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PracticeMidterm1 - 1 Part I Multiple choice Choose exactly...

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1 Part I: Multiple choice Choose exactly one response for each 1. A natural monopoly (a) is a monopoly in the production of raw materials. (b) occurs when one °rm can supply the entire market more cheaply than can a number of °rms. (c) is one result of a patent. (d) necessarily involves ine¢ cient pricing. 2. A monopoly±s economic pro°ts are represented by 3. The principal di/erence between economic pro°ts for a monopolist and for a competi- tive °rm is that (a) monopoly pro°ts create major problems of equity whereas competitive pro°ts do not. (b) competitive pro°ts exist only in the short run whereas monopoly pro°ts may exist in the long run as well. (c) monopoly pro°ts are always larger than competitive pro°ts. 4. If a monopoly is maximizing pro°ts
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