Demand

42) A natural monopoly arises when

A) economies of scale are so great that only one firm can exist in a market.

B) a firm acquires a patent.

C) two firms merge to become the only firm serving an entire market.

D) a single firm controls all of a natural resource.

43) Figure 13.1 shows a demand and costs of an unregulated monopoly. At the profit maximization output, the firm earns a profit of:

A) $80,000.

B) $10,000.

C) $50,000.

D) $0.

44) Figure 13.1 shows a demand and costs of an unregulated monopoly. At the output level of 22,000 units,

A) the firm’s marginal revenue is smaller than its marginal cost.

B) the firm is earning a zero economic profit.

C) the firm is producing more than its profit maximizing level of output.

D) All of the above are correct.

45) When compared to the profit maximizing price and quantity supplied, an average-cost pricing policy for a natural monopoly causes the price the monopolist charges to ________ and the quantity it sells to ________.

A) increase; decrease

B) decrease; decrease

C) decrease; increase

D) increase; increase

47) A public good is a good that:

A) is consumed by a single person or household.

B) cannot be used by private citizens.

C) is available for everyone to consume, regardless of who pays.

D) is provided by the government.

48) A private good is a good that:

A) is nonrival.

B) is not excludable.

C) is provided only by private sectors.

D) is consumed by a single person or household.

49) The free-rider problem implies that:

A) each person will pay the full cost of the public good.

B) nobody wants the public good.

C) everybody will pay a portion of the cost of the public good.

D) each person will try to benefit from the public good without paying for it.

52) If the consumer gets 40 utils from consuming four CDs, 45 utils from consuming five CDs and 48 utils from consuming six CDs, then the consumer’s marginal utility from the fifth CD is:

A) 5 utils.

B) 45 utils.

C) 42.5 utils.

D) 10 utils.

54) What is the absolute value of the slope of an indifference curve?

A) the ratio of the marginal utility of one good to the price of the other good

B) the marginal rate of substitution between one good and the other

C) the result of the quantity demanded at the price of one good to the price of the other good

D) it is dependent on consumer income

58) The demand for labor is:

A) derived from the demand for the products it is used to produce.

B) determined by the demand for consumer products.

C) determined by the price of consumer products.

D) all of the above

59) When a firm hires a worker for one hour, the marginal benefit to that firm equals the

A) dollar value of the goods produced by that worker in one hour.

B) hourly wage of that worker.

C) number of items the worker produces in that hour.

D) price of each item that the worker produces in that hour.

61) Figure 17.2 depicts a firm’s marginal revenue product curve. If the wage rate is $15, how many workers does the firm demand?

A) four workers

B) five workers

C) six workers

D) seven workers