Question :
51.Drugcompaniesareallowedtobemonopolistsinthedrugstheydiscoverinorderto
a.increasetheavailabilityofexpensivebutusefulmedications.
b.increasetheoverallwelfareofsocietythroughbetterhealthbe : 1261630
51.Drugcompaniesareallowedtobemonopolistsinthedrugstheydiscoverinorderto
a.increasetheavailabilityofexpensivebutusefulmedications.
b.increasetheoverallwelfareofsocietythroughbetterhealthbecausedrugcompaniescontinuallyproducebettermedications.
c.encourageresearch.
d.Alloftheabovearecorrect.
52.Drugcompaniesareallowedtobemonopolistsinthedrugstheydiscoverinorderto
a.allowdrugcompaniestochargeapricethatisequaltotheirmarginalcost.
b.discouragenewfirmsfromenteringthedrugmarket.
c.allowthegovernmenttoearnpatentrevenue.
d.Noneoftheaboveiscorrect.
53.Authorsareallowedtobemonopolistsinthesaleoftheirbooksinorderto
a.encourageauthorstowritemoreandbetterbooks.
b.correctforthenegativeexternalitiesthattheInternetandtelevisionimpose.
c.satisfyliteraryadvocacygroupsthatexercisetheirlobbyingpower.
d.promoteasocietyinwhichpeoplethinkforthemselvesandlearnfromwhicheverbookstheyplease.
54.Authorsareallowedtobemonopolistsinthesaleoftheirbooksinorderto
a.promoteasocietyinwhichpeoplethinkforthemselvesandlearnfromwhicheverbookstheyplease.
b.correctforthenegativeexternalitiesthattheInternetandtelevisionimpose.
c.satisfyliteraryadvocacygroupsthatexercisetheirlobbyingpower.
d.Noneoftheaboveiscorrect.
Figure15-1
55.RefertoFigure15-1.Theshapeoftheaveragetotalcostcurverevealsinformationaboutthenatureofthebarriertoentrythatmightexistinamonopolymarket.Whichofthefollowingmonopolytypesbestcoincideswiththefigure?
a.ownershipofakeyresourcebyasinglefirm
b.naturalmonopoly
c.government-createdmonopoly
d.apatentorcopyrightmonopoly
56.RefertoFigure15-1.Theshapeoftheaveragetotalcostcurveinthefiguresuggestsanopportunityforaprofit-maximizingmonopolisttotakeadvantageof
a.economiesofscale.
b.diseconomiesofscale.
c.diminishingmarginalproduct.
d.increasingmarginalcost.
57.RefertoFigure15-1.Consideringtherelationshipbetweenaveragetotalcostandmarginalcost,themarginalcostcurveforthisfirm
a.mustlieentirelyabovetheaveragetotalcostcurve.
b.mustlieentirelybelowtheaveragetotalcostcurve.
c.mustbeupwardsloping.
d.doesnotexist.
58.RefertoFigure15-1.Consideringtherelationshipbetweenaveragetotalcostandmarginalcost,themarginalcostcurveforthisfirmmust
a.lieentirelyabovetheaveragetotalcostcurve.
b.lieentirelybelowtheaveragetotalcostcurve.
c.beU-shaped.
d.behorizontal.
Scenario15-1
ConsideratransportationcorporationnamedReading’sthathasjustcompletedthedevelopmentofanewlightrailsysteminMinneapolis.Currently,thereareplentyofseatsonthetrain,anditisnevercrowded.Itscapacityfarexceedstheneedsofthecity.Afterjustafewyearsofoperation,theshareholdersofReading’sexperiencedincrediblyhighratesofreturnontheirinvestmentduetotheprofitabilityofthecorporation.
59.RefertoScenario15-1.Whichofthefollowingstatementsismostlikelytobetrue?
(i)NewentrantstothemarketknowtheywillhaveasmallermarketsharethanReading’s
currentlyhas.
(ii)Reading’sisanaturalmonopoly.
(iii)Reading’sismostlikelyexperiencingincreasingaveragetotalcost.
a.(i)and(ii)only
b.(ii)and(iii)only
c.(i)and(iii)only
d.(i),(ii),and(iii)
60.RefertoScenario15-1.Whichofthefollowingstatementsismostlikelytobetrue?
(i)NewentrantstothemarketknowtheywillhaveasmallermarketsharethanReading’s
currentlyhas.
(ii)Reading’sismostlikelyexperiencingdecreasingaveragetotalcost.
(iii)Reading’sisanaturalmonopoly.
a.(i)and(ii)only
b.(ii)and(iii)only
c.(i)and(iii)only
d.(i),(ii),and(iii)
Scenario15-2
Consideralocal,privately-ownedelectricalcooperativenamedPoweshiekPowerCompany(PPCo).PPCohasjustcompletedaclean-coal-burningelectricalpowerplantinIowa.Currently,PPCocanmeettheelectricityneedsofallresidentsinthecounty.Infact,itscapacityfarexceedstheneedsofthecounty.Afterjustafewyearsofoperation,theshareholdersofPPCoexperiencedincrediblyhighratesofreturnontheirinvestmentduetotheprofitabilityofthecorporation.