Question

11. Natural monopolies arise because of:

A. Government licenses.

B. Patents on technological innovations.

C. Economies of scale.

D. Control over an important natural resource.

12. For a perfectly competitive firm, its long run supply curve is:

A. Horizontal.

B. its marginal cost curve above minimum average variable cost.

C. its marginal cost curve above minimum average total cost.

D. its average variable cost curve below the break-even (zero-profit) point.

13. In the long run for a perfectly competitive firm, no barriers to entry and exit ensures that:

A. There will be no positive economic profits.

B. There will be no negative economic profits.

C. The market price is equal to average total cost.

D. All of the above

14. The primary reason that monopoly produces a deadweight loss to society is:

A. There is less consumer surplus under monopoly than under perfect competition.

B. There is more producer surplus under monopoly than under perfect competition.

C. Some of the consumer surplus under perfect competition is shifted to the monopolist in the form of producer surplus.

D. The loss of consumer surplus exceeds the gain in producer surplus under monopoly.

15. Which is the correct ranking from Most Efficient to Least Efficient type of industry?

I. Perfect Competition, Monopoly, Oligopoly, Monopolistic Competition

II. Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly

III. Monopoly, Monopolistic Competition, Oligopoly, Perfect Competition

IV. Monopoly, Oligopoly, Perfect Competition, Monopolistic Competition

16. A monopoly maximizes profits or minimizes losses in the short-run by:

A. Setting price equal to marginal cost.

B. Producing output at the level where ATC is minimized.

C. Producing output at the level where P = AVC.

D. Producing output at the level where MR = MC.

17. Which of the following is NOT a reason for the existence of a monopoly?

A. Patents that protect the holder