Monopoly Concepts and other Competition related concepts

A natural monopoly exists whenever a single firm ______.
is owned and operated by the federal or local government
is investor owned but has been granted the exclusive right by the government to operate in a market
confronts economies of scale over the entire range of production that is relevant to its market
has gained control over a strategic input of an important production process

Marginal revenue for a monopolist is ______.
equal to price
greater than price
less than price
equal to average revenue

In a monopoly in the long run ______.
economic profits will be eliminated by the entry of rival firms
economic profits will be reduced, but not eliminated entirely, by the entry of rival firms
entry will not occur
none of the above is true

In monopoly _______.
because P > MC, a basic condition for efficiency is violated
consumers are confronted with a price that is lower than marginal cost
consumers will consume more of the good than is economically efficient
all of the above are true

To practice effective price discrimination, a monopolist must be able to ______.
estimate its own production and cost functions
avoid detection by government regulatory agencies
prevent the resale of goods among groups of buyers
calculate the utility level of each buyer in the market

A concentration ratio is used to measure ______.
efficiency
diseconomies of scale
marginal cost
market dominance

If the only two firms in an industry agree to fix the price at a given level, this is an example of ______.
collusion
satisfying
price extortion
price leadership

When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits, those firms are practicing ______.
overt collusion
tacit collusion
leadership price
competitive game

A cartel is an example of ______.
price extortion
price leadership
overt collusion
tacit collusion

A dominant strategy equilibrium exists in a game when ______.
every player has no choice
every player makes the same choice, regardless of the action of the other players
each player makes the best choice, given the choice of the other player
no player is able to dictate the actions of any other player

When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a ______.
dormant strategy
trigger strategy
conclusive strategy
tit-for-tat strategy

An industry characterized by many firms, producing similar but differentiated products, in a market with easy entry and exit is called ______.
perfect competition
monopoly
monopolistic competition
oligopoly

In large shopping areas, the retail market is most illustrative of ______.
monopolistic competition
monopoly
perfect competition
perfect oligopoly

A feature of monopolistic competition that makes it different from monopoly is the ______.
fact that firms in the model of monopolistic competition follow the marginal decision rule while monopolies do not
downward-sloping demand curve
downward-sloping marginal revenue curve
number of firms in the industry

Product differentiation under monopolistic competition means that each firm ______.
charges the same price
maximizes profit where MC = P
faces a downward-sloping demand curve
receives economic profits

Product differentiation under monopolistic competition means that each firm ______.
charges slightly different prices
has a pure monopoly
maximizes profit where MC = P
faces a horizontal demand curve

Monopolistic competition within an industry results in ______.
overutilization of plants
chronic excess capacity
less advertising than in perfect competition
lower prices than in perfect competition

Critics of advertising argue that it ______.
tends to make markets more perfect
leads to low-cost mass production
results in higher prices to consumers
encourages competition through new-product advertising

If an activity generates external costs, decision makers generating the activity will ______.
be faced with its full costs
be faced with no costs
not be faced with its full costs
be faced with excessive costs

A tax system _______ when it minimizes the direct and indirect costs to the economy of tax collection.
is efficient
is equitable
has no deadweight loss
is both A and B

Criteria that economists use in selecting a tax system include ______.
ability to pay and benefits received
fairness
only benefits received
only ability to pay

Sales taxes are considered to be ______.
proportional
progressive
degressive
regressive