Home / Questions / To be able to engage in profit-maximizing price searching, a monopoly firm must be able to
To be able to engage in profit-maximizing price searching, a monopoly firm must be able to
A) prevent the entry of other firms into the market for its product.
B) induce the entry of other firms into the market for its product.
C) avoid earning negative economic profits in the short run.
D) always earn zero economic profits.
5) Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?
A) Significant economies of scale exist.
B) The market price of the product is too high.
C) The firm has a patent on the good or control over some resource required for the production of the good.
D) The firm has government authorization to be a monopoly.
6) Which of the following would NOT be a barrier to entry for a particular market?
A) Ownership of a patent
B) Low cost of obtaining initial capital
C) The presence of economies of scale
D) Government regulation
7) If government regulations significantly increase the cost of operating within a particular market, one result is that
A) new firms are discouraged from entering the market.
B) barriers to entry are nullified.
C) a perfectly competitive market environment is encouraged.
D) new firms are encouraged to enter the market.
8) If there are no barriers to entry into an industry,
A) short-run economic profits must be zero.
B) long-run economic profits must be zero.
C) both short-run and long-run economic profits must be zero.
D) short-run and long-run profits must still be positive.
9) A firm typically achieves its position as a monopolist as a result of
A) a small market and a constant average cost.
B) a downward sloping demand for the product.
C) barriers to entry.
D) the absence of long-run profits in an industry.
10) A monopolist can earn economic profits in the long run because
A) a monopoly is by definition large, and this gives it the ability to make large profits.
B) a monopoly makes the good or service better than anyone else.
C) barriers to entry prevent new firms from entering the industry.
D) monopolies can legally force people to buy their products and to pay more for them than they are worth.
11) Which of the following can be a barrier to entry, closing a market to new firms?
A) An elastic industry demand curve
B) Control of a vital resource by one producer
C) Diseconomies of scale
D) Ease of obtaining capital financing
12) Economies of scale can
A) result in an increasing cost industry.
B) cause input prices to drop.
C) prevent the entry of new firms into a market.
D) reduce the rate of return which the firm may earn.
13) A natural monopoly usually arises when
A) there are diseconomies of scale in an industry.
B) the government allows unrestricted access to a market.
C) there are large economies of scale relative to the industry's demand.
D) companies band together to form a larger company.
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