QUESTION 1
In a contestable market,
- Entry occurs when prices rise above average total costs.
- Many firms compete, which drives prices down to minimum long-run average total cost.
- A few firms use predatory prices to achieve market share.
- A few firms collude to achieve monopoly profits.

QUESTION 2
1. Which of the following is true for a monopolist?
- It faces many competitors.
- Its marginal revenue curve is equal to its demand curve.
- It faces a perfectly elastic demand curve.
- It must lower its price on all of its units in order to sell any additional units

QUESTION 4
1. A monopolist will find that its marginal revenue curve
- Lies above its demand curve and is flatter than its demand curve.
- Lies below its demand curve and is steeper than its demand curve.
- Lies below its demand curve and has the same slope as its demand curve.
- Is the same as its demand curve.

QUESTION 5
1. If the government does not intervene in the market, then
- there will only be 1 firm in this market, and they will take the price as given and produce where price equals marginal cost
- no firms will enter this market
- there will be many firms in this market, all of whom will take the market price as given and produce where price equals marginal cost
- there will only be 1 firm in this market, and they will produce where marginal revenue equals marginal cost

QUESTION 6
1. All of the following can be used to increase monopoly power except
- Antitrust laws.
- Lawsuits.
- Discounts for customer loyalty.
- Acquisitions.

QUESTION 7
1. The primary purpose of antitrust policy in the United States is to
- Regulate monopolies.
- Issue patents.
- Limit foreign competition.
- Encourage competition.

QUESTION 8
1. A monopolist has market power because it
- Is a price taker.
- Is regulated by the government.
- Can raise price as much as it wishes and not lose any customers.
- Faces a downward-sloping demand curve for its own output.

QUESTION 10
1. A barrier to entry is
- An obstacle that prevents additional workers from entering an industry, such as a union.
- An obstacle that makes it difficult for new firms to enter a market.
- A commitment on the part of big business to allow smaller companies to compete.
- A law established by the government to protect new industries

QUESTION 11
1. Which of the following is not an example of price discrimination by the only movie theater in town?
- Charging a lower price for people over the age of 65.
- Charging a lower price for matinees.
- Charging a lower price for children under the age of 12.
- Charging one price at all times for all customers.

QUESTION 1 In a contestable market, - Entry occurs when prices r...