Please answer these questions

Question 6

A market may be contestable if there are:

Falling average fixed costs in the long run.

Government regulations.

High barriers to entry.

Possibilities for entry.

Question 7

Marginal revenue measures:

The change in total revenue resulting from a 1 unit change in output.

The difference between the revenue gained from increasing output by 1 unit and the revenue lost from the resulting lower price.

The slope of the total revenue curve.

All of the above.

Question 8

Which of the following rules will always be satisfied when any firm (i.e. perfectly competitive or monopoly) has maximized profits?

Price = lowest level of ATC.

Price = MC.

MR = MC.

Total revenues are also maximized.

Question 9

Which of the following rules is satisfied when a monopoly maximizes profits?

Price > AVC.

Price > MC.

MR = MC.

All of the above.

Question 10

The marginal revenue of a monopolist:

Falls below price because a monopolist is a price taker.

Falls below price because to sell more output the firm must reduce price on all units sold.

Is above price because the demand curve facing the monopolist is inelastic.

Is equal to price.

Question 11

Suppose a monopoly firm produces tables and can sell 10 tables per month at a price of $500 per table. In order to increase sales by one table per month, the monopolist must lower the price of its tables by $30 to $470 per table. The marginal revenue of the eleventh table is:

$170.

$-30.

$70.

$5170.

Question 12

Which of the following is true about the output level where marginal revenue equals marginal cost?

Economic profits are equal to zero.

The firm is maximizing profit.

The firm should increase its output.

The firm should reduce its output.

Question 13

Which of the following is a barrier to entry in a monopoly market?

Economic profits greater than zero for the monopolist.

A rising long-run average total cost curve.

A patent on a new product.

All of the above.

Question 14

In monopoly and perfect competition, a firm should expand production when:

Marginal revenue is below marginal cost.

Marginal revenue is above marginal cost.

Price is below marginal cost.

Price is above marginal cost.

Question 15

A monopolist will not use marginal cost pricing because at that output:

MR is greater than MC.

MC is greater than MR.

MR is below the ATC curve.

MC is greater than the monopolist's price.

Question 16

Relative to a competitive market with the same cost and market demand, a monopolist will produce:

Less output at a higher price.

More output at a lower price.

More output at a higher price.

Less output at a lower price.

Question 17

The ultimate market constraint on the exercise of market power:

Is the demand curve facing the monopolist.

Is the ATC curve facing the monopolist.

Is MC pricing.

Are barriers to entry.

Question 18

A monopoly has a high degree of market power because of:

The lack of close substitutes for its product.

Barriers to entry.

A downward-sloping demand curve for its product.

All of the above.

Question 19

Which of the following is an argument in favor of a competitive market structure rather than monopoly?

Monopolies have greater ability to pursue research and design.

The lure of monopoly power provides a greater incentive for invention and innovation.

Monopolies produce less at a higher price than competitive markets, ceteris paribus.

Economies of scale allow a single firm to produce at lower cost than in a competitive market, ceteris paribus.

Question 20

A patent gives a firm the exclusive right to produce a product for:

6 months.

2 years.

20 years.

Forever.

Question 21

Markets that exhibit economies of scale over the entire range of market output:

Are natural monopolies.

Are perfectly competitive.

Have downward-sloping short-run average total cost curves.

Have upward-sloping long-run average total cost curves.

Question 22

If higher cost production processes that control pollution are adopted, then:

The average total cost curve will shift upward.

The profit-maximizing rate of output will be reduced.

The marginal cost curve will shift to the left.

All of the above.

Question 23

In the process of growing corn, Farmer Lee uses chemicals that pollute the river and damage drinking water downstream. This is an example of:

A public good.

Inequity.

Market.

An externality.

Question 24

Social costs are:

The full resource costs of an economic activity.

Usually less than private costs.

The costs of an economic activity borne by the producer.

All of the above.

Question 25

If there is no pollution associated with an economic activity, social costs are:

The full resource costs of an economic activity.

Equal to private costs.

Equal to the costs of an economic activity borne by the producer.

All of the above.

Question 26

If an electric company does not have to pay for its contribution to acid rain, then it will be producing:

Too much electricity from a social viewpoint.

Inefficiently from a private viewpoint.

Unprofitably from a private viewpoint.

At a price that is too high from a social viewpoint.

Question 27

If the economy relies entirely on the market mechanism, it tends to:

Underproduce goods that yield external benefits and overproduce goods that yield external costs.

Underproduce goods that yield external benefits and underproduce goods that yield external costs.

Overproduce goods that yield external benefits and overproduce goods that yield external costs.

Overproduce goods that yield external benefits and underproduce goods that yield external costs.

Question 28

In order to maximize social welfare, the firm's production of a certain good should occur at the output where:

Social marginal cost equals social marginal benefit.

Price equals social marginal revenue.

Marginal revenue equals price.

All pollution is entirely eliminated.

Question 29

Which of the following involves altering market incentives to achieve environmental protection?

Emission charges.

User charges.

Pollution fines.

All of the above.

Question 30

An emission charge increases:

Private marginal cost and encourages higher output.

Private marginal cost and encourages lower output.

Social marginal cost and encourages lower output.

The difference between private and social costs.

Question 31

A completely successful emission fee charge would:

Shift the private MC curve until the curve intersects with price at zero output and pollution is completely eliminated.

Shift the private MC curve to the same position as the social MC curve.

Shift the social MC curve to the same position as the private MC curve.

Not shift either the private or social MC curve.

Question 32

Which of the following is true about marketable pollution permits?

They are auctioned at the Chicago Board of Trade.

They were first used as an incentive to reduce pollution in 1992.

They should reduce the cost of pollution control.

All of the above.

Question 33

The Clean Air Acts of 1970 and 1990 reduced pollution through:

Market incentives.

Command-and-control regulatory standards.

Privatization.

Emission charges.

Question 34

The optimal rate of pollution occurs at the rate where:

MR = MC for the production of the good that produces pollution.

The difference between marginal social benefit and marginal social cost of pollution abatement is zero.

Marginal benefit of pollution abatement is zero.

All of the above.

Question 35

The optimal rate of pollution:

Is zero.

Occurs at the point where the opportunity cost of further pollution control equals the financial benefits to the producer in terms of increased sales.

Occurs where the social marginal benefit of pollution control equals its social marginal cost.

Is the rate that reduces production costs but does not result in externalities.