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CHAPTER 24 Pure Monopoly Topic Question numbers ___________________________________________________________________________________________________ 1. Monopoly concept; definition 1-7 2. Barriers to entry 8-13 3. Monopoly demand curve 14-73 4. Profit maximization 74-116 5. Economic implications 117-145 6. Price discrimination 146-164 7. Regulated monopolies 165-179 Consider This 180-181 Last Word 182-184 True-False 185-208 ___________________________________________________________________________________________________ Multiple Choice Questions Monopoly concept; definition Type: D Topic: 1 E: 438 MI: 194 1. Pure monopoly means: A) any market in which the demand curve to the firm is downsloping. B) a standardized product being produced by many firms. C) a single firm producing a product for which there are no close substitutes. D) a large number of firms producing a differentiated product. Answer: C Type: D Topic: 1 E: 438 MI: 194 2. Which of the following is correct ? A) Both purely competitive and monopolistic firms are "price takers." B) Both purely competitive and monopolistic firms are "price makers." C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." D) A purely competitive firm is a "price maker," while a monopolist is a "price taker." Answer: C
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Type: A Topic: 1 E: 438-439 MI: 194-195 3. A purely monopolistic industry: A) has no entry barriers. B) has a downward sloping demand curve. C) produces a product or service for which there are many close substitutes. D) earns only a normal profit in the long run. Answer: D Type: D Topic: 1 E: 438 MI: 194 4. A pure monopolist is: A) any firm realizing all existing economies of scale. B) any firm whose demand curve is downsloping. C) any firm which can engage in price discrimination. D) a one-firm industry. Answer: D Type: A Topic: 1 E: 439 MI: 195 5. Pure monopolists may obtain economic profits in the long run because: A) of advertising. C) of barriers to entry. B) marginal revenue is constant as sales increase. D) of rising average fixed costs. Answer: C Type: F Topic: 1 E: 439 MI: 195 6. Which of the following approximates a pure monopoly? A) the foreign exchange market C) the diamond market B) the Kansas City wheat market D) the soft drink market Answer: C Type: A Topic: 1 E: 439 MI: 195 7. Which of the following is a characteristic of pure monopoly? A) close substitute products B) barriers to entry C) the absence of market power D) "price taking" Answer: B Barriers to entry Type: A Topic: 2 E: 439-441 MI: 195-197 8. Which of the following is not a barrier to entry? A) patents B) X-inefficiency C) economies of scale D) ownership of essential resources Answer: B Type: A Topic: 2 E: 439 MI: 195 9. Barriers to entering an industry: A) are justified because they result in allocative efficiency. B) are justified because they result in productive efficiency. C) are the basis for monopoly. D) apply only to purely monopolistic industries. Answer: C
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Chapter 24: Pure Monopoly Type: A Topic: 2 E: 440 MI: 196 10. Patents: A) give firms the exclusive right to produce or control a product for 100 years. B) discourage research and innovation.
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