Chapter 23 - Monopoly

1		Statement I: An industry that is a monopoly usually has just one firm. Statement II: Most of American industry can be described as monopoly.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
2		The monopolist's demand curve is
			A)	perfectly elastic.
			B)	perfectly inelastic.
			C)	slopes downward to the right.
			D)	slopes upward to the right.
3		Statement I. The marginal analysis used to find the monopolist's profit or loss is virtually the same as that used to find the perfect competitor's profit or loss. Statement II. The monopolist's marginal revenue curve declines faster than her demand curve.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
4		The monopolistic can make a profit
			A)	only in the short run.
			B)	only in the long run.
			C)	in both the short run and the long run.
			D)	in neither the short run nor the long run.
5		If a monopolist is taking a loss, that monopolist
			A)	must be in the short run.
			B)	must be in the long run.
			C)	may be in either the short run or the long run.
6		If a monopolist's ATC is higher than her demand curve for the entire range of output,
			A)	the firm is making a profit.
			B)	The firm is losing money.
			C)	The firm is breaking even.
			D)	There isn't enough information to determine if the firm is making a profit, taking a loss, or breaking even.
7		Statement I. The monopolist will always break even in the long run. Statement II. All monopolies are big companies.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
8		Statement I: Microsoft's monopoly for personal computer operating systems is based on setting the industry standard. Statement II: Pepsi Cola and Coca Cola have campus-wide soft drink monopolies at many colleges.
			A)	Statement I is true and statement II is false.
			B)	Statement ii is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
9		Natural monopoly is closely associated with
			A)	economies of scale.
			B)	diseconomies of scale.
			C)	ownership of an essential resource.
			D)	the economies of being established.
10		Statement I. Today the rationale for natural monopoly is disappearing. Statement II. Economic power is not easily translated into political power.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
11		The average CEO earns over ___________ times as much as the earnings of the average worker.
			A)	10
			B)	50
			C)	125
			D)	400
			E)	1,000
12		Statement I. Most of our natural monopolies are government owned. Statement II. Most of our monopolies are "bad."
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
13		Which statement is true?
			A)	The monopolist's most efficient output is her most profitable output as well.
			B)	The monopolist charges a higher price than the perfect competitor in the long run.
			C)	All monopolists have control over an essential resource.
			D)	None is true.
14		As the monopolist's output rises, the price she receives _____ and her marginal revenue _____.
			A)	rises, rises
			B)	falls, falls
			C)	rises, falls
			D)	falls, falls