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Some economists believe that monopolies are both inevitable and beneficial to society.

 Some economists believe that monopolies are both inevitable and beneficial to society.
                            They believe that monopolies are more efficient than competitive markets and generate
                            lower prices. For these reasons they oppose _________ and advocate __________.

a.antitrust laws; laissez-faire

b.laissez-faire; antitrust laws

c.nationalization; regulation

d.regulation; nationalization

e.antitrust laws; nationalization

12.              Splitting up a monopoly is often justified on the grounds that

a.consumers prefer dealing with small firms

b.small firms have lower costs

c.competition is inherently efficient

d.nationalization is a less preferred option

e.monopolies are inevitable and desirable

13.              Government regulation of industry is designed to separate __________ from

a.profit maximization; efficiency

b.efficiency; output

c.price making; the firm

d.monopolies; competitors

e.bigness; profitability

14.              The primary reason government chooses to regulate a natural monopoly is to

a.promote its eventual nationalization

b.control price and output

c.control profit

d.create competition

e.distribute market power more evenly among the firms in the industry

15.              Cable television is regulated because of its monopolistic cost structure. Baseball and
                            basketball games, which also have monopolistic cost structures, are unregulated. What do
                            these activities (watching TV and going to the ball park or stadium) not have in common?

a. being a leisure activity

b. being a luxury

c. entertainment value

d. large-scale public consumption

e. industry trade groups

16.              When regulating a firm, setting price equal to marginal cost does not necessarily require
                            providing a subsidy if

a. it always requires providing a subsidy

b. ATC is always falling

c. MC is always falling

d. variable costs are covered

e. ATC is U-shaped

17.              Setting a fair price means

a. c and e

b. lowering the price until the monopolist says “unfair”

c. pricing at the point where average fixed and average variable costs sum to the price

d. imposing unreasonable restrictions on the price making capability of competitive

e. pricing as if the market were actually competitive

18.              A big problem with fair pricing schemes is that

a. output is lower than if the market were competitive

b. prices are higher than if the market were competitive

c. firms have no incentive to control costs

d. efficiencies result from lack of profit motive

e. the marginal cost may not be very low

19.              Marginal cost pricing regulations for a natural monopolist ensure that

a. b and e

b. price reflects the value society places on the last unit produced

c. output will continue to grow until the required subsidy is zero

d. fair pricing schemes are more profitable

e. subsidization will be necessary

20.              The Interstate Commerce Commission was created to check the monopoly power of
                            ________ and ended up protecting them from the competitive forces of _________.

a. passenger rail service; interstate bus companies

b. the Civil Aeronautics Board; the Federal Communications Commission

c. airlines; automobiles

d. railroads; truck transportation

e. railroads; inland barge service


Dec 09 2019 Read more Less More

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