200810021151300

200810021151300 - Microeconomics Testbank 1,...

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Microeconomics – Testbank 1, (Hubbard/O’Brien) Chapter 14: Monopoly and Antitrust Policy MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Refer to Figure 14.2 for the questions below. Figure 14.2 1) If the firm in figure 14.2 produces what it wants, it will: A) break even. B) suffer a loss. C) make a profit. D) face entry. Answer: C Diff: 3 Page Ref: 464 2) A network externality is: A) a good or service that requires connection to a network for it to be useful. B) having lobbyists to advocate a public franchise. C) having a network of suppliers and buyers for a good or service. D) a good or service whose usefulness increases with the number of people using it. Answer: D Diff: 2 Page Ref: 448 3) If a firm has market power and has earned monopoly profits for some time, Joseph Schumpeter would predict: A) the public will get fed up and refuse to buy those products. B) the government will eventually have to control these firms. C) new products will drive older products and firms with market power out of the market. D) all of the above. Answer: C Diff: 2 Page Ref: 458 4) Governments grant patents to: A) encourage competition. B) compensate firms for research and development costs.
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C) encourage low prices. D) all of the above. Answer: B Diff: 2 Page Ref: 446 5) The size of a deadweight loss in a market is reduced by: A) government legislating a price floor. B) market price being close to marginal cost. C) government legislating a ceiling price. D) all of the above. Answer: B Diff: 2 Page Ref: 458 6) For a natural monopoly to exist: A) a firm must continually buy up rivals. B) a firm's long run average cost curve must exhibit economies of scale. C) a firm's long run average cost curve must exhibit diseconomies of scale. D) a firm must have a patent. Answer: B Diff: 2 Page Ref: 449 7) A public enterprise is: A) government ownership and operation of a legal monopoly. B) any private business that is not - for - profit. C) government designation that a private firm is the only legal producer of a good or service. D) an unregulated monopoly necessary for the public good. Answer: A Diff: 2 Page Ref: 445 8) If U.S. Steel and General Motors merged, this would be an example of a: A) horizontal merger. B) vertical merger. C) conglomerate merger. D) none of the above. Answer: B Diff: 1 Page Ref: 460 Refer to Figure 14.1 for the questions above.
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9) If average total costs are ATC1, the firm in figure 14.1 will: A) face competition. B) suffer a loss. C) make a profit. D) break even. Answer: C Diff: 3 Page Ref: 453 Refer to Figure 14.2 for the questions below. Figure 14.2 10) The firm in figure 14.2 wants to produce: A) Q1. B) Q2.
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This note was uploaded on 05/10/2010 for the course ECO 201 taught by Professor Mikeadkins during the Spring '08 term at KCTCS.

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200810021151300 - Microeconomics Testbank 1,...

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