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Unformatted text preview: ch9 Student: _______________________________________________________________________________________ 1. If a firm can change market prices by altering its output, then it: A. Has market power. B. Faces a flat demand curve. C. Is a price taker. D. Engages in marginal cost pricing. 2. Market power is: A. A characteristic of all market structures. B. The ability to alter the market price of a product. C. Most common for competitive firms. D. Enjoyed by all firms at high levels of output. 3. If the entire output of a market is produced by a single seller, the firm: A. Is a monopoly. B. Faces a perfectly inelastic demand. C. Can charge any price it wants and not lose customers. D. Is producing a new product. 4. Which of the following is likely to be a monopolist? A. A drug firm that has a patent granting it the exclusive right to produce a drug. B. A large firm like GM, which has a substantial portion of the car market. C. The Boeing Company, which is one of the largest producers of airplanes. D. An Indonesian restaurant in a large city. 5. Which of the following is true for a monopolist? A. It faces a perfectly elastic demand curve. B. It must lower its price on all of its units in order to sell any additional units. C. Its marginal revenue curve is equal to its demand curve. D. It faces many competitors 6. Which of the following firms is likely to have the greatest market power? A. A farmer selling watermelons in a competitive market who can sell as many watermelons as she wants at the market price. B. The only airline serving two cities (assume this is a contestable market). C. A regulated natural monopoly selling electrical power. D. The sole producer of the only effective AIDS drug. 7. Monopolists are price: A. Takers, as are competitive firms. B. Takers, but competitive firms are price makers. C. Makers, but competitive firms are price takers. D. Makers, as are competitive firms. 8. Competitive firms and monopolies both face downward-sloping: A. Market demand curves. B. Demand curves from the point of view of the firm. C. Long-run average cost curves. D. Short-run marginal cost curves. 9. A monopolist has market power because it: A. Faces a downward-sloping demand curve for its own output. B. Can raise price as much as it wishes and not lose any customers. C. Is a price taker. D. Is regulated by the government. 10. Both a competitive industry and a monopoly: A. Use marginal cost pricing. B. Maximize profit per unit where P = MC. C. Face downward-sloping market demand curves. D. Produce products that have many identical substitutes. 11. If a firm can raise market price by reducing its output, then: A. It has no market power. B. It faces a downward-sloping demand curve....
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- Spring '10