized
C) at the point where the cost of producing the last unit of output is equal to the price of that unit
D) at the output level where marginal revenue equals marginal cost
E) at the level where the deadweight loss in the market is zero.

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Monopolistically competitive industries ...

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From the total cost function,marginal co...

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A) maximize profit for the largest,most influential members.
B) increase the total consumer surplus in the market.
C) produce the highest output level possible.
D) secure monopoly profits for its members.
E) successfully practice price discrimination in the market.

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A) Price = marginal cost
B) Price = average cost
C) Price > average cost > marginal cost
D) Price > average cost = marginal cost
E) Marginal revenue = price

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A) The number of firms in the market will increase but the market price will be unchanged.
B) The output in the industry will increase.
C) The cost of production in the industry will increase.
D) The market demand curve will become flatter.
E) The total industry profits will increase.

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The cartel,which behaves like a monopoli...

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A) all firms in the market sell homogeneous goods.
B) there is a single buyer for the goods produced in the market.
C) the firm produces a good that has imperfect substitutes.
D) a single firm produces a good that has no substitutes.
E) there are low entry barriers in the market.

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A) earn zero economic profit
B) face perfectly elastic demand curves
C) tend to standardize their products
D) produce output at minimum marginal cost
E) merge and form a few dominant firms to maximize profit

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A) 0R - 0P
B) 0R
C) 0Q
D) 0P
E) 0T

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A) 0C and 0Q
B) 0A and 0Q
C) 0B and 0R
D) 0D and 0P
E) 0A and 0T

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A) The firm's average costs decline over all levels of output.
B) The firm's elasticity of supply is very low.
C) The firm does not incur any sunk costs.
D) The firm faces a horizontal demand curve.
E) The firm makes zero economic profit.

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A) With average-cost pricing,the output produced is lower than the efficient level of output.
B) Firms that practice average-cost pricing suffer persistent losses.
C) Imperfect information about the firm's costs reduces the effectiveness of average-cost pricing.
D) Average-cost pricing reduces the firm's economic profit but also reduces consumer welfare.
E) With average-cost pricing,the price in the market is lower than the efficient price.

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The Lerner index is given by L = (P - MC...

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A) is positive because firms produce with excess capacity.
B) is zero because of price wars among a small number of firms.
C) is zero because of free entry and exit possibilities in the market.
D) is positive because of advertising and product differentiation by the firms.
E) is positive because of collusive behavior between firms.

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A) 0B and 0R
B) 0A and 0T
C) 0C and 0Q
D) 0D and 0P
E) 0A and 0Q

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A) the number of firms in each industry.
B) the typical firm size in each industry.
C) the degree of entry barriers in each industry.
D) the demand curves faced by individual firms in each industry.
E) the long-run profits of firms in each industry.

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A) A continuously decreasing long-run average cost curve
B) The possession of a patent
C) The control of essential inputs in the production process
D) A pure cost or quality advantage
E) A perfectly elastic market demand curve

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