Question 1

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 2

The Sherman Act prohibited

Accepted Answer

A) marginal cost pricing. 
B) setting price above marginal cost. 
C) collusive price agreements among rival sellers. 
D) selling below average total cost. 
A) marginal cost pricing. 
B) setting price above marginal cost. 
C) collusive price agreements among rival sellers. 
D) selling below average total cost.

Question 3

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Accepted Answer

A) True 
 B)False

Question 4

Table 15-1
   
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
-Refer to Table 15-1.What is the firm's profit-maximizing output and what is the price charged to sell this output?

Accepted Answer

A) P = $85; Q = 10 
B) P = $80; Q = 11 
C) P = $70; Q = 13 
D) P = $65; Q = 14 
A) P = $85; Q = 10 
B) P = $80; Q = 11 
C) P = $70; Q = 13 
D) P = $65; Q = 14

Question 5

Figure 15-10
  
-Refer to Figure 15-10.What is the area that represents producer surplus under a monopoly?

Accepted Answer

A) the triangle 0P₂E 
B) the triangle 0P₃H 
C) the area 0P₁FH 
D) the rectangle P₁P₃HF 
A) the triangle 0P₂E 
B) the triangle 0P₃H 
C) the area 0P₁FH 
D) the rectangle P₁P₃HF

Question 6

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 7

Figure 15-16
   
Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Accepted Answer

A) Q₀ units; P₀ 
B) Q₂ units; P₂ 
C) Q₁ units; P₄ 
D) Q₃ units; P₃ 
A) Q₀ units; P₀ 
B) Q₂ units; P₂ 
C) Q₁ units; P₄ 
D) Q₃ units; P₃

Question 8

A monopoly differs from monopolistic competition in that

Accepted Answer

A) a monopoly has market power while a firm in monopolistic competition does not have any market power. 
B) a monopoly can never make a loss, but a firm in monopolistic competition can. 
C) in a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure. 
D) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve. 
A) a monopoly has market power while a firm in monopolistic competition does not have any market power. 
B) a monopoly can never make a loss, but a firm in monopolistic competition can. 
C) in a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure. 
D) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

Question 9

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

Accepted Answer

A) The original trademark expired well before Hasbro bought Parker Brothers, so they never had a trademark on Monopoly. 
B) Trademarks never expire, so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011, 20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955, 20 years after the trademark was issued to Parker Brothers. 
A) The original trademark expired well before Hasbro bought Parker Brothers, so they never had a trademark on Monopoly. 
B) Trademarks never expire, so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011, 20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955, 20 years after the trademark was issued to Parker Brothers.

Question 10

Provide two examples of a government barrier to entry.

Accepted Answer

1.A patent or copyright which gives an i

Question 11

Figure 15-15
   
Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.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 12

Article Summary
In late 2017, informed sources announced that telecommunications companies T-Mobile and Sprint were engaged in active discussions about a potential merger. The 3rd and 4th largest wireless carriers in the United States have had frequent conversations about a stock-for-stock merger, with T-Mobile parent Deutsche Telekom becoming the majority owner of the combined firms and T-Mobile CEO John Legere expected to lead the company. Part of the discussions have been whether the Department of Justice and the Federal Trade Commission would approve the merger, and based on those discussions, whether both companies will choose to proceed with a deal.
Source: David Faber, "T-Mobile and Sprint are in active talks about a merger," cnbc.com, September 19, 2017.
-Refer to the Article Summary.A merger between two competitors such as T-Mobile and Sprint may ultimately be approved by the Department of Justice and the FTC 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 in the HHI to over 2,500 
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 in the HHI to over 2,500 
C) decreases in marginal revenue for the merged company 
D) increases in economic efficiency

Question 13

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

Accepted Answer

A) For the first time, horizontal mergers were allowed-with government approval-and vertical mergers were allowed without need for approval from the government. 
B) For the first time, concentration ratios were used to evaluate the degree of competition in the industries of firms that proposed mergers. 
C) The Division began to systematically consider the economic consequences of proposed mergers. 
D) Proposed mergers no longer needed the approval of the Federal Trade Commission or the court system. 
A) For the first time, horizontal mergers were allowed-with government approval-and vertical mergers were allowed without need for approval from the government. 
B) For the first time, concentration ratios were used to evaluate the degree of competition in the industries of firms that proposed mergers. 
C) The Division began to systematically consider the economic consequences of proposed mergers. 
D) Proposed mergers no longer needed the approval of the Federal Trade Commission or the court system.

Question 14

Figure 15-7
  
-Refer to Figure 15-7.Use the figure above to answer the following questions.
a.What is the profit-maximizing quantity and what price will the monopolist charge?
b.What is the total revenue at the profit-maximizing output level?
c.What is the total cost at the profit-maximizing output level?
d.What is the profit?
e.What is the profit per unit (average profit)at the profit-maximizing output level?
f.If this industry was organized as a perfectly competitive industry, what would be the profit-maximizing price and quantity?

Accepted Answer

a.Quantity = 50; price = 32
b.Total reve

Question 15

Natural monopolies in the United States are generally regulated by

Accepted Answer

A) the Federal Trade Commission. 
B) the Department of Justice. 
C) local or state regulatory commissions. 
D) the Department of Commerce. 
A) the Federal Trade Commission. 
B) the Department of Justice. 
C) local or state regulatory commissions. 
D) the Department of Commerce.

Question 16

For decades, the NCAA restricted the number of college football and basketball games that could be televised, and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984, the Supreme Court decided the case

Accepted Answer

A) for the NCAA, citing the fact that belonging to the NCAA was voluntary. 
B) against the NCAA, citing that the NCAA did not control what television networks put on the air. 
C) against the NCAA, citing anticompetitive practice. 
D) against the NCAA, citing explicit collusion among the larger colleges. 
A) for the NCAA, citing the fact that belonging to the NCAA was voluntary. 
B) against the NCAA, citing that the NCAA did not control what television networks put on the air. 
C) against the NCAA, citing anticompetitive practice. 
D) against the NCAA, citing explicit collusion among the larger colleges.

Question 17

When the government wants to give an exclusive right to one firm to produce a product, it

Accepted Answer

A) imposes a tariff on imports of the product. 
B) imposes a quota on imports of the product. 
C) grants a patent or copyright to an individual or firm. 
D) uses antitrust laws to keep other firms from entering the market. 
A) imposes a tariff on imports of the product. 
B) imposes a quota on imports of the product. 
C) grants a patent or copyright to an individual or firm. 
D) uses antitrust laws to keep other firms from entering the market.

Question 18

If a regulatory commission set a price for a natural monopoly where marginal cost is equal to demand,

Accepted Answer

A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even. 
A) the firm would earn monopoly profits. 
B) economic efficiency would not be achieved. 
C) the firm would incur a loss. 
D) the firm would break even.

Question 19

Compared to a monopolistic competitor, a monopolist faces

Accepted Answer

A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero. 
A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero.

Question 20

Figure 15-2
   
Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.If the firm's average total cost curve is ATC₂, the firm will

Accepted Answer

A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition. 
A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

The Sherman Act prohibited

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the firm's profit-maximizing output and what is the price charged to sell this output?

Figure 15-10 -Refer to Figure 15-10.What is the area that represents producer surplus under a monopoly?

A product's price approaches its marginal cost as market concentration increases.

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce units and charge a price of .

A monopoly differs from monopolistic competition in that

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

Provide two examples of a government barrier to entry.

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.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 .

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

Natural monopolies in the United States are generally regulated by

For decades, the NCAA restricted the number of college football and basketball games that could be televised, and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984, the Supreme Court decided the case

When the government wants to give an exclusive right to one firm to produce a product, it

If a regulatory commission set a price for a natural monopoly where marginal cost is equal to demand,

Compared to a monopolistic competitor, a monopolist faces

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.If the firm's average total cost curve is ATC₂, the firm will

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 15: Monopoly and Antitrust Policy

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

The Sherman Act prohibited

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the firm's profit-maximizing output and what is the price charged to sell this output?

Figure 15-10 -Refer to Figure 15-10.What is the area that represents producer surplus under a monopoly?

A product's price approaches its marginal cost as market concentration increases.

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

A monopoly differs from monopolistic competition in that

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

Provide two examples of a government barrier to entry.

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.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 ________.

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

Natural monopolies in the United States are generally regulated by

For decades, the NCAA restricted the number of college football and basketball games that could be televised, and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984, the Supreme Court decided the case

When the government wants to give an exclusive right to one firm to produce a product, it

If a regulatory commission set a price for a natural monopoly where marginal cost is equal to demand,

Compared to a monopolistic competitor, a monopolist faces

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.If the firm's average total cost curve is ATC₂, the firm will

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce units and charge a price of .

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.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 .