71.Whenafirm’saveragetotalcostcurvecontinuallydeclines,thefirmisa a.government-createdmonopoly. b.naturalmonopoly. c.revenuemonopoly. d.Alloftheabovearecorrect. 72.Anaturalmonopolist’sabilitytopriceitsproductis a.constrainedbythemarketdemandcurve. b.constrainedbymarketsupply. c.notaffectedbymarketdemand. d.enhancedbyregulatorycontrolofthegovernment. 73.Whenanindustryisanaturalmonopoly, a.itischaracterizedbyconstantreturnstoscale. b.itischaracterizedbydiseconomiesofscale. c.alargernumberoffirmsmayleadtoaloweraveragecost. d.alargernumberoffirmswillleadtoahigheraveragecost. Figure15-2   74.RefertoFigure15-2.Whichofthefollowingreasonsdescribesthefundamentalbarriertoentryforthemonopolyinthefigure? a.monopolyresources b.governmentregulation c.theproductionprocess d.Bothaandbarecorrect. 75.Ifthedistributionofwaterisanaturalmonopoly,then a.(i)and(ii)only b.(ii)and(iii)only c.(i)and(iii)only d.(iii)only 76.Afirmthatisanaturalmonopoly a.isnotlikelytobeconcernedaboutnewentrantserodingitsmonopolypower. b.istakingadvantageofeconomiesofscale. c.wouldexperienceahigheraveragetotalcostifmorefirmsenteredthemarket. d.Alloftheabovearecorrect. 77.Afirmthatisanaturalmonopoly a.isnotlikelytobeconcernedaboutnewentrantserodingitsmonopolypower. b.istakingadvantageofdiseconomiesofscale. c.wouldexperiencealoweraveragetotalcostifmorefirmsenteredthemarket. d.Alloftheabovearecorrect. 78.Additionalfirmsoftendonottrytocompetewithanaturalmonopolybecause a.theyfearretaliationintheformofpricingwarsfromthenaturalmonopolist. b.theyareunsureofthesizeofthemarketingeneral. c.theyknowtheycannotachievethesamelowcoststhatthenaturalmonopolistenjoys. d.thenaturalmonopolydoesnotmakealargeprofit. 79.Whenasinglefirmcansupplyaproducttoanentiremarketatalowercostthancouldtwoormorefirms,theindustryiscalleda a.resourceindustry. b.exclusiveindustry. c.governmentmonopoly. d.naturalmonopoly. 80.Anaturalmonopolyariseswhen a.thereareconstantreturnstoscaleovertherelevantrangeofoutput. b.thereareeconomiesofscaleovertherelevantrangeofoutput. c.onefirmownsakeynaturalresource. d.thegovernmentgivesasinglefirmtheexclusiverighttoproduceaparticulargoodorservice. 81.Whenafirmhasanaturalmonopoly,thefirm’s a.marginalcostalwaysexceedsitsaveragetotalcost. b.totalcostcurveishorizontal. c.averagetotalcostcurveisdownwardsloping. d.marginalcostcurvemustlieabovethefirm’saveragetotalcostcurve. 82.Ifgovernmentofficialsbreakupanaturalmonopolyintofoursmallerfirms,then a.eachfirmwillbeunabletomaximizeprofitsduetoincreasedcompetition. b.competitionwillforcefirmstoproducesurplusoutput,whichdrivesupprice. c.theaveragecostofproductionwillincrease. d.consumerswillbenefitfromloweraveragetotalcosts. 83.Whenthereareeconomiesofscaleovertherelevantrangeofoutputforamonopoly,the a.isanaturalmonopoly. […]

  3.1   The Demand Side of the Market   1) The market for smartphones has become very competitive. The increase in competition in this market is an example of how the market responds to A) decreases in the price of desktop computers (a substitute for the product). B) increases in income. C) changes in population. D) changes in consumer tastes.     2) If you […]

  11) Which of the following represents a derived demand? Demand for A) a taco by Sam when she is hungry. B) golf balls by Jose, who is planning on going golfing with his boss. C) a grocery clerk by the local Safeway. D) an automobile by Jack, who wants a car to get to school. E) new clothing by Shaniq, who is starting a […]

    117.Donner Corporation had net income of $400,000 and paid dividends to common stockholders of $40,000 in 2013. The weighted average number of shares outstanding in 2013 was 50,000 shares. Donner Corporation’s common stock is selling for $50 per share on the New York Stock Exchange. Donner Corporation’s payout ratio for 2013 is a.$8 per share. b.10%. c.12.5%. d.20%.     118.Town Company reported […]

    31) Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making A) a decision that does not involve an opportunity cost. B) a rational decision if her marginal cost from the movie is greater than her marginal benefit. C) a rational decision if her marginal benefit from the movie is greater than […]

  The following figure shows the marginal revenue (MR) and demand curves faced by a monopolist. 11) Refer to the figure above. If the monopolist faces a constant marginal cost of $6, what is the optimal quantity that he should produce? A) 20 units B) 30 units C) 40 units D) 60 units 12) Refer to the figure above. If the monopolist faces a constant […]

    31) The desired reserve ratio is 3 percent. Robert deposits $3,000 in Bank America. Bank America keeps its minimum desired reserves and lends the excess to Fredrica. How much does Bank America lend to Fredrica? A) $3,000 B) $2,910 C) $300 D) $2700 E) $900 Answer:  B Topic:  Money creation process Skill:  Level 3: Using models Section:  Checkpoint 11.4 Status:  CD new   […]

  1.4   Integrative Questions 1) Suppose you decide to attend summer school and that this is considered a rational choice. When making this choice, A) you must ignore the problem of scarcity. B) you considered the marginal cost and marginal benefit of your choice. C) you have used the ceteris paribus assumption. D) you have made a positive statement. E) you must have considered the […]

  121.RefertoFigure26-4.If theequilibrium quantity ofloanable funds is$56 billion andif the rateof inflation is5percent,thentheequilibriumnominalinterestrateis a.11percent. b.approximately6percent. c.between6percentand8percent. d.between11percentand13percent. 122.Foranimaginaryeconomy,whentherealinterestrateis7percent,thequantityofloanablefundsdemandedis$500andthequantityofloanablefundssuppliedis$500.Currently,thenominalinterestrateis9percentandtheinflationrateis4percent.Currently, a.themarketforloanablefundsisinequilibrium. b.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillrise. c.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillfall. d.thequantityofloanablefundsdemandedexceedsthequantityofloanablefundssupplied,andasaresulttherealinterestratewillrise. 123.Foranimaginaryeconomy,whentherealinterestrateis5percent,thequantityofloanablefundsdemandedis$1,000andthequantityofloanablefundssuppliedis$1,000.Currently,thenominalinterestrateis9percentandtheinflationrateis2percent.Currently, a.themarketforloanablefundsisinequilibrium. b.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillrise. c.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillfall. d.thequantityofloanablefundsdemandedexceedsthequantityofloanablefundssupplied,andasaresulttherealinterestratewillrise. 124.Foranimaginaryeconomy,whentherealinterestrateis5percent,thequantityofloanablefundsdemandedis$100,000andthequantityofloanablefundssuppliedis$100,000.Currently,thenominalinterestrateis6percentandtheinflationrateis2percent.Currently, a.themarketforloanablefundsisinequilibrium. b.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillrise. c.thequantityofloanablefundssuppliedexceedsthequantityofloanablefundsdemanded,andasaresulttherealinterestratewillfall. d.thequantityofloanablefundsdemandedexceedsthequantityofloanablefundssupplied,andasaresulttherealinterestratewillrise. 125.Whenthegovernmentgoesfromrunningabalancedbudgettorunningabudgetsurplus, a.nationalsavingdecreases,theinterestraterises,andtheeconomy’slong­rungrowthrateislikelytodecrease. b.nationalsavingincreases,theinterestratefalls,andtheeconomy’slong­rungrowthrateislikelytodecrease. c.nationalsavingdecreases,theinterestraterises,andtheeconomy’slong­rungrowthrateislikelytoincrease. d.nationalsavingincreases,theinterestratefalls,andtheeconomy’slong­rungrowthrateislikelytoincrease. 126.Whichofthefollowingpolicychangeswouldleadtoadecreaseintherealinterestrateandanincreaseininvestmentandsaving? a.alargerinvestmenttaxcredit b.anexpansionofeligibilityforIndividualRetirementAccounts c.anincreaseinincome-taxrates,withnochangeinthegovernmentbudgetdeficitorsurplus d.anincreaseingovernmentpurchases,withnochangeintaxes 127.Asrealinterestratesfall,firmsdesireto a.buymorenewequipmentandbuildings.Thisresponsehelpsexplainwhythesupplyofloanablefundsisupwardsloping. b.buymorenewequipmentandbuildings.Thisresponsehelpsexplainwhythedemandforloanablefundsisdownwardsloping. c.buylessnewequipmentandbuildings.Thisresponsehelpsexplainwhythesupplyofloanablefundsisupwardsloping. d.buylessnewequipmentandbuildings.Thisresponsehelpsexplainwhythedemandforloanablefundsisdownwardsloping. 128.Theslopeofthesupplyofloanablefundsisbasedonthelogicthatanincreaseininterestrates a.makessavingmoreattractive. b.makessavinglessattractive. c.makesinvestmentmoreattractive. d.makesinvestmentlessattractive. 129.Ifthequantityofloanablefundsdemandedexceedsthequantityofloanablefundssupplied, a.thereisasurplussointerestrateswillrise. b.thereisasurplussointerestrateswillfall. c.thereisashortagesointerestrateswillrise. d.thereisashortagesointerestrateswillfall. 130.Whichofthefollowingcouldexplainadecreaseintheinterestrateandanincreaseintheequilibriumquantityofinvestment? a.thesupplyofloanablefundsshiftedright. b.thesupplyofloanablefundsshiftedleft. c.thedemandforloanablefundsshiftedright. d.thedemandforloanablefundsshiftedleft.    

    11) After a tariff is imposed, consumers must pay a price equal to the A) world market price. B) domestic equilibrium price when there is no trade. C) world market price plus the tariff. D) world market price less the tariff. E) domestic equilibrium price when there is no trade plus the tariff.   12) Suppose the world price of widgets is $5 […]