Question : 32) In a monopoly, producers and consumers . A) gain; : 1241243

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) Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in

A) bidding up the price of the license so that the winning firm makes $0 economic profit.

B) the winning firm making an economic profit because it will be a price maker.

C) the winning firm making an economic profit because it will have no competition.

D) the winning firm making an economic profit because rent seeking cannot occur.

E) a $0 economic profit because monopolies are illegal.

35) 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.

36) 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

37) 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.

38) 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.

39) 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.

40) 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.

41) 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.

42) 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

43) 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.

44) 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.

45) 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

46) 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.

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July 1, 2023

21. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of .01% to .02% of credit sales.

22. The percentage-of-completion method measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.

23. A common-size income statement expresses each expense and net income as a percentage of
A. assets.
B. revenues.
C. liabilities.
D. expenses.
E. shareholders’ equity.

24. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability,
A. U.S. GAAP would permit revenue to be recognized, but IFRS would not permit revenue to be recognized.
B. U.S. GAAP would not permit revenue to be recognized, but IFRS would permit revenue to be recognized.
C. neither U.S. GAAP nor IFRS would permit revenue to be recognized.
D. U.S. GAAP and IFRS would permit revenue to be recognized.
E. none of the above

25. Which section includes income derived from a firm’s primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital

26. Operating risks
A. include variability in sales from changing economic conditions (cyclicality risk).
B. include variability in sales from short product life cycles (because of technological change or changes in consumer taste).
C. include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change.
D. Answers a, b, and c are correct.
E. None of these answer choices is correct.

27. Ulrich Co. sells an asset to a buyer for a total sales price of $6,000 with a payment schedule of $2,000 in year 1, $2,000 in year 2, and $2,000 in year 3. The cost of the asset is $5,000. Under the cost-recovery-first method, what amount of net profit is recognized in year 3?
A. $2,000
B. $1,000
C. $666.67
D. $333.33
E. $0

28. Which of the following is true regarding income recognition?
A. The seller must have substantially performed its obligations to the customer (for example, by transferring ownership of goods to the customer).
B. The seller must have obtained an asset from the customer that it can reliably measure. If the asset is not cash, the seller must be reasonably certain of converting it into cash.
C. The firm recognizes expenses when it consumes assets.
D. If an event or transaction leads to the recognition of revenue, the firm matches the consumption of any assets (the expense), in time, with the revenue recognized.
E. all of the above

29. Cowden Properties

Cowden Properties sold a condominium to Ms. Roberts for $90,000. Cowden originally acquired the condo at a cost of $40,000 and made improvements to the unit totaling $20,000. The contract for sale required Ms. Roberts to pay the $90,000 as follows: