Question : 21) In a natural monopoly, throughout the range of market : 1387900

 

 

21) In a natural monopoly, throughout the range of market demand

A) marginal cost is above average total cost and pulls average total cost upward.

B) average total cost is above marginal cost and pulls marginal cost upward.

C) marginal cost is below average total cost and pulls average total cost downward.

D) there are diseconomies of scale.

 

 

22) To have a monopoly in an industry there must be

A) barriers to entry so high that no other firms can enter the industry.

B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years.

C) an inelastic demand for the industry’s product.

D) a public franchise, making the monopoly the exclusive legal provider of a good or service.

 

 

23) Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

A) The monopoly firm has control of a key resource necessary to produce a good.

B) There are important network externalities in supplying a good or service.

C) large economies of scale that result in a natural monopoly

D) a high concentration ratio

 

24) When the government wants to give an exclusive right to one firm to produce a product, it

A) imposes a tariff on imports of the product.

B) imposes a quota on imports of the product.

C) grants a patent or copyright to an individual or firm.

D) uses antitrust laws to keep other firms from entering the market.

 

 

25) There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?

A) network externalities

B) public franchise

C) economies of scale

D) control of a key resource

 

 

26) When the government makes a firm the exclusive legal provider of a good or service, it grants the firm

A) a copyright.

B) a network externality.

C) a quota.

D) a public franchise.

 

27) A patent

A) grants the creator of a book, film, or piece of music the exclusive right to use the creation for 20 years.

B) grants the creator of a book, film, or piece of music the exclusive right to use the creation during the creator’s lifetime.

C) gives a firm the exclusive right to a new product for 20 years from the date the product is invented.

D) gives the firm the exclusive right to a new product during the product inventor’s lifetime.

 

 

28) Ordinarily, governments attempt to promote competition in markets. Why do governments use patents to block entry into some markets when this prohibits competition?

A) Patents encourage firms to spend money on research necessary to create new products.

B) Politicians sometimes succumb to pressure from lobbyists to grant favors to businesses for political reasons.

C) Patents are an important source of government revenue.

D) Patents are justified because they are an important means for creating network externalities.

 

 

29) Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

A) most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs.

B) prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents.

C) other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents.

D) firms will find ways to obtain additional patent protection—often by making cosmetic changes in drugs that were patented—so that they can continue charging high prices.

 

30) Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market. This reflects which of the following barriers to entry?

A) control of a key resource

B) network externalities

C) entry blocked by government action

D) economies of scale creating a natural monopoly

 

 

 

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