Economics part 2

A(n) ______ exists when increasing returns to scale provide a large cost advantage to a single firm that produces all of an industry's output.

•   oligopoly

• competitive equilibrium

• legal monopoly

• natural monopoly

A(n)______ gives an inventor a temporary monopoly on the use or sale of an invention.

• patent

• copyright

• monopoly

• externality

Most electric, gas, and water companies are examples of _____ monopolies.

• unregulated

• natural

• restricted-input

• sunk-cost

  Suppose you were the only firm that has an official license to sell corn dogs in your community. Your monopoly would result from:

• control of a scarce resource or input.

• technological superiority.

• increasing returns to scale.

• government-created barriers.

The land you own has the only known source of macinannea root, needed to make a special anti-inflammatory itch lotion. In this case, your monopoly results from:

• government restrictions.

• location.

• sunk costs.

• ownership of scarce inputs.

  Suppose that Intel (a monopoly computer chip maker) increases production from 10 microchips to 11 microchips, causing the market price to fall from $30 per unit to $29 per unit. Marginal revenue from the 11th unit is:

• $1.

• $9.

• $19.

• $29.

James operates a monopoly hiking gear store in the woodland trails near his home in the Ozarks. He is currently producing at an output level where marginal revenue equals marginal cost. If James were to reduce his output, he:

• can charge a higher price.

• will increase profits.

• will decrease marginal revenue.

• can't change the price because it is a price taker.

A monopoly is producing output, with an average total cost is $60, marginal revenue of $80, and a price of $100. If ATC is at its minimum, and the ATC curve is U-shaped, to maximize profits, this firm should:

• increase output.

• reduce output.

• do nothing; it is already maximizing profits.

• shut down.

A monopolist responds to a decrease in demand by _____ price and _____ output.

• increasing; decreasing

• increasing; increasing

• decreasing, increasing

• decreasing; decreasing

A monopolist responds to an increase in marginal cost by _____ price and _____ output.

•   increasing; decreasing

• increasing; increasing

• decreasing; increasing

• decreasing; decreasing