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CHAPTER 24 Pure Monopoly Topic Question numbers ___________________________________________________________________________________________________ 1. Monopoly concept; definition 1-7 2. Barriers to entry 8-13 3. Monopoly demand curve 14-73 4. Profit maximization 74-116 5. Economic implications 117-145 6. Price discrimination 146-164 7. Regulated monopolies 165-179 Consider This 180-181 Last Word 182-184 True-False 185-208 ___________________________________________________________________________________________________ Multiple Choice Questions Monopoly concept; definition Type: D Topic: 1 E: 438 MI: 194 1. Pure monopoly means: A) any market in which the demand curve to the firm is downsloping. B) a standardized product being produced by many firms. C) a single firm producing a product for which there are no close substitutes. D) a large number of firms producing a differentiated product. Answer: C Type: D Topic: 1 E: 438 MI: 194 2. Which of the following is correct ? A) Both purely competitive and monopolistic firms are "price takers." B) Both purely competitive and monopolistic firms are "price makers." C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." D) A purely competitive firm is a "price maker," while a monopolist is a "price taker." Answer: C Type: A Topic: 1 E: 438-439 MI: 194-195 3. A purely monopolistic industry: A) has no entry barriers. B) has a downward sloping demand curve. C) produces a product or service for which there are many close substitutes. D) earns only a normal profit in the long run. Answer: D Type: D Topic: 1 E: 438 MI: 194 4. A pure monopolist is: A) any firm realizing all existing economies of scale. B) any firm whose demand curve is downsloping. C) any firm which can engage in price discrimination. D) a one-firm industry. Answer: D Type: A Topic: 1 E: 439 MI: 195 5. Pure monopolists may obtain economic profits in the long run because: A) of advertising. C) of barriers to entry. B) marginal revenue is constant as sales increase. D) of rising average fixed costs. Answer: C Type: F Topic: 1 E: 439 MI: 195 6. Which of the following approximates a pure monopoly? A) the foreign exchange market C) the diamond market B) the Kansas City wheat market D) the soft drink market Answer: C Type: A Topic: 1 E: 439 MI: 195 7. Which of the following is a characteristic of pure monopoly? A) close substitute products B) barriers to entry C) the absence of market power D) "price taking" Answer: B Barriers to entry Type: A Topic: 2 E: 439-441 MI: 195-197 8. Which of the following is not a barrier to entry? A) patents B) X-inefficiency C) economies of scale D) ownership of essential resources Answer: B Type: A Topic: 2 E: 439 MI: 195 9. Barriers to entering an industry: A) are justified because they result in allocative efficiency. ... View Full Document

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