Monopolies, Oligopolies and Market Structure
I would appreciate any help that I can get with the following questions.
1. Patent laws
a. reduce incentive to innovate by restricting market entry
b. reduce incentive to innovate by making it difficult to use the patented innovation
c. increase incentive to innovate by restricting entry into a market
d. increase incentive to innovate by giving a firm permanent and exclusive production rights
2. Which of the following is true of marginal revenue for a monopolist that charges a single price?
a. P = MR because there are no close substitutes for the monopolist's product.
b. P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
c. P < MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
d. AR = MR because there are no close substitutes for the monopolist's product.
3. Negative marginal revenue means that
a. total revenue is decreasing as output increases
b. the firm is maximizing its total revenue
c. the firm is maximizing its economic profit
d. total revenue is increasing at a decreasing rate as output increases
4. A profit-maximizing monopolist produces an output level at which
a. marginal revenue is the greatest distance from marginal cost
b. price is less than marginal cost
c. the value to society of the last unit produced equals marginal cost
d. marginal revenue equals marginal cost
5. Compared to a perfectly competitive market, a monopoly tends to produce
a. more output and charge a higher price
b. the same amount of output, but charge a higher price
c. less output and charge a higher price
d. less output and charge the same price
6. Monopolistic competition is best described as
a. many firms with some control over price, and some product differentiation
b. many firms with no control over price, producing identical products
c. a few firms with some control over price, producing highly differentiated products
d. a few firms with no control over price, producing similar products
7. Which of the following characteristics does perfect competition share with monopolistic competition?
a. price-taking firms
b. zero long-run economic profit
c. homogeneous product
d. some barriers to entry
8. Monopolistically competitive firms do not achieve productive efficiency because
a. entry of firms raises production costs in the long run
b. barriers to entry allow profit to be earned in the long run
c. price is greater than marginal cost at the profit maximizing output level
d. profit is maximized at a quantity where average total cost is not minimized
9. There are multiple models of pricing behavior in oligopolistic markets because
a. it is difficult to predict how rival firms will react to any pricing decision
b. the demand curve slopes upward for these firms
c. firms could earn profit in the long run unlike other markets
d. price has a direct impact on profit for a firm in oligopoly
10. Which of the following is likely to occur when a two-person game can be played repeatedly?
a. Collusion and cooperation among the players
b. The prisoner's dilemma
c. The industry demand curve will become perfectly elastic
d. The industry demand curve will become perfectly inelastic