Question 1

Figure 13.3
   
Figure 13.3 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.3.What is the price charged for the profit-maximizing output level?

Accepted Answer

A) $13 
B) $21 
C) $27 
D) $34 
A) $13 
B) $21 
C) $27 
D) $34 D

Question 2

A merger between two competitors may be approved by the Competition Bureau if the two companies can substantiate ________ as a result of the merger.

Accepted Answer

A) increases in revenue for the merged company 
B) an increase share of sales controled by one firm 
C) decreases in marginal revenue for the merged company 
D) increases in economic efficiency 
A) increases in revenue for the merged company 
B) an increase share of sales controled by one firm 
C) decreases in marginal revenue for the merged company 
D) increases in economic efficiency D

Question 3

If a firm's average total cost is less than price where MR=MC,

Accepted Answer

A) the firm should shut down. 
B) the firm should raise its price. 
C) the firm should continue to produce the output it is producing. 
D) the firm should cut back on its output to lower its cost. 
A) the firm should shut down. 
B) the firm should raise its price. 
C) the firm should continue to produce the output it is producing. 
D) the firm should cut back on its output to lower its cost. C

Question 4

Table 13.1
 $\begin{array}{|c|c|c|}
\hline \text { Price per Unit } & \begin{array}{c}
\text { Quantity } \
\text { Demanded } \
\text { (units) }
\end{array} & \begin{array}{c}
\text { Total Cost of } \
\text { Production } \
\text { (dollars) }
\end{array} \
\hline \$ 85 & 10 & \$ 530 \
\hline 80 & 11 & 540 \
\hline 75 & 12 & 550 \
\hline 70 & 13 & 560 \
\hline 65 & 14 & 575 \
\hline 60 & 15 & 595 \
\hline 55 & 16 & 625 \
\hline
\end{array}$ 
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 13.1.
-Refer to Table 13.1.What is the amount of the firm's profit?

Accepted Answer

A) $335 
B) $350 
C) $880 
D) $910 
A) $335 
B) $350 
C) $880 
D) $910

Question 5

In a natural monopoly, throughout the range of market demand

Accepted Answer

A) marginal cost is above average total cost and pulls average total cost upward. 
B) average total cost is above marginal cost and pulls marginal cost upward. 
C) marginal cost is below average total cost and pulls average total cost downward. 
D) there are diseconomies of scale. 
A) marginal cost is above average total cost and pulls average total cost upward. 
B) average total cost is above marginal cost and pulls marginal cost upward. 
C) marginal cost is below average total cost and pulls average total cost downward. 
D) there are diseconomies of scale.

Question 6

Relative to a perfectly competitive market, a monopoly results in

Accepted Answer

A) a gain in producer surplus equal to the gain in consumer surplus. 
B) a gain in producer surplus equal to the loss in consumer surplus. 
C) a gain in producer surplus less than the loss in consumer surplus. 
D) greater economic efficiency. 
A) a gain in producer surplus equal to the gain in consumer surplus. 
B) a gain in producer surplus equal to the loss in consumer surplus. 
C) a gain in producer surplus less than the loss in consumer surplus. 
D) greater economic efficiency.

Question 7

A patent or copyright is a barrier to entry based on

Accepted Answer

A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities. 
A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities.

Question 8

Figure 13.9
   
Figure 13.9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 13.9.If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at ________ and the output level is ________.

Accepted Answer

A) P₁; Q₄ 
B) P₂; Q₃ 
C) P₂; Q₂ 
D) P₃; Q₂ 
A) P₁; Q₄ 
B) P₂; Q₃ 
C) P₂; Q₂ 
D) P₃; Q₂

Question 9

A possible advantage of a horizontal merger for the economy is that

Accepted Answer

A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue. 
A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue.

Question 10

What happens to a monopoly's revenue when it sells more units of its product?

Accepted Answer

The monopolist must lower its price to s

Question 11

If an increase in the price of PC Cola causes the profits of President's Choice to decrease

Accepted Answer

A) PC Cola is in a market by itself. 
B) the competition bureau should prevent President's Choice from raising its prices. 
C) the relevant market for PC Cola includes competitors. 
D) President's Choice should cease production. 
A) PC Cola is in a market by itself. 
B) the competition bureau should prevent President's Choice from raising its prices. 
C) the relevant market for PC Cola includes competitors. 
D) President's Choice should cease production.

Question 12

If a monopolist's price is $50 per unit and its marginal cost is $25, then

Accepted Answer

A) to maximize profit the firm should increase output. 
B) to maximize profit the firm should decrease output. 
C) to maximize profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximize profit. 
A) to maximize profit the firm should increase output. 
B) to maximize profit the firm should decrease output. 
C) to maximize profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximize profit.

Question 13

Figure 13.5
   
Figure 13.5 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.5.What is the economically efficient output level?

Accepted Answer

A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units 
A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units

Question 14

Figure 13.5
   
Figure 13.5 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.5.What is the difference between the monopoly's price and perfectly competitive industry's price?

Accepted Answer

A) The monopoly's price is higher by $9.50. 
B) The monopoly's price is higher by $13. 
C) The monopoly's price is higher by $3.50. 
D) The monopoly's price is higher by $21. 
A) The monopoly's price is higher by $9.50. 
B) The monopoly's price is higher by $13. 
C) The monopoly's price is higher by $3.50. 
D) The monopoly's price is higher by $21.

Question 15

Why would some firms collude in violation of the Competition Act?

Accepted Answer

Collusion often allows firms to charge h

Question 16

The Ecke's family virtual monopoly on commercial poinsettia production by grafting together two varieties of the plant ended around 1996 when university researchers were able to independently make the same discovery.The Ecke family did not patent their grafting process.Would the Ecke's have been better off if they had patented their process of growing poinsettias?

Accepted Answer

A) Yes, it would have allowed them to earn economic profits indefinitely. 
B) That depends on how long they had a monopoly before university researchers made the discovery. If the discovery was made after the period of time when patents expire, then the Ecke family is not any better off. 
C) No, even with a patent protection, the Ecke family cannot prevent government-funded academic institutions from researching into plant breeding. 
D) No, seeking patent protection necessitates divulging enough information that would enable others to information to discover ways of grafting poinsettias that were similar to the Ecke method but that did not violate the patent. 
A) Yes, it would have allowed them to earn economic profits indefinitely. 
B) That depends on how long they had a monopoly before university researchers made the discovery. If the discovery was made after the period of time when patents expire, then the Ecke family is not any better off. 
C) No, even with a patent protection, the Ecke family cannot prevent government-funded academic institutions from researching into plant breeding. 
D) No, seeking patent protection necessitates divulging enough information that would enable others to information to discover ways of grafting poinsettias that were similar to the Ecke method but that did not violate the patent.

Question 17

An example of a monopoly based on control of a key resource is

Accepted Answer

A) the National Hockey League. 
B) the Paul Ecke Ranch monopoly on poinsettias. 
C) Microsoft's Windows operating system. 
D) Health Canada. 
A) the National Hockey League. 
B) the Paul Ecke Ranch monopoly on poinsettias. 
C) Microsoft's Windows operating system. 
D) Health Canada.

Question 18

Table 13.2
 $\begin{array}{|c|c|c|}
\hline \text { Price per Dose } & \begin{array}{c}
\text { Quantity } \
\text { Demanded } \
\text { (dose) }
\end{array} & \begin{array}{c}
\text { Total Cost of } \
\text { Production } \
\text { (dollars) }
\end{array} \
\hline \$ 80 & 0 & \$ 80 \
\hline 72 & 1 & 82 \
\hline 64 & 2 & 88 \
\hline 56 & 3 & 100 \
\hline 48 & 4 & 124 \
\hline 40 & 5 & 164 \
\hline 32 & 6 & 208 \
\hline 24 & 7 & 268 \
\hline 16 & 8 & 340 \
\hline
\end{array}$ 
Onawy Inc. has been granted a patent for its birch root toothache balm. Table 13.2 shows the demand and the total cost schedule for the firm.
-Refer to Table 13.2.What is the amount of Onawy's profit?

Accepted Answer

A) $68 
B) $72 
C) $124 
D) $192 
A) $68 
B) $72 
C) $124 
D) $192

Question 19

The International Nickel Company of Canada had a monopoly until the end of World War II because

Accepted Answer

A) it was a public enterprise. 
B) it had a patent on the manufacture of aluminum. 
C) the company had a secret technique for making aluminum from bauxite. 
D) it had control of almost all the available supply of nickel ore. 
A) it was a public enterprise. 
B) it had a patent on the manufacture of aluminum. 
C) the company had a secret technique for making aluminum from bauxite. 
D) it had control of almost all the available supply of nickel ore.

Question 20

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Accepted Answer

A) True 
 B)False

Figure 13.3 Figure 13.3 shows the demand and cost curves for a monopolist. -Refer to Figure 13.3.What is the price charged for the profit-maximizing output level?

A merger between two competitors may be approved by the Competition Bureau if the two companies can substantiate ________ as a result of the merger.

If a firm's average total cost is less than price where MR=MC,

In a natural monopoly, throughout the range of market demand

Relative to a perfectly competitive market, a monopoly results in

A patent or copyright is a barrier to entry based on

Figure 13.9 Figure 13.9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 13.9.If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at and the output level is .

A possible advantage of a horizontal merger for the economy is that

What happens to a monopoly's revenue when it sells more units of its product?

If an increase in the price of PC Cola causes the profits of President's Choice to decrease

If a monopolist's price is $50 per unit and its marginal cost is $25, then

Figure 13.5 Figure 13.5 shows the demand and cost curves for a monopolist. -Refer to Figure 13.5.What is the economically efficient output level?

Figure 13.5 Figure 13.5 shows the demand and cost curves for a monopolist. -Refer to Figure 13.5.What is the difference between the monopoly's price and perfectly competitive industry's price?

Why would some firms collude in violation of the Competition Act?

An example of a monopoly based on control of a key resource is

The International Nickel Company of Canada had a monopoly until the end of World War II because

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 13: Monopoly and Antitrust Policy

Figure 13.3 Figure 13.3 shows the demand and cost curves for a monopolist. -Refer to Figure 13.3.What is the price charged for the profit-maximizing output level?

A merger between two competitors may be approved by the Competition Bureau if the two companies can substantiate ________ as a result of the merger.

If a firm's average total cost is less than price where MR=MC,

In a natural monopoly, throughout the range of market demand

Relative to a perfectly competitive market, a monopoly results in

A patent or copyright is a barrier to entry based on

Figure 13.9 Figure 13.9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 13.9.If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at ________ and the output level is ________.

A possible advantage of a horizontal merger for the economy is that

What happens to a monopoly's revenue when it sells more units of its product?

If an increase in the price of PC Cola causes the profits of President's Choice to decrease

If a monopolist's price is $50 per unit and its marginal cost is $25, then

Figure 13.5 Figure 13.5 shows the demand and cost curves for a monopolist. -Refer to Figure 13.5.What is the economically efficient output level?

Figure 13.5 Figure 13.5 shows the demand and cost curves for a monopolist. -Refer to Figure 13.5.What is the difference between the monopoly's price and perfectly competitive industry's price?

Why would some firms collude in violation of the Competition Act?

An example of a monopoly based on control of a key resource is

The International Nickel Company of Canada had a monopoly until the end of World War II because

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Figure 13.9 Figure 13.9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 13.9.If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at and the output level is .