Question 1

Describe the Microsoft case.

Accepted Answer

In the judge's initial ruling,Microsoft

Question 2

Most often,a natural monopoly will:

Accepted Answer

A) charge the profit maximizing price. 
B) charge a price equal to average variable cost. 
C) be subject to a maximum price set by the government. 
D) all of the above 
A) charge the profit maximizing price. 
B) charge a price equal to average variable cost. 
C) be subject to a maximum price set by the government. 
D) all of the above

Question 3

What is a natural monopoly? How is it different from other monopolies?

Accepted Answer

A natural monopoly occurs when the long-

Question 4

The government's policies regarding anti-competitive actions are called industrial policy.

Accepted Answer

A) True 
 B)False

Question 5

A merger is a process in which two or more firms combine their operations.

Accepted Answer

A) True 
 B)False

Question 6

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to ________ subscribers at a price of ________.

Accepted Answer

A) 800;$15 
B) 1,000;$16 
C) 2,200 $13 
D) 2,500;$12 
A) 800;$15 
B) 1,000;$16 
C) 2,200 $13 
D) 2,500;$12

Question 7

Under an average-cost pricing policy,the government picks the price at which the market demand curve intersects the monopolist's long-run average-cost curve.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following mergers was successfully blocked by the United States government?

Accepted Answer

A) Interstate Bakeries and Continental Bakery 
B) Microsoft and Intuit 
C) Standard Oil and Mobil 
D) American Tobacco Company and Reynolds 
A) Interstate Bakeries and Continental Bakery 
B) Microsoft and Intuit 
C) Standard Oil and Mobil 
D) American Tobacco Company and Reynolds

Question 9

A natural monopoly is the result of barriers such as patents and government licenses.

Accepted Answer

A) True 
 B)False

Question 10

-Refer to Figure 13.2.If the government sought to regulate the firm and allowed it to earn only zero economic profit,the government should set:

Accepted Answer

A) P = MC. 
B) P = ATC. 
C) MR = MC. 
D) MR = ATC. 
A) P = MC. 
B) P = ATC. 
C) MR = MC. 
D) MR = ATC.

Question 11

The Clayton Act:

Accepted Answer

A) strengthened the Sherman Act. 
B) was developed to encourage the creation of cartels. 
C) replaced the Sherman Act. 
D) made cooperative agreements enforceable. 
A) strengthened the Sherman Act. 
B) was developed to encourage the creation of cartels. 
C) replaced the Sherman Act. 
D) made cooperative agreements enforceable.

Question 12

To maximize profit,a natural monopolist will produce at a point where marginal revenue is equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 13

What will happen if a second firm enters a natural monopolistic market?

Accepted Answer

A) The demand curve of the typical firm will shift to the left. 
B) The demand curve will lay above the long-run average cost curve. 
C) The profit will be reduced to zero for both firms. 
D) It will have no effect on the profit of the first firm. 
A) The demand curve of the typical firm will shift to the left. 
B) The demand curve will lay above the long-run average cost curve. 
C) The profit will be reduced to zero for both firms. 
D) It will have no effect on the profit of the first firm.

Question 14

A tie-in sale occurs when:

Accepted Answer

A) it encourages the enforcement of cooperative agreements. 
B) a business sells a few products that work well when used together. 
C) a business forces the buyer of one product to purchase another product. 
D) a business sells a product at a price below its production cost. 
A) it encourages the enforcement of cooperative agreements. 
B) a business sells a few products that work well when used together. 
C) a business forces the buyer of one product to purchase another product. 
D) a business sells a product at a price below its production cost.

Question 15

Predatory pricing occurs when a firm attempts to drive a competitor out of business by selling its product above production cost.

Accepted Answer

A) True 
 B)False

Question 16

A trust is:

Accepted Answer

A) a cartel. 
B) legal under the Sherman Act. 
C) an arrangement in which the owners of several companies transfer their decision-making powers to a group of trustees. 
D) all of the above 
A) a cartel. 
B) legal under the Sherman Act. 
C) an arrangement in which the owners of several companies transfer their decision-making powers to a group of trustees. 
D) all of the above

Question 17

Describe the Sherman Antitrust Act.

Accepted Answer

The Sherman Antitrust Act made

Question 18

-Refer to Figure 13.1.If the government regulates Armstrong Cable so they can earn only zero economic profit,the price would be set at:

Accepted Answer

A) $12.00. 
B) $12.50. 
C) $13.00. 
D) $16.00. 
A) $12.00. 
B) $12.50. 
C) $13.00. 
D) $16.00.

Question 19

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

Accepted Answer

A) True 
 B)False

Question 20

An average-cost pricing policy allows natural monopolies to earn positive economic profits.

Accepted Answer

A) True 
 B)False

Describe the Microsoft case.

Most often,a natural monopoly will:

What is a natural monopoly? How is it different from other monopolies?

The government's policies regarding anti-competitive actions are called industrial policy.

A merger is a process in which two or more firms combine their operations.

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to subscribers at a price of .

Under an average-cost pricing policy,the government picks the price at which the market demand curve intersects the monopolist's long-run average-cost curve.

Which of the following mergers was successfully blocked by the United States government?

A natural monopoly is the result of barriers such as patents and government licenses.

-Refer to Figure 13.2.If the government sought to regulate the firm and allowed it to earn only zero economic profit,the government should set:

The Clayton Act:

To maximize profit,a natural monopolist will produce at a point where marginal revenue is equal to marginal cost.

What will happen if a second firm enters a natural monopolistic market?

A tie-in sale occurs when:

Predatory pricing occurs when a firm attempts to drive a competitor out of business by selling its product above production cost.

A trust is:

Describe the Sherman Antitrust Act.

-Refer to Figure 13.1.If the government regulates Armstrong Cable so they can earn only zero economic profit,the price would be set at:

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

An average-cost pricing policy allows natural monopolies to earn positive economic profits.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 13: Controlling Market Power: Antitrust and Regulation

Describe the Microsoft case.

Most often,a natural monopoly will:

What is a natural monopoly? How is it different from other monopolies?

The government's policies regarding anti-competitive actions are called industrial policy.

A merger is a process in which two or more firms combine their operations.

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to ________ subscribers at a price of ________.

Under an average-cost pricing policy,the government picks the price at which the market demand curve intersects the monopolist's long-run average-cost curve.

Which of the following mergers was successfully blocked by the United States government?

A natural monopoly is the result of barriers such as patents and government licenses.

-Refer to Figure 13.2.If the government sought to regulate the firm and allowed it to earn only zero economic profit,the government should set:

The Clayton Act:

To maximize profit,a natural monopolist will produce at a point where marginal revenue is equal to marginal cost.

What will happen if a second firm enters a natural monopolistic market?

A tie-in sale occurs when:

Predatory pricing occurs when a firm attempts to drive a competitor out of business by selling its product above production cost.

A trust is:

Describe the Sherman Antitrust Act.

-Refer to Figure 13.1.If the government regulates Armstrong Cable so they can earn only zero economic profit,the price would be set at:

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

An average-cost pricing policy allows natural monopolies to earn positive economic profits.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to subscribers at a price of .