31) Compared to a similar perfectly competitive industry, a single-price monopoly
A) creates a deadweight loss and decreases economic profit.
B) produces more output.
C) creates a deadweight loss and decreases consumer surplus.
D) is more efficient because there is no wasteful competition.
E) sets a lower price because there is less competition.
32) In a monopoly, producers ________ and consumers ________.
A) gain; lose
B) lose; lose
C) lose; gain
D) gain; gain
E) gain; do not gain or lose
33) If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?
A) The producer benefits, but consumers and society are harmed.
B) The producer and society are harmed, but consumers benefit.
C) The producer and society benefit, but consumers are harmed.
D) The producer is harmed, but consumers and society benefit.
E) The producer, consumers, and society all benefit.
34) The Seattle Mariners baseball team has a monopoly on major league baseball in the Northwest. If the Mariners could be purchased by anyone with enough money, we could argue that this purchase is fair according to the
A) fair rules test.
B) fair results test.
C) fair price test.
D) fair output test.
E) allocative fairness test.
35) Rent seeking is the act of obtaining special treatment by ________ to create ________.
A) a monopoly; consumer surplus
B) the government; economic profit
C) consumers; a monopoly
D) the government; consumer surplus
E) competitive producers; a monopoly
36) Rent seeking is defined as
A) charging higher prices for an apartment.
B) the act of obtaining special treatment by the government to create an economic profit.
C) charging a price below marginal cost.
D) selling a greater quantity than is profitable.
E) charging different prices for different units of the good or service.
37) Rent seeking
A) is the act of obtaining special treatment by the government to create economic profit.
B) is the attempt to get rent from tardy renters.
C) occurs when landlords advertise for apartments and other property for rent.
D) is an attempt to sell a property and capture economic profit.
E) occurs when a firm charges different prices for different units of its good or service.
38) If a producer wants a monopoly with a legal barrier to entry, how can this be done?
i.The producer can spend funds lobbying to attain passage of the legal barrier to entry.
ii.The producer can purchase an existing monopoly.
iii.The producer can make rent seeking expenditures.
A) i and ii
B) i and iii
C) ii and iii
D) i, ii, and iii
E) None of the above are ways to acquire a monopoly with a legal barrier to entry.
39) Competition among rent seekers results in
A) higher rents.
B) firms earning normal profits.
C) firms setting lower prices.
D) lower costs.
E) all competing firms earning an economic profit.
40) When a rent-seeking equilibrium is reached, the
A) economic profit is maximized.
B) economic profit is eliminated by legislation.
C) economic profit is eliminated.
D) consumer surplus is greater than without rent seeking.
E) consumer surplus is eliminated.
41) If a perfectly competitive industry is taken over by a single firm that operates as a single-price monopoly, the price will ________ and the quantity will ________.
A) fall, decrease
B) fall, increase
C) rise, decrease
D) rise, increase
E) not change; decrease
42) Comparing single-price monopoly to perfect competition, monopoly
A) increases the amount of consumer surplus.
B) has the same amount of consumer surplus.
C) has no consumer surplus.
D) decreases the amount of consumer surplus.
E) decreases the amount of economic profit.
43) Is a single-price monopoly efficient?
A) Yes, because it creates a deadweight loss.
B) No, because it creates a deadweight loss.
C) Yes, because consumers gain and producers lose some of their surpluses.
D) Yes, because consumers lose and producers gain some of their surpluses.
E) Yes, because it produces the quantity at which MR=MC.
44) Monopolies ________ fair and ________ efficient.
A) are always; are not
B) might be; are always
C) might be; might be
D) are always; are always
E) are never; are always
45) In equilibrium, rent seeking eliminates the
A) deadweight loss.
B) economic profit.
C) consumer surplus.
D) demand for the product.
E) opportunity to price discriminate.
