chp 12 test bank - CHAPTER 12MONOPOLY AND MONOPSONY...

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Unformatted text preview: CHAPTER 12MONOPOLY AND MONOPSONY MULTIPLE CHOICE 1. In long-run equilibrium, monopoly prices are set a level where: a. price exceeds marginal revenue. b. industry demand equals industry supply. c. industry demand is less than industry supply. d. price exceeds average revenue. ANS: A 2. For a monopoly in equilibrium: a. MR = MC b. MC AC c. MR AC d. P AC ANS: A 3. The level of competition in a given market tends to increase if: a. minimum efficient scale of firms increases. b. the number of substitutes increase. c. significant barriers to exit are imposed. d. the number of potential entrants decreases. ANS: B 4. A monopsony is a market with: a. many sellers. b. one buyer. c. many buyers. d. one seller. ANS: B 5. Government-mandated wage arbitration for employers can enhance efficiency when the labor market involves: a. monopoly. b. excess seller power. c. perfect competition. d. monopsony. ANS: D 6. In monopoly competitive markets, profits are maximized when: a. MC = AC b. P > AC c. MR = MC d. MR = P ANS: C 7. A market with one buyer is called: a. monopsony. b. monopoly. c. perfect competition. d. oligopsony. ANS: A 8. The demand curve for a unique product without substitutes is: a. upward sloping. b. downward sloping. c. horizontal. d. vertical. ANS: D 9. A monopolist maximizes profits by producing a level of output where: a. P = AC b. P > MC c. P < MC d. P = MC ANS: B 10. In the short run, a monopolist will: a. shut down if price equals average total cost. b. shut down if price is less than average total cost. c. shut down if price is less than average variable cost. d. never shut down. ANS: C 11. At the profit maximizing level of output for a monopolist: a. P = AR and AR = AC b. P = MC and MR > MC c. P > MC and MR = MC d. P = MR and AC = MC ANS: C 12. Economic agents that have countervailing power in transactions with monopolists are: a. other monopolists. b. perfect competitors. c. monopsonists. d. individual consumers. ANS: C 13. Holding supply conditions constant, the costs of regulation fall wholly on producers when: a. P = b. P 1 c. P = 1 d. P = 0 ANS: A 14. Utility price and profit regulation is based on the perception of: a. externalities. b. diseconomies of scale. c. natural monopoly. d. consumers' surplus. ANS: C 15. A natural monopoly exists if: a. marginal revenue is falling as output expands. b. price equals average cost. c. average cost falls as output expands. d. marginal revenue equals marginal cost. ANS: C 16. Government seeks to aid economic efficiency in the case of natural monopoly through: a. creating government-financed corporations to compete with the natural monopolist. b. subsidizing competitors. c. price regulation....
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This note was uploaded on 03/08/2011 for the course ECONABA 635 taught by Professor Leiter during the Summer '10 term at Andrew Jackson.

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chp 12 test bank - CHAPTER 12MONOPOLY AND MONOPSONY...

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