Question 1

The principal measure of concentration used by the Justice Department to evaluate mergers and judge market power is the

Accepted Answer

A)  four-firm concentration ratio. 
B)  eight-firm concentration ratio. 
C)  Herfindahl-Hirschman Index. 
D)  Stone index. 
A)  four-firm concentration ratio. 
B)  eight-firm concentration ratio. 
C)  Herfindahl-Hirschman Index. 
D)  Stone index. C

Question 2

Price discrimination occurs because it increases profit.

Accepted Answer

A) True 
 B)False  True

Question 3

X-inefficiency stems from a monopolist not having the incentive to reduce costs.

Accepted Answer

A) True 
 B)False  True

Question 4

For the monopolist, average profit per unit equals

Accepted Answer

A)  P- ATC 
B)  P - AVC. 
C)  P- MC. 
D)  P - MR. 
A)  P- ATC 
B)  P - AVC. 
C)  P- MC. 
D)  P - MR.

Question 5

If Pool Guy Jeremy negotiates a separate deal with each customer, he is engaging in _____ price discrimination.

Accepted Answer

A)  fourth-degree 
B)  second-degree 
C)  third-degree 
D)  perfect 
A)  fourth-degree 
B)  second-degree 
C)  third-degree 
D)  perfect

Question 6

A monopoly differs from a perfectly competitive market in that

Accepted Answer

A)  a monopolist always earns a normal profit in the long run. 
B)  a monopoly market is easy to enter. 
C)  no close substitutes exist for the monopolist's product. 
D)  there is a lot of market power in a perfectly competitive market. 
A)  a monopolist always earns a normal profit in the long run. 
B)  a monopoly market is easy to enter. 
C)  no close substitutes exist for the monopolist's product. 
D)  there is a lot of market power in a perfectly competitive market.

Question 7

A monopolist sells 2,000 units for $20 each. The total cost of producing 2,000 units is $30,000. If the price falls to $19, the number of units sold increases to 2,100. The total cost of producing 2,100 units is $30,075. When the monopolist reduces its price from $20 to $19, its marginal revenue will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  be zero. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  be zero.

Question 8

Which act established an independent regulatory body?

Accepted Answer

A)  Hart-Scott-Rodino Act 
B)  Clayton Act 
C)  Sherman Act 
D)  Federal Trade Commission Act 
A)  Hart-Scott-Rodino Act 
B)  Clayton Act 
C)  Sherman Act 
D)  Federal Trade Commission Act

Question 9

Create examples of two industries that both have a four-firm concentration ratio of 90 but that differ in market power.

Accepted Answer

The n-firm concentration ratio is the sh

Question 10

Potential competition restrains the behavior of firms in a contestable market.

Accepted Answer

A) True 
 B)False

Question 11

(Figure: Monopolist Production) Based on the graph, if the marginal cost of production is constant at $20 per unit produced, then the monopolist will earn total revenue of

Accepted Answer

A)  $400. 
B)  $800. 
C)  $1,200. 
D)  $200. 
A)  $400. 
B)  $800. 
C)  $1,200. 
D)  $200.

Question 12

Unlike monopolists, perfectly competitive firms do not wish to earn economic profit.

Accepted Answer

A) True 
 B)False

Question 13

Nobel Prize laureate George Stigler believed that for homogenous industries, prices should converge.

Accepted Answer

A) True 
 B)False

Question 14

Second-degree price discrimination occurs when

Accepted Answer

A)  every consumer pays his or her maximum willingness to pay. 
B)  consumers are charged one price for the first bundle of purchases and a different price for the next bundle of purchases. 
C)  different groups of people are charged different prices. 
D)  a business asks a series of personal questions about what the purchase is going to be used for. 
A)  every consumer pays his or her maximum willingness to pay. 
B)  consumers are charged one price for the first bundle of purchases and a different price for the next bundle of purchases. 
C)  different groups of people are charged different prices. 
D)  a business asks a series of personal questions about what the purchase is going to be used for.

Question 15

A one-firm industry with no close product substitutes and substantial barriers to entry is called a(n)

Accepted Answer

A)  monopsony. 
B)  monopoly. 
C)  competitive industry. 
D)  oligopoly. 
A)  monopsony. 
B)  monopoly. 
C)  competitive industry. 
D)  oligopoly.

Question 16

The exclusive right to produce or reproduce certain types of intellectual property (e.g., books, works of art) for an extended period of time is called a(n)

Accepted Answer

A)  government franchise. 
B)  copyright. 
C)  patent. 
D)  output decision. 
A)  government franchise. 
B)  copyright. 
C)  patent. 
D)  output decision.

Question 17

Which of these is NOT true about the demand curve of a monopolist?

Accepted Answer

A)  The firm's demand curve is the same as the market demand curve. 
B)  The demand curve is downward sloping. 
C)  The demand curve is perfectly elastic. 
D)  The marginal revenue curve is below the market demand curve. 
A)  The firm's demand curve is the same as the market demand curve. 
B)  The demand curve is downward sloping. 
C)  The demand curve is perfectly elastic. 
D)  The marginal revenue curve is below the market demand curve.

Question 18

Contestable markets

Accepted Answer

A)  exist where monopolies charge high prices. 
B)  exist where the threat of easy entry prevents a dominant company from charging excessive prices. 
C)  are markets that have protection from barriers to entry. 
D)  make it more challenging for firms to merge. 
A)  exist where monopolies charge high prices. 
B)  exist where the threat of easy entry prevents a dominant company from charging excessive prices. 
C)  are markets that have protection from barriers to entry. 
D)  make it more challenging for firms to merge.

Question 19

Perfectly competitive firms and monopoly firms should increase production when _____ marginal cost.

Accepted Answer

A)  marginal revenue is less than 
B)  marginal revenue is greater than 
C)  price is less than 
D)  price is equal to 
A)  marginal revenue is less than 
B)  marginal revenue is greater than 
C)  price is less than 
D)  price is equal to

Question 20

In the case of an average cost pricing rule for a natural monopoly

Accepted Answer

A)  the monopolist sustains an economic loss. 
B)  the monopolist makes an economic profit. 
C)  consumers pay a lower price than under the marginal cost pricing rule. 
D)  consumers pay a higher price than under the marginal cost pricing rule. 
A)  the monopolist sustains an economic loss. 
B)  the monopolist makes an economic profit. 
C)  consumers pay a lower price than under the marginal cost pricing rule. 
D)  consumers pay a higher price than under the marginal cost pricing rule.

The principal measure of concentration used by the Justice Department to evaluate mergers and judge market power is the

Price discrimination occurs because it increases profit.

X-inefficiency stems from a monopolist not having the incentive to reduce costs.

For the monopolist, average profit per unit equals

If Pool Guy Jeremy negotiates a separate deal with each customer, he is engaging in _____ price discrimination.

A monopoly differs from a perfectly competitive market in that

Which act established an independent regulatory body?

Create examples of two industries that both have a four-firm concentration ratio of 90 but that differ in market power.

Potential competition restrains the behavior of firms in a contestable market.

(Figure: Monopolist Production) Based on the graph, if the marginal cost of production is constant at $20 per unit produced, then the monopolist will earn total revenue of

Unlike monopolists, perfectly competitive firms do not wish to earn economic profit.

Nobel Prize laureate George Stigler believed that for homogenous industries, prices should converge.

Second-degree price discrimination occurs when

A one-firm industry with no close product substitutes and substantial barriers to entry is called a(n)

The exclusive right to produce or reproduce certain types of intellectual property (e.g., books, works of art) for an extended period of time is called a(n)

Which of these is NOT true about the demand curve of a monopolist?

Contestable markets

Perfectly competitive firms and monopoly firms should increase production when _____ marginal cost.

In the case of an average cost pricing rule for a natural monopoly

Exploring Economics

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Supply and Demand

Markets and Government

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Exam 9: Monopoly

The principal measure of concentration used by the Justice Department to evaluate mergers and judge market power is the

Price discrimination occurs because it increases profit.

X-inefficiency stems from a monopolist not having the incentive to reduce costs.

For the monopolist, average profit per unit equals

If Pool Guy Jeremy negotiates a separate deal with each customer, he is engaging in _____ price discrimination.

A monopoly differs from a perfectly competitive market in that

Which act established an independent regulatory body?

Create examples of two industries that both have a four-firm concentration ratio of 90 but that differ in market power.

Potential competition restrains the behavior of firms in a contestable market.

(Figure: Monopolist Production) Based on the graph, if the marginal cost of production is constant at $20 per unit produced, then the monopolist will earn total revenue of

Unlike monopolists, perfectly competitive firms do not wish to earn economic profit.

Nobel Prize laureate George Stigler believed that for homogenous industries, prices should converge.

Second-degree price discrimination occurs when

A one-firm industry with no close product substitutes and substantial barriers to entry is called a(n)

The exclusive right to produce or reproduce certain types of intellectual property (e.g., books, works of art) for an extended period of time is called a(n)

Which of these is NOT true about the demand curve of a monopolist?

Contestable markets

Perfectly competitive firms and monopoly firms should increase production when _____ marginal cost.

In the case of an average cost pricing rule for a natural monopoly

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopolistic Competition, Oligopoly, and Game Theory

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters