BA4309, Fall
2002 - Test 2. Peter
Lewin.
Please read the following
carefully:
Multiple
Choice -25 questions. Please use a 50 question scantron (882-E or
ES) with a pencil. Hand in only the
scantron (you may keep this question paper).
This is a closed book
exam. Cheating will result in a zero
(among other possible sanctions).
Among the possibilities
given in each question select the best alternative.
Solution and grade distribution at end.
1.
Licensure in the
a.
confined just to a
few professions like doctors and dentists
b.
affects only six
professions
c.
affects only
twelve professions
d.
affects a large
number of professions and jobs
2.
Most occupational
licensing boards are composed of
a.
disinterested lay
people drawn from the general population
b.
licensed
practitioners in the occupation that the board oversees
c.
licensed
practitioners in another occupation than the one that the board oversees
d.
only those who
have passed the civil service exam
e.
a and d of the
above
3.
Of the various
levels of occupational control which of the following is the most restrictive?
a.
no control
b.
registration
c.
certification
d.
licensing
4.
Given the choice,
a single seller monopolist will operate in
a.
the elastic
section of the demand curve
b.
the inelastic
section of the demand curve
c.
where the
elasticity of demand equals unity
d.
where the
elasticity of demand equals zero
5.
For a perfectly
competitive firm the MC curve above the AC curve can be used as the
a.
supply curve
b.
demand curve
c.
maximum profit
curve
d.
minimum cost
curve
6.
Which of the following
characterized the recent
a.
wholesale
electricity prices rose very sharply
b.
retail electric
prices were controled by regulation
c.
utilities were
prevented from using long term contracts
d.
all of the above
e.
only a and b of
the above
7.
In the midst of
a.
by subsidizing
the production of electricity
b.
by taxing the
utilities
c.
by using state
money to buy sufficient electricity
d.
by allowing
retail prices to rise to their market levels
8.
If a firm faces a
horizontal demand curve it is a
a.
price taker
b.
price maker
c.
price searcher
d.
price nuisance
e.
none of the above
9.
For a firm in a
long run perfectly competitive equilibrium
a.
average cost is
at a minimum
b.
marginal cost is
at a minimum
c.
total revenue is
at a maximum
d.
all of the above
e.
a and b of the
above
10.
For a perfectly
competitive firm in short run, but not long run, equilibrium, which of the
following may not be true?
a.
average cost is
at a minimum
b.
marginal revenue
equals marginal cost
c.
profits are
maximized
d.
marginal revenue
equals average revenue
e.
price equals
average revenue
11.
For a single
seller monopolist
a.
marginal revenue
must always be equal to average revenue
b.
marginal revenue must
always be above average revenue
c.
marginal revenue
must always be below average revenue
d.
marginal revenue
must always cross average revenue on the x axis
12.
If average cost
is falling, marginal cost
a.
must also be
falling
b.
must be below it
c.
must be rising
d.
a and b of the
above
13.
Considered from a
dynamic perspective being a single seller is
a.
a necessary
condition for the possession of monopoly power
b.
a sufficient
condition for the possession of monopoly power
c.
a sufficient and
a necessary condition for the possession of monopoly power
d.
neither a
sufficient nor a necessary condition for the possession of monopoly power
14.
Even a firm in an
industry with a very small number of sellers may have minimal control over
price because of
a.
the threat of
competition from possible entrants
b.
competition among
a small number of sellers may be quite vigorous
c.
both of the above
d.
none of the above
– it will always have control over price
15.
For purposes of
regulation and litigation which of the following is a reliable indicator of the
presence of inefficient monopoly power?
a.
a high market
share
b.
a low elasticity
of demand
c.
a small number of
competitors
d.
all of the above
e.
none of the above
16.
From the
perspective of the traditional neoclassical model which of the following are
considered social costs of monopoly?
a.
the profits
earned by the monopolist
b.
the loss in
consumer surplus that results from monopoly power
c.
both of the above
d.
none of the above
17.
Which of the
following Acts concerns anti-trust?
a.
the McFadden
b.
the Glass-Stegall
c.
the
d.
the Smith
18.
Which of the
following law cases concerned anti-trust?
a.
Standard Oil
b.
Robber Barron
c.
Rockefeller
d.
Carnegie
19.
The anti-trust
case against Microsoft used which of the following ideas?
a.
Microsoft charged
a price that was too high to be competitive
b.
Microsoft acted
like a predator, trying to destroy its competition by temporarily changing low
prices
c.
Microsoft
illegally bundled high price products with low price products, thus forcing the
consumer to buy both
d.
b and c of the
above
e.
none of the above
20.
According to
Armentano, what constitutes a credible barrier to entry?
a.
government
restrictions
b.
large size of the
incumbent
c.
insufficient
capital
d.
inability to
advertise
e.
all of the above
21.
In the
traditional theory a natural monopolist is identified by
a.
an average cost
curve that slopes down over the relevant range of production
b.
substantial
innovation
c.
a downward
sloping marginal cost curve
d.
all of the above
e.
a and b of the
above
22.
Most of the
popular solutions for the high price of health care in the
a.
how to decrease
the demand for health care
b.
how to increase
the supply of health care
c.
how to decrease
the supply of health care
d.
how to increase
the demand for health care
23.
Which of the
following works to increase the demand for health care?
a.
the existence of
medical insurance
b.
the cost of
malpractice insurance
c.
the licensing of
doctors
d.
the expensive
technology
e.
a and b of the
above
24.
A natural monopoly
forced to operate at a point where price equals marginal cost
a.
would be
operating a the lowest possible average cost
b.
would be
operating efficiently
c.
would be making a
loss
d.
would be
maximizing profits
25.
Which of the
following is a source of economies of scale?
a.
low fixed costs
b.
high fixed costs
c.
steep variable
costs
d.
barriers to entry
e.
none of the above
Bonus
question:
26. Imagine a firm that is a single seller monopolist that
produces a product in two separate markets (the markets are not connected in any
way). Assume that the elasticity of demand in market 1 is less than the
elasticity of demand in market 2. Assume that the firm acts to maximize
profits. Which of the following is true?
a.
the price in
market 1 will be higher than the price in market 2
b.
the price in
market 1 will be lower than the price in market 2
c.
the marginal
revenue in market 1 will be higher than the marginal revenue in market 2
d.
the marginal
revenue in market 1 will equal the marginal revenue in market 2
e.
a and d of the above.
GRADE DISTRIBUTION:
If you score is greater than or equal to: your grade is
|
18 |
A |
|
17 |
B+ |
|
16 |
B |
|
14 |
C+ |
|
ELSE |
C |
Solution:
1.
d
2.
b
3.
d
4.
a
5.
a
6.
d
7.
d
8.
a
9.
a
10. a
11. c
12. b
13. d
14. c
15. e
16. b
17. c
18. a
19. d
20. a
21. a
22. b
23. a
24. c
25. b
26. e