Chapter15MonopolyTRUE/FALSE1.Monopolistscanachieveanylevelofprofittheydesirebecausetheyhaveunlimitedmarketpower.ANS:FDIF:2REF:15-0NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive2.Evenwithmarketpower,monopolistscannotachieveanylevelofprofittheydesirebecausetheywillselllowerquantitiesathigherprices.ANS:TDIF:2REF:15-0NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive3.Onecharacteristicofamonopolymarketisthattheproductisvirtuallyidenticaltoproductsproducedbycompetingfirms.ANS:FDIF:2REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Definitional4.Thefundamentalcauseofmonopoliesisbarrierstoentry.ANS:TDIF:2REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive5.TheDeBeersDiamondcompanyadvertisesheavilytopromotethesaleofalldiamonds,notjustitsown.Thisisevidencethatithasamonopolypositiontosomedegree.ANS:TDIF:1REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive6.TheDeBeersDiamondcompanyisnotworriedaboutdifferentiatingitsproductfromallothergemstones.ANS:FDIF:1REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive7.Theamountofpowerthatamonopolyhasdependsonwhetherthereareclosesubstitutesforitsproduct.ANS:TDIF:1REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Interpretive8.IftheABCcompanyownstheexclusiverightstominelandinAfghanistanforLapisLazuli,ararestoneusedinjewelrywhichisfoundonlyinAfghanistan,thecompanybenefitsfromabarriertoentry.ANS:TDIF:1REF:15-1NAT:AnalyticLOC:MonopolyTOP:MonopolyMSC:Applicative9.Copyrightsandpatentsareexamplesofbarrierstoentrythataffordfirmsmonopolypricingpowers.ANS:TDIF:2REF:15-1NAT:AnalyticLOC:MonopolyTOP:PatentsMSC:Interpretive10.Ifthegovernmentdeemsanewlyinventeddrugtobetrulyoriginal,thepharmaceuticalcompanyisgiventheexclusiverighttomanufactureandsellthedrugfor50years.ANS:FDIF:1REF:15-1NAT:AnalyticLOC:MonopolyTOP:PatentsMSC:Interpretive11.Anaturalmonopolyhaseconomiesofscaleformostifnotallofitsrangeofoutput.ANS:TDIF:2REF:15-1NAT:AnalyticLOC:MonopolyTOP:Natu