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Parkin/Bade,Economics:CanadaintheGlobalEnvironment,8eCopyright©2013PearsonCanadaInc.545Chapter13Monopoly13.1MonopolyandHowItArises1)AnexclusiverightgrantedtoafirmtosupplyagoodorserviceisA)alicence.B)apatent.C)apublicfranchise.D)theessentialcharacteristicofnaturalmonopoly.E)aneconomyofscale.Answer:CDiff:1Type:MCTopic:MonopolyandHowItArises2)AnaturalmonopolyexistswhenA)thegovernmentprotectsthefirmbygrantinganexclusivefranchise.B)productioncantakeplacewithconstantreturnstoscale.C)therearenorivalsinthemarket.D)onefirmcansupplytheentiremarketatalowercostthantwoormorefirms.E)theaveragetotalcostcurveisupwardsloping.Answer:DDiff:1Type:MCTopic:MonopolyandHowItArises3)Inanaturalmonopoly,thelong-runaveragecostcurveA)isdownwardslopingintherelevantrangeofoutputlevels.B)ishorizontalintherelevantrangeofoutputlevels.C)isupwardslopingintherelevantrangeofoutputlevels.D)maybeeitherupwardslopingordownwardslopingintherelevantrangeofoutputlevels.E)liesbelowthemarginalcostcurve.Answer:ADiff:2Type:MCTopic:MonopolyandHowItArises4)Whichoneofthefollowingisanexampleofanaturalbarriertoentryofnewfirmsintoanindustry?A)licensingofprofessionsB)economiesofscaleC)issuingapatentD)apublicfranchiseE)alloftheaboveAnswer:BDiff:2Type:MCTopic:MonopolyandHowItArisesSource:StudyGuideParkin/Bade,Economics:CanadaintheGlobalEnvironment,8eCopyright©2013PearsonCanadaInc.5465)Topreventmonopolyfromarising,theremustbeA)asinglesupplierofagoodinthemarket.B)noclosesubstitutesforthegood.C)barrierspreventingentryofotherfirms.D)freedomofentryintothemarket.E)economiesofscale.Answer:DDiff:2Type:MCTopic:MonopolyandHowItArises6)SupposeinanindustryafirmrealizeseconomiesofscaleovertheentirelengthofitsLRACcurve.Inthissituation,thefirmisA)anaturalmonopoly.B)afixed-costmonopoly.C)anoutput-discriminatingmonopoly.D)aperfect-pricediscriminatingmonopoly.E)aconstanttotalvariablecostmonopoly.Answer:ADiff:2Type:MCTopic:MonopolyandHowItArises7)Whichofthefollowingisleastlikelytobeanaturalmonopoly?A)subwayservicesB)electricutilitiesC)waterandsewerservicesD)taxicabserviceE)cabletelevisionservicesAnswer:DDiff:2Type:MCTopic:MonopolyandHowItArises8)Asingle-pricemonopolyisafirmthat________eachunitofitsoutput________.A________monopolysellsdifferentunitsofagoodorservicefordifferentprices.A)produces;ataconstantcost;discriminatoryB)mustsell;forthesamepricetoallitscustomers;price-discriminatingC)produces;ataconstantcost;price-discriminatingD)mustsell;forthesamepricetoallitscustomers;discriminatoryE)mustsell;atthesamepriceasaperfectlycompetitivefirm;price-discriminatingAnswer:BDiff:2Type:MCTopic:MonopolyandHowItArisesSource:MyEconLabParkin/Bade,Economics:CanadaintheGlobalEnvironment,8eCopyright©2013PearsonCanadaInc.5479)CanadaPosthasamonopolyonresidentialmaildelivery.PfizerInc.makesLIPITOR,aprescriptiondrugthatlowerscholesterol.RogersCommunicationsisthesoleproviderofcabletelevisionserviceinsomepartsofOntario.Themonopolieswhicharelegalmonopoliesare________.A)onlyPfizerB)CanadaPost,Pfizer,andRogersCommunicationsC)CanadaPostandPfizerD)onlyCanadaPostE)noneoftheaboveAnswer:CDiff:2Type:MCTopic:MonopolyandHowItArisesSource:MyEconLab10)CanadaPosthasamonopolyonresidentialmaildelivery.PfizerInc.makesLIPITOR,aprescriptiondrugthatlowerscholesterol.RogersCommunicationsisthesoleproviderofcabletelevisionserviceinsomepartsofOntario.Themonopolieswhichprofitfrompricediscriminationare________.A)CanadaPostandRogersCommunicationsB)onlyPfizerC)onlyCanadaPostD)allthreemonopoliesE)noneoftheaboveAnswer:DDiff:2Type:MCTopic:MonopolyandHowItArisesSource:MyEconLab11)Amonopolyarisesfortwokeyreasons,whichare________.A)barrierstoentryandnoclosesubstitutesB)franchisesandbarrierstoentryC)barrierstoentryandclosesubstitutesD)closesubstitutesandnobarrierstoentryE)naturalandlegalAnswer:AType:MCTopic:MonopolyandHowItArisesSkill:RecognitionAACSB:ReflectiveThinkingParkin/Bade,Economics:CanadaintheGlobalEnvironment,8eCopyright©2013PearsonCanadaInc.54812)AmonopolyisamarketwithasinglefirmthatA)producesagoodorserviceforwhichnoclosesubstituteexistsandwhichisprotectedbyabarrierthatpreventsotherfirmsfromsellingthatgoodorservice.B)purchasesitsfactorsofproductionfromonlyonesupplierbecauseofabarrierpreventingitfrombuyingfromothersuppliers.C)producesagoodorserviceforwhichnoclosesubstituteexistsandthatsellsallitsoutputtoonebuyerbecausethereisbarrierpreventingotherbuyersfrompurchasingthegoodorservice.D)cannotcontrolthepriceitsetsforitsgoodorservicebecausethereisbarrierthatpreventsthefirmfromchangingtheprice.E)producesitsgoodorserviceusinglabourfromasinglesource,whichisusuallyaunion.Answer:AType:MCTopic:MonopolyandHowItArisesSkill:RecognitionAACSB:ReflectiveThinking13)Firmsthatcanpricediscriminatebetweencustomersdosoto________.A)increaseconsumersurplusB)increaseemploymentC)increaseeconomicprofitD)decreasethequantitytheyproduceE)increaseproducersurplusanddeadweightlossAnswer:CType:MCTopic:MonopolyandHowItArisesSkill:RecognitionAACSB:ReflectiveThinking14)Whichoneofthefollowingismostlikelytobeanaturalmonopoly?A)sandwichshopsB)printingservicesC)weldin