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:
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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