In a competitive market no single producer can

7. In a competitive market, no single producer can influence the market price because
a. many other sellers are offering a product that is essentially identical.
b. consumers have more influence over the market price than producers do.
c. government intervention prevents firms from influencing price.
d. producers agree not to change the price.
8. Which of the following statements regarding a competitive market is not correct?

930  Chapter 14/Firms in Competitive Markets
a. There are many buyers and many sellers in the market.
b. Firms can freely enter or exit the market.
c. Price equals average revenue.
d. Price exceeds marginal revenue.
Table 1
Quantity Total Revenue
0 $0
1 $7
2 $14
3 $21
4 $28
9. Refer to Table 1. For a firm operating in a competitive market, the price is
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10. Refer to Table 1. For a firm operating in a competitive market, the marginal revenue is
MONOPOLY
SHORT ANSWER
1. What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.
2. Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods.
3. Why might economists prefer private ownership of monopolies over public ownership of monopolies?
MULTIPLE CHOICE
1. Which of the following statements is correct?
a. Both a competitive firm and a monopolist are price takers.
b. Both a competitive firm and a monopolist are price makers.
c. A competitive firm is a price taker, whereas a monopolist is a price maker.
d. A competitive firm is a price maker, whereas a monopolist is a price taker.
2. Which of the following are necessary characteristics of a monopoly?
(i) The firm is the sole seller of its product.
(ii) The firm's product does not have close substitutes.
(iii) The firm generates a large economic profit.
(iv) The firm is located in a small geographic market.