Question 1

Why are textbooks so expensive?

Because the book suppliers have low marginal costs

Because textbook firms are price takers

Because the PED for textbooks is far greater than 1 in magnitude

Because there is a monopoly for each textbook produced

The behavioral bias known as the Stratton bias

Question 2

According to the lecture slides, which market was an example of a monopoly?

Toothpaste

Computers

Water bottles

Kleenex

Diamonds

Question 3

In terms of which of the following is the competitive market similar to a monopoly?

Price

The number of firms

P=ATC in the long run

Prevalence

None of the above

Question 4

Consider the following information for a firm known as "Marco Industries" that has a monopoly over the product known as Aguillons.

qPTRTCProfitMRMCProfit

0285---------

12415

22016

31618

41263

58-30

How much will the firm "Marco Industries" produce?

0

2

3

4

5

Question 5

Again, consider the following information for a firm known as "Marco Industries" that has a monopoly over the product known as Aguillons.

qPTRTCProfitMRMCProfit

0285---------

12415

22016

31618

41263

58-30

How much will be producedin the marketfor Aguillons?

2

4

8

16

Not enough information

Question 6

Which of the following is true concerning the Prize Linked Savings Accounts (PLSAs)?

They have been adopted in only one state in the US because of how damaging they are to a state's poorer population

They were blocked by many states because the state governments had a monopoly on lotteries

They help people to spend more money

They are far worse than regular savings accounts in every possible way which explains why no one uses PLSAs

PLSAs have not been presented in this course's material

Question 7

According to this class, what is the main constraint on a monopoly?

A monopoly has no constraints on its ability to charge higher prices

The market demand curve

The market supply curve

The firms' PES

The profits the firm has already made

Question 8

Consider the company Luxottica which is responsible for almost all of the production of eyeglasses in the world.

To compete with this company, a newcomer would need a huge amount of money - for example, just to start an assembly line. These high fixed costs can be considered an example of what concept of this course?

Price taker

Price maker

Barrier to entry

Availability bias

None of the above

Question 9

Luxottica has a monopoly over eyeglasses and is making high profits. Then, suppose there is an increase in the number of people getting corrective eye surgery.

What happens to the firm's quantity and profits in the long run as a result of this change in people's tastes?

q increases, profits decrease

q increases, profits increase

q unchanged, profits unchanged

q decreases, profits decrease

q decreases, profits increase

Question 10

According to studies, the average number of firms in many industries is declining. As a result, many industries are converging to a monopoly. This trend means that these markets will become more efficient (as defined in this class) and be better for consumers.

True

False