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ch08 - File Ch08 CHAPTER 8 Monopoly Each question contains...

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File: Ch08; CHAPTER 8: Monopoly Each question contains a code showing the section of the chapter text from which it was taken. The codes for this chapter are: Code Section 1 Pure Monopoly 2 Perfect Competition Versus Pure Monopoly 3 Monopolistic Competition MULTIPLE CHOICE 1. A pure monopoly a) Can raise price indefinitely. a) Typically is more efficient than other firms in the market. a) Is the only seller in an industry. d) Always restricts output below the competitive level. e) Answers c and d are both correct. ANSWER: e SECTION: 1 2. A monopolist maximizes profit by a) Maximizing the markup of price over marginal cost. b) Producing until average cost is minimized. c) Producing until the cost of the last unit of output is equal to the price of the unit. d) Producing an output level such that marginal revenue equals marginal cost. e) Answers b and c are both correct. ANSWER: d SECTION: 1 3. A monopoly earns positive economic profits in the long run due to 4. Which of these factors contributes to the existence of monopoly power? 8-1
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Monopoly 5. If a natural monopoly is broken up into two smaller firms, 6. Monopoly reduces overall economic welfare because a) Monopolies earns excess economic profits. b) Monopolies overproduce to maximize profits. c) Monopolies are usually anticompetitive. d) Monopolies engage in excessive product differentiation. e) Monopolies restrict output below efficient levels. ANSWER: e SECTION: 2 7. A pure monopoly occurs when
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