CHAPTER 22 Pure Monopoly

1. Which is most characteristic of a pure monopoly?
A) There is a
dominant firm in a multifirm industry.
B) The firm
produces a good or a service for which there are no close substitutes.
C) The firm
has considerable control over the quantity of the output produced, but not over
price.
D) Exit from
the industry is blocked but entry into the industry is relatively easy.

Type:
A Topic: 1 Level: Easy
E: 424 MI: 190
2. One feature of
pure monopoly is that the monopolist is:
A) a producer of products with close substitutes. C) a
price taker.
B) one of several producers of a product. D) a price
maker.

Type:
A Topic: 1 Level: Easy
E: 424 MI: 190
3. One defining
characteristic of pure monopoly is that:
A) the
monopolist is a price taker.
B) the
monopolist uses advertising.
C) the
monopolist produces a product with no close substitutes.
D) there is
relatively easy entry into the industry, but exit is difficult.

Type:
D Topic: 1 Level: Easy
E: 424 MI: 190
4. Which phrase
would be most characteristic of pure monopoly?
A) close
substitutes B) efficient advertiser C)
price taker D) single seller

Type:
A Topic: 1 Level: Easy
E: 424 MI: 190
5. Under conditions
of pure monopoly:
A) there are close substitutes. C) the firm is a price taker.
B) there is no advertising. D) entry is blocked.

Type:
F Topic: 1 Level: Easy
E: 424 MI: 190
6. The classic
example of a private, unregulated monopoly is:
A) Xerox. B)
De Beers. C) General Motors. D)
General Electric.

Type:
F Topic: 1 Level: Easy
E: 424 MI: 190
7. Which is an
example of a privately-owned monopoly?
A) the De Beers diamond syndicate C) United States Postal Service
B) State of Utah
Liquor Commission Stores D) Nebraska
State Lottery

Barriers
to entry

Type:
A Topic: 2
Level: Moderate E: 424-426 MI: 190-192
8. One major barrier
to entry under pure monopoly arises from:
A) the
availability of close substitutes for a product.
B) ownership
of essential resources.
C) the price
taking ability of the firm.
D) diseconomies
of scale.

Type:
F Topic: 2 Level: Easy
E: 424-426 MI: 190-192
9. Barriers to
entry:
A) usually
result in pure competition.
B) can result
from government regulation.
C) exist in
economic theory but not in the real world.
D) are
typically the result of wrongdoing on the part of a firm.

Type:
A Topic: 2 Level: Moderate E: 424-426
MI: 190-192
10. Which is a barrier
to entry?
A) patents B)
revenue maximization C) profit maximization D)
elastic product demand

Type:
A Topic: 2 Level: Difficult E: 424-426
MI: 190-192
11. A monopoly is most
likely to emerge and be sustained when:
A) output
demand is relatively elastic.
B) firms have
U-shaped, average-total-cost curves.
C) fixed
capital costs are small relative to total costs.
D) economies
of scale are large relative to market demand.

Use
the following to answer question 12:

.gif”>

Type:
G Topic: 2 Level: Moderate E: 425
MI: 191
12. A firm facing the cost
schedules shown in the graph above would probably be:
A) a
monopolistic competitor.
B) a
monopolist facing the market demand alone.
C) a pure
competitor in stiff competition with many other firms in the market.
D) unable to
earn any economic profits unless protected from competition by government
regulations.

Type:
A Topic: 2 Level: Difficult E: 424-426
MI: 190-192
13. Natural monopolies
result from:
A) patents. C) control over an essential natural resource.
B) copyrights. D) extensive economies of scale in production.

Type:
A Topic: 2 Level: Easy
E: 424-426 MI: 190-192
14. Which is a barrier
to entry?
A) close
substitutes B) diseconomies of scale C)
government licensing D) price-taking behavior

Type:
A Topic: 2 Level: Moderate E: 424-426
MI: 190-192
15. Which is a barrier
to entry in an industry?
A) economies
of scale B) allocative efficiency C)
profit maximization D) economic profits
Type:
F Topic: 2 Level: Easy
E: 424-426 MI: 190-192