18. The government gives monopoly power to utility companies because they a. the
ID: 1100103 • Letter: 1
Question
18. The government gives monopoly power to utility companies because they
a. they spend considerable sums of money on inventions.
b. they are assumed to be a natural monopoly.
c. they achieve considerable diseconomies of scale.
d. they can produce homogeneous goods.
20. A monopsonist is:
a. a competitive buyer of inputs.
b. a single buyer that is able to obtain lower prices.
c. an oligopolist operating in the labor market.
d. a market where a single buyer faces a single seller.
21. The Clayton Act allows:
a. all types of price discrimination.
b. price discrimination that can be justified by cost differences.
c. price discrimination that tends to increase competition.
d. conspiracies in restraint of trade.
26. If a concentration ratio for two industries is the same, we can conclude that:
a. the HHI index must be the same for the two industries.
b. the HHI index is probably the same for the two industries.
c. the HHI index is probably not the same for the two industries.
d. both industries have the same number of firms.
Use the following information for questions 27 and 28.
There are five firms in an industry with sales at $14 million, $4 million, $4 million, $2 million,
and $1 million, respectively.
27. The first four-firm concentration ratio is:
a. impossible to calculate because there are five firms.
b. 96 percent.
c. 45 percent.
d. 4,806
28. The HHI for the industry is:
a. 96.
b. 925.
c. 2,083.
d. 3,728.
36. Which of the following is true for perfect competition but not true for monopolistic competition and monopoly?
a. MC = MR.
b. P = MC.
c. Positive long run profits.
d. Both b and c.
37. Profit margin equals:
a. marginal cost minus marginal revenue.
b. average cost minus average revenue.
c. average cost minus average variable cost.
d. price minus cost.
Explanation / Answer
A
C
B
26. unsure
B
D
B
D
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