1. The situation where one person's demand for a good depends on the consumption of the good by others is called a
A. production externality.
B. network externality.
C. network internality.
D. consumption externality.
2.An exclusive right to sell a new and useful product, process, substance, or design for a fixed period of time is called a
A. patent.
B. barrier to entry.
C. research disincentive.
D. monopoly.
3.If the demand for a monopoly's output shifts rightward, the change in quantity produced is not predictable because
A. the monopoly's marginal cost curve might not be upward sloping.
B. the monopoly has no supply curve.
C. the monopoly is a profit maximize.
D. the monopoly is a price taker.
4. Which of the following is most likely the most beneficial form of monopoly advantage?
A. better production methods
B. input hoarding
C. government protection
D. decreasing returns to scale
5. A monopoly shuts down when
A. the short run price is below its average variable costs.
B. the long run price is below its average variable costs.
C. never, because it can raise its prices as high as necessary to keep operating and maximize profits.
D. the average cost is less than price.
6. One difference between a monopoly and a competitive firm is that
A. a monopoly faces a downward sloping demand curve.
B. a monopoly is a price taker.
C. a monopoly maximizes profit by setting marginal revenue equal to marginal cost.
D. None of the above.
7. If a monopoly's demand curve shifts to the right the monopoly
A. will charge a higher price.
B. will sell more.
C. will charge a lower price.
D. decision cannot be determined.
8. If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then the firm's Lerner Index equals
A. 16/42.
B. 42/58.
C. 58/42.
D. 58/16.
9. A monopoly that is maximizing profits never operates in the ________ portion of the demand curve.
A. horizontal
B. inelastic
C. unitary elastic
D. elastic
10. Which of the following could create a cost advantage for a monopoly?
A. lower friction due to better organization
B. standardization
C. better technology
D. All of the above.