Chapter 15 Monopoly
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. _ __ 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. _ __
1. Monopolies use their market power to ( c )
a. charge prices that equal minimum average total cost. b. attain normal profits in the long run. c. restrict output and increase price.
d. dump excess supplies of their product on the market.
2. If government officials break a natural monopoly up into several smaller firms, then ( c )
a. competition will force firms to attain economic profits rather than accounting
profits.
b. competition will force firms to produce surplus output, which drives up price. c. the average costs of production will increase. d. the average costs of production will decrease.
3. Sizable economic profits can persist over time under monopoly if the monopolist ( b )
a. produces that output where average total cost is at a maximum. b. is protected by barriers to entry.
c. operates as a price taker rather than a price maker. d. realizes revenues that exceed variable costs.
4. Most markets are not monopolies in the real world because ( d )
a. firms usually face downward-sloping demand curves. b. supply curves slope upward.
c. price is usually set equal to marginal cost by firms. d. there are reasonable substitutes for most goods.
Chapter 15 (4-1)
Consider the following demand and cost information for a monopoly. QUANTITY PRICE TOTAL COST 0 $40 $10 1 $30 $15 2 $20 $25 3 $10 $40 4 $0 $60
5. The marginal revenue of th