Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

1. Which of the following is true?

A) Patents reduce a firm's incentive to develop new products.
B) Patents
Monopoly -- Practice Quizare given for new works of art or literature.
C) Patents give a permanent exclusive right to produce a new good.
D) Patents give a temporary exclusive right to produce a new good.
E) Patents guarantee economic profits.

2. Patent laws promote technical progress in all of the following ways except one.
Which is the exception?
A) They allow other firms to copy successful products as soon as
they are marketed.
B) They prevent duplication of inventions.
C) They provide a stimulus to innovation.
D) They provide the inventor with a temporary monopoly.
E) They increase a firm's incentive to incur the up-front costs of
developing new products.

3. Which of the following could not bar entry into an industry?

A) economies of scale
B) diseconomies of scale
C) patents
D) licenses
E) one firm's control of essential resources

4. For a nondiscriminating monopolist, marginal revenue is

A) equal to price
B) greater than price
C) less than price
D) represented by a horizontal curve
E) equal to average revenue

5. For the nondiscriminating monopolist,

A) P = MR = AR
B) P = MR > AR
C) P > MR = AR
D) P = MR < AR
E) P = AR > MR

6. A nondiscriminating monopolist's demand curve

A) is horizontal at the market price
B) lies above its marginal revenue curve
C) is the same as its marginal cost curve
D) indicates that the firm must raise price to sell additional units
E) lies above the marginal cost curve at all levels of output

7. A profit-maximizing monopoly will always produce at the minimum point of its

average total cost (ATC) curve.
A) True
B) False

8. A monopolist maximizes profit at the quantity where the slope of its total revenue
curve equals the slope of its total cost curve.
A) True
B) False

9. Which of the following is not true of monopolists?