Economics Questions

Price discrimination is best defined asA: Charging an excessive price for a productB: The charging of different prices by different companies for the same productC: The selling of an identical good at different prices to different consumers by a single sellerD: The selling of differentiated goods to consumers at different prices

According to the text, one argument in favor of concentration of market power is thatA: Market power increases incentives for innovation and inventionB: Market power provides for greater investment in research and developmentC: The exercise of market power provides a more desirable mix of outputD: Large firms can sometimes produce more efficiently than smaller firms because of economies of scale in production

Market power isA: A characteristic of all market structuresB: The ability to alter the market price of a productC: Most common for competitive firmsD: Enjoyed by all firms at high levels of output

A monopoly occurs when one firm produces all of the market supply of a good or serviceTrue or False

A patent gives a firm the exclusive right to produce a product forA: 6 monthsB: 2 yearsC: 20 yearsD: Forever

Even if a market is not competitive, the firms in the market may behave competitively ifA: Potential competition existsB: There are economies of scaleC: A natural monopoly existsD: The market is regulated

Economies of scale involve a reduction in minimum average costs as a result of an increase the size of plants and equipmentTrue or False

Markets that exhibit economies of scale over the entire range of market outputA: Are natural monopoliesB: Are perfectly competitiveC: Have downward sloping short run average total cost curvesD: Have upward sloping long run average total cost curves

Economies of scale over the entire range of market outputA: Lead to higher levels of competitionB: Become a low barrier to entry, preventing a market from being contestableC: Mean that as the size of a firm increases, its minimum average total costs riseD: Mean that the long run average total cost curve is downward sloping

A barrier to entry isA: A law established by the govt. to protect new industriesB: A commitment on the part of bug business to allow smaller companies to competeC: An obstacle that prevents additional workers from entering an industry, such as a unionD: An obstacle that makes it difficult for new firms to enter a market

The argument that concentration of market power enhances research and development efforts may be weak becauseA: Monopolies cannot afford basic researchB: A monopoly may have no clear incentive to pursue new research and developmentC: No one has attempted to gather an empirical evidenceD: No existing monopoly has a research and development

Consumers may not experience the benefits of economies of scale because a natural monopolyA: Has higher costs with higher outputB: Engages in marginal cost pricingC: Increases output beyond efficient levelsD: Charges prices higher than competitive levels

According to the theory of contestable markets, monopoly may not be a problem ifA: The structure of a market is competitiveB: Antitrust regulations are enforcedC: Firms can exit from the marketD: Potential competition exists

In a contestable marketA: Entry occurs when prices rise above average total costsB: Many firms compete, which drives prices down to minimum long run average total costC: A few firms use predatory prices to achieve market shareD: A few firms collude to achieve monopoly profits

In a contestable marketA: Product differentiation results in non-price competition as well as price competitionB: There are economies of scale that heighten competitionC: Barriers to entry and long run economic profits are lowD: Many forms computer in producing a standardized product

Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition. This is most likely becauseA: There are no economies of scale in this industryB: It operates in a contestable marketC: It is a natural monopolyD: It care more about customer's well being than its own

If the entire output of a market is produced by a single seller, the firmA: Is a monopolyB: Faces perfectly inelastic demandC: Can charge any price it wants and not lose customersD: Is producing a new product

expansionary fiscal policy- What happens to AD

expansionary fiscal policy- what happens to demand of loanable funds

expansionary monetary policy- what happens to supply of money