Question

Which of the following statements is correct?

A) The monopolist's supply curve is its MC curve.

B) The monopolist's supply curve is that section of its MC curve that lies above its AVC curve.

C) The monopolist's supply curve is that section of its MC curve that lies above its MR curve.

D) The monopolist does not have a supply curve.

Answer:

13) All of the following are measures of market power except the:

A) Lerner Index.

B) Minimum-Efficient Scale Index.

C) four-firm concentration ratio for an industry.

D) Herfindahl-Hirschman Index.

Answer:

14) The Sherman Antitrust Act:

A) prohibits conspiracies in restraint of trade.

B) allows the formation of trusts so long as they are public enterprises.

C) allows a group of firms to form a trust only if it is done to take advantage of economies of scale.

D) prevents the military from using armored vehicles on the public streets.

Answer:

15) Which of the following characteristics is common to both monopoly and monopolistic competition?

A) Ease of entry into the industry.

B) Firms are price setters.

C) A relatively large number of sellers.

D) Long-run economic profit equals 0.

Answer:

16) Which of the following is not a characteristic of an oligopolistic industry?

A) Substantial barriers to entry.

B) The output produced by the firms in the industry may be homogeneous or differentiated.

C) A small number of large firms.

D) One dominant firm and low entry barriers.

Answer 1

12. D) The monopolist does not have a supply curve.
(The monopolist unlike a perfectly competitive firm does not have a supply curve because it is single firm in its industry and thus is a price setter.)

13. B) Minimum-Efficient Scale Index.
(All the other three are a measure of market power but Minimum-Efficient Scale Index is not a measure of market power.)

14. A) prohibits conspiracies in restraint of trade.
(This act made all conspiracies which prohibit or restraint trade illegal.)

15. B) Firms are price setters.
(Due to lesser number of firms, both monopolistic and monopolistic competitive firms are price setters.)

16. D) One dominant firm and low entry barriers.
(There is not just one dominant firm and there are large entry barriers under oligopoly.)