1 A public utility is a classic example of: Student Response A. monopolistic competition. B. a natural monopoly. C. an oligopoly. D. perfect competition. Score: 0/1 2 Figure 13.1 shows a demand and costs of an unregulated monopoly. At the profit maximization output, the firm earns a profit of: Student Response A. $50,000. B. $10,000. C. $80,000. D. $0. Score: 1/1 3 Figure 13.1 shows a demand and costs of an unregulated monopoly. The negatively sloped long-run average cost curve reflects that Student Response A. the firm's total cost of production decreases as its output increases.
Student Response B. the firm's profit increases as its output increases. C. there exist large economies of scale in production. D. All of the above is correct. Score: 1/1 4 Consider an unregulated monopoly in Figure 13.2. If a second firm enters the market, the demand curve facing the first firm will: Student Response A. shift to the right. B. shift to the left. C. remain the same. D. There is no sufficient information. Score: 1/1 5 Consider a cable TV company which is subject to an average-cost pricing regulation. If the number of subscribers decreases, Student Response A. the company will have to operate at a smaller profit unless it suffers an economic loss. B. the company will have to charge a relatively low price as the demand curve facing the firm shifts to the left. C. the company will charge more per customer as its average cost increases. D. none of the above Score: 1/1 6
If a natural monopoly is forced to follow a policy of average-cost pricing, the monopolist will: Student Response A. charge a lower price than if the monopolist were not regulated. B. decrease output below that in an unregulated pricing policy. C. charge a higher price than if the monopolist were not regulated. D. earn economic profits greater than zero. Score: 1/1 7 A likely consequence over time of an average-cost pricing policy for a natural monopoly is: Student Response A. a decrease in the average cost curve. B. no change in price. C. an increase in the average cost curve. D. an increase in profits. Score: 0/1 8 Which of the following is an example of tie-in sales? Student Response A. Bus rides are cheaper for senior citizens than for other people. B. Two companies merge to form one company. C. In order to buy Microsoft Windows, you must also purchase Internet Explorer. D. Prices are set just low enough to prevent other firms from entering the market. Score: 1/1
9 Which of the following is an example of predatory pricing? Student Response A. In order to buy Microsoft Windows, you must also purchase Internet Explorer. B. Bus rides are cheaper for senior citizens than for other people. C. Prices are set low enough to drive other firms out of a market. D. Prices are set just high enough to prevent other firms from entering the market.
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