iVAT Chapter 14

A  Price will be driven down to minimum average total cost in the long run.

B  These profits will persist in the long run because of the firm’s limited monopoly power.

C  These profits will be eliminated in the long run as new firms enter the industry.

D  Its output will increase in the long run.

A  Monopoly; go out of business.

B  Perfect competition; charge a price that is greater than.

C  Monopoly; charge a price that is greater than marginal cost.

D  Monopoly; earn zero economic profit in the long run.

E  Perfect competition; earn zero economic profit in the long run.

A  Corn Market.

B  Electric utility market.

C  Soy bean market.

D  Fast-food industry.

A  One firm can produce a given quantity at a lower price than having multiple firms producing the same given quantity.

B  There are exceptionally low indivisible setup costs in that industry.

C  Naturally occurring competitive strengths of the firm lower costs.

D  Multiple firms can compete and lower costs.

E  None of the available answers.

A  True

B  False

A  True

B  False

A  False

B  True

A  Producer sovereignty.

B  Consumer sovereignty.

C  Price gouging.

D  Price discrimination.

A  Charges a different price to different customers.

B  Charges the same price to everyone.

C  Has the same level of output as a normal monopolist.

D  Produces where price equals total cost.

E  Produces where P=MR=AVC.

A  Due to the fact that monopolization is inherently unfair.

B  Due to the fact that deadweight loss is inherent when a market is competitive.

C  Due to the fact that higher output will be produced and lower prices will be charged relative to a competitive market.

D  Due to the fact that lower output will be produced and higher prices will be charged relative to a competitive market.

A  Faces a perfectly elastic demand curve for its product.

B  Will always earn economic profits.

C  Faces a perfectly inelastic demand curve for its product.

D  Can influence the price of its product by controlling output.

E  Cannot influence the price of its product.

A  Lower output at a higher price.

B  Lower output at a lower price.

C  Exactly the same manner as a perfect competitor.

D  Larger output at a higher price.

E  Slightly lower output and a much lower price.

A  Decrease production.

B  Increase production.

C  None of the available answers.

D  Maintain the same level of production.

E  Shut down.

A  Due to the fact that in order to sell an additional unit, a monopolist must reduce the price for all of the previous units.

B  Due to the fact that in order to purchase additional unit, a monopolist must increase the price for all of the previous units.

C  Due to the fact that in order to sell an additional unit, a monopolist must increase the price for all of the previous units.

D  Due to the fact that a monopolist is a price taker.

A    

B  Increasing.

C  Constant.

D  Greater than price.

E  Below price.

F  Equal to price.