Question : 31) Refer to Figure 10-12. Assume the firm maximizes its : 1244615

31) Refer to Figure 10-12. Assume the firm maximizes its profits. What is the amount of consumer surplus?

A) $21

B) $124

C) $186

D) $332

32) Refer to Figure 10-12. What is the amount of consumer surplus if, instead of monopoly, the industry was organized as a perfectly competitive industry?

A) $21

B) $124

C) $186

D) $332

33) Refer to Figure 10-12. If this industry was organized as a perfectly competitive industry, the market output and market price would be

A) output = 62; price = $24.

B) output = 83; price = $22.

C) output = 62; price = $18.

D) output = 104; price = $20.80.

34) Refer to Figure 10-12. If the firm maximizes its profits, the deadweight loss to society due to this monopoly is equal to the area

A) ABF.

B) ABEG.

C) ACE.

D) EFG.

35) The ability of a firm to charge a price greater than marginal cost is called

A) monopoly power.

B) price-making power.

C) cost-plus pricing.

D) market power.

36) Whenever a firm can charge a price greater than marginal cost,

A) the firm must be a monopolist.

B) there is some loss of economic efficiency.

C) consumers have the ability to choose a close substitute.

D) the firm will earn economic profits.

37) The only firms that do not have market power are

A) firms in industries with low barriers to entry.

B) firms that do not advertise their products.

C) firms in perfectly competitive markets.

D) firms that sell identical products.

38) Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that

A) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production.

B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States.

C) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production.

D) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent.

39) Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Since Harberger’s findings were published, other researchers have studied this same issue. How do the results of these researchers compare to Harberger’s results?

A) The other researchers reached conclusions similar to Harberger’s; namely, the loss of economic efficiency due to market power is about 10 percent of the value of production in the United States.

B) The other researchers reached conclusions different from Harberger’s; namely, they found that the loss of economic efficiency due to market power is only about 1 percent of the value of production in the United States, much less than Harberger’s estimate.

C) The other researchers reached conclusions different from Harberger’s; namely, the loss of economic efficiency due to market power is about 10 percent of the value of production in the United States, significantly greater than Harberger’s estimate.

D) The other researchers reached conclusions similar to Harberger’s; namely, the loss of economic efficiency due to market power is about 1 percent of the value of production in the United States.

40) In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

A) the greater the difference between marginal cost and price.

B) the smaller the difference between marginal cost and average total cost.

C) the smaller the difference between marginal cost and price.

D) the greater the difference between marginal cost and average revenue.