Question :
41) Although some economists believe network externalities important barriers to : 1244631
41) Although some economists believe network externalities are important barriers to entry, other economists disagree because
A) they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences.
B) they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource.
C) network externalities are really negative externalities.
D) they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale.
42) In discussions of barriers to entry, what is meant by the term “virtuous cycle”?
A) A virtuous cycle refers to successful research and development that leads to information that is used to develop other new products.
B) A virtuous cycle refers to a firm using the profits from a monopoly in one market to establish a monopoly in another market.
C) A virtuous cycle refers to the situation where the pursuit of self-interest in establishing an entry barrier leads to an increase in social welfare (the “invisible hand”).
D) A virtuous cycle refers to a situation where if a firm can attract enough customers initially, it can attract additional customers because its product’s value has been increased by other customers using it, which attracts even more customers.
43) To be a natural monopoly a firm must
A) control a key resource input.
B) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms.
C) have significant network externalities.
D) be very large relative to the total market.
Figure 10-1
44) Refer to Figure 10-1. Which of the following statements about the firm depicted in the diagram is true?
A) The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises.
B) The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.
C) The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises.
D) The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximizes its profits.
45) A natural monopoly is most likely to occur in which of the following industries?
A) the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years
B) the diamond mining and marketing industry because one firm can control a key resource
C) the software industry because of the importance of network externalities
D) an industry where fixed costs are very large relative to variable costs
46) If a restaurant was a natural monopoly, its
A) marginal cost curve would still be declining when it crossed the demand curve.
B) average total cost curve would still be declining when it crossed the demand curve.
C) marginal revenue curve wold be the same as its demand curve.
D) marginal revenue curve would be horizontal.
47) If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would
A) decrease marginal cost.
B) raise average total cost.
C) increase total revenue.
D) make marginal revenue less elastic.
48) A natural monopoly is characterized by large fixed costs relative to variable costs.
49) For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.
50) The National Football League has long-term leases with the stadiums in major cities. Control of these stadiums is an entry barrier to a potential new football league.
