WRITE THE LETTER OF THE BEST ANSWER IN THE SPACE PROVIDED.

1. A monopolist is defined as

a.one of a large number of small firms producing a differentiated product.

b.a single seller of a product with no close substitutes.

c.one of a small number of large firms producing a differentiated product.

d.a single seller of a product with many close substitutes.

2. Which of the following statements regarding patents is true?

a.They reduce a firm's incentive to develop new products.

b.They guarantee short-run economic profits.

c.They give a temporary exclusive right to produce a new good.

d.All of the above are true statements.

3. A monopolist is said to be a

a.price breaker. c.a cartel.

b.price taker. d. a price maker.

4. Although there may not be any pure monopolies in the world today, which of the

following is the best example of a company that has been a "near-monopoly"?

a.Wal-Mart Corporation c.The De Beers diamond syndicate

b.A corn farm in Nebraska d.Coca Cola Corporation

5. List any one of the "barriers to entry"

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6. Which of the following would probably not be considered a natural monopoly?

a.a state-wide electric power company such as Florida Power & Light

b.a cable television provider such as Cox Communications

c.an automobile manufacturer such as Ford Motor Company

d.a local natural gas supplier such as National Grid

7. The demand curve any monopolist uses in making output decisions is

a.the same as the demand curve facing a perfectly competitive firm.

b.vertical, because there are no close substitutes for its product.

c.the same as the market demand curve.

d.horizontal, because the demand for a monopolist's product or service is

perfectly elastic.

8. Which of the following statements about a monopolist is true?

a.Price is higher and output is lower compared to pure competition.

b.Long run economic profits are usually zero.

c.Economic losses in the short run are impossible.

d.All of the above are true.