Question 45. A benefit to society of the patent and copyright laws is that those laws

45. A benefit to society of the patent and copyright laws is that those laws

a. help to keep prices down.

b. help to prevent a single firm from acquiring ownership of a key resource.

c. encourage creative activity.

d. discourage excessive amounts of output of certain products.

46. When a single firm can supply a product to an entire market at a smaller cost than could two or more firms, the industry is called a

a. resource industry.

b. exclusive industry.

c. government monopoly.

d. natural monopoly.

47. A natural monopoly arises when

a. there are constant returns to scale over the relevant range of output.

b. there are economies of scale over the relevant range of output.

c. one firm owns a key natural resource.

d. the government gives a single firm the exclusive right to produce a particular good or service.

48. When a firm has a natural monopoly, the firm’s

a. marginal cost always exceeds its average total cost.

b. total cost curve is horizontal.

c. average total cost curve is downward sloping.

d. All of the above are correct.

49. It is possible for a natural monopoly to evolve into a competitive market

a. as a market expands.

b. as patent and copyright laws change.

c. as technological advances give rise to economies of scale.

d. None of the above are correct; it is not possible for a natural monopoly to evolve into a competitive market.

50. The key difference between a competitive firm and a monopoly firm is the ability to select

a. the level of competition in the market.

b. the level of production.

c. inputs in the production process.

d. the price of its output.

51. The market demand curve for a monopolist is typically

a. unitary elastic at the point of profit maximization.

b. downward sloping.

c. horizontal.

d. vertical.

52. When a firm operates under conditions of monopoly, its price is

a. not constrained.

b. constrained by marginal cost.

c. constrained by demand.

d. constrained only by its social agenda.

53. In order to sell more of its product, a monopolist must

a. sell to the government.

b. sell in international markets.

c. lower its price.

d. use its market power to force up the price of complementary products.

54. A natural monopolist’s ability to price its product is

a. constrained by the market demand curve.

b. constrained by market supply.

c. not affected by market demand.

d. enhanced by regulatory control of the government.

55. Economists assume that monopolists behave as

a. cost minimizers.

b. profit maximizers.

c. price maximizers.

d. All of the above are correct.

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