Question 1

The first important law regulating monopolies in the United States was

Accepted Answer

A) the Grant Act, which was passed in 1890. 
B) the Clayton Act, which was passed in 1890. 
C) the Sherman Act, which was passed in 1890. 
D) the Federal Trade Commission Act, which was passed in 1914. 
A) the Grant Act, which was passed in 1890. 
B) the Clayton Act, which was passed in 1890. 
C) the Sherman Act, which was passed in 1890. 
D) the Federal Trade Commission Act, which was passed in 1914.

Question 2

The most profitable price for a monopolist is

Accepted Answer

A) the highest price a consumer is willing to pay for the monopolist's product. 
B) the price at which demand is unit elastic. 
C) a price that maximizes the quantity sold. 
D) found where the profit-maximizing quantity hits the demand curve. 
A) the highest price a consumer is willing to pay for the monopolist's product. 
B) the price at which demand is unit elastic. 
C) a price that maximizes the quantity sold. 
D) found where the profit-maximizing quantity hits the demand curve.

Question 3

Which one of the following about a monopoly is false?

Accepted Answer

A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary. 
A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary.

Question 4

Which of the following is true for a monopolist?

Accepted Answer

A) Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. 
B) Being the only seller in the market, the monopolist faces a perfectly elastic demand curve. 
C) Being the only seller in the market, the monopolist faces the market demand curve. 
D) Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve. 
A) Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. 
B) Being the only seller in the market, the monopolist faces a perfectly elastic demand curve. 
C) Being the only seller in the market, the monopolist faces the market demand curve. 
D) Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve.

Question 5

Figure 15-12
   
Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

Accepted Answer

A) $21 
B) $124 
C) $186 
D) $332 
A) $21 
B) $124 
C) $186 
D) $332

Question 6

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 7

To maintain a monopoly, a firm must have

Accepted Answer

A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors. 
A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors.

Question 8

Figure 15-6
   
Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist earns a profit of

Accepted Answer

A) $0. 
B) $170. 
C) $248. 
D) $372. 
A) $0. 
B) $170. 
C) $248. 
D) $372.

Question 9

Figure 15-8
   
Figure 15-8 reflects the cost and revenue structure for a monopoly that has been in business for a very long time.
-Refer to Figure 15-8.Use the figure above to answer the following questions.
a. Identify the curves labeled A and B.Identify the curve which contains both point Y and point Z.Identify the curve which contains both point V and point W.
b.What is the profit-maximizing quantity and what price will the monopolist charge?
c.What area represents total revenue at the profit-maximizing output level?
d.What area represents total cost at the profit-maximizing output level?
e.What area represents profit?
f.What is the profit per unit (average profit)at the profit-maximizing output level?
g.If this industry was organized as a perfectly competitive industry, what would be the profit-maximizing price and quantity?
h.What area represents the deadweight loss as a result of a monopoly?

Accepted Answer

a.A = Demand curve; B = Marginal revenue

Question 10

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7.

Accepted Answer

A) True 
 B)False

Question 11

The possibility that the economy may benefit from having market power, rather than being very competitive, is closely identified with which famous economist?

Accepted Answer

A) Arnold Harberger 
B) Joseph Schumpeter 
C) Sergey Brin 
D) Donald Turner 
A) Arnold Harberger 
B) Joseph Schumpeter 
C) Sergey Brin 
D) Donald Turner

Question 12

According to the Department of Justice merger guidelines, a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Accepted Answer

A) lies between 1,500 and 2,500 and the merger raises the Index by 50 points. 
B) lies between 1,500 and 2,500 and the merger raises the Index by more than 100 points. 
C) lies above 2,500 and the merger raises the Index by less than 50 points. 
D) lies below 1,000 and the merger raises the Index by 100 points. 
A) lies between 1,500 and 2,500 and the merger raises the Index by 50 points. 
B) lies between 1,500 and 2,500 and the merger raises the Index by more than 100 points. 
C) lies above 2,500 and the merger raises the Index by less than 50 points. 
D) lies below 1,000 and the merger raises the Index by 100 points.

Question 13

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

Accepted Answer

A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource 
A) network externalities 
B) public franchise 
C) economies of scale 
D) control of a key resource

Question 14

Figure 15-15
   
Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.The firm would maximize profit by producing

Accepted Answer

A) Q₁ units. 
B) Q₂ units. 
C) Q₃ units. 
D) Q₄ units. 
A) Q₁ units. 
B) Q₂ units. 
C) Q₃ units. 
D) Q₄ units.

Question 15

Assume a hypothetical case where an industry begins as perfect competition and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Accepted Answer

A) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. 
A) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good. 
B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. 
C) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. 
D) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good.

Question 16

Figure 15-9
   
Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.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 17

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

Accepted Answer

A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price maker who sets his price independently of the market price, but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft, the wealthy corn farmer is probably a monopolist 
A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price maker who sets his price independently of the market price, but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft, the wealthy corn farmer is probably a monopolist

Question 18

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 ATC₃, 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.

Question 19

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

Accepted Answer

A) adding up the market shares of all firms in the industry, squaring this number and then dividing by the number of firms in the industry. 
B) squaring the market shares of each firm in an industry and then adding up the values of the squares. 
C) squaring the four-firm concentration ratio of the industry and dividing this number by the total number of firms in the industry. 
D) determining the market shares of the four largest firms in the industry, but unlike the concentration ratio, the Index includes sales in the United States by foreign firms. 
A) adding up the market shares of all firms in the industry, squaring this number and then dividing by the number of firms in the industry. 
B) squaring the market shares of each firm in an industry and then adding up the values of the squares. 
C) squaring the four-firm concentration ratio of the industry and dividing this number by the total number of firms in the industry. 
D) determining the market shares of the four largest firms in the industry, but unlike the concentration ratio, the Index includes sales in the United States by foreign firms.

Question 20

Figure 15-14
  
-Refer to Figure 15-14.From the monopoly graph above, identify the following:
a.The profit-maximizing price
b.The profit-maximizing quantity
c.The area representing deadweight loss
d.The area representing the transfer of consumer surplus to the monopoly

Accepted Answer

a.Price = P₃
b.Quantity = Q₁
c

The first important law regulating monopolies in the United States was

The most profitable price for a monopolist is

Which one of the following about a monopoly is false?

Which of the following is true for a monopolist?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

A patent or copyright is a barrier to entry based on

To maintain a monopoly, a firm must have

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7.

The possibility that the economy may benefit from having market power, rather than being very competitive, is closely identified with which famous economist?

According to the Department of Justice merger guidelines, a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

Assume a hypothetical case where an industry begins as perfect competition and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.What is the economically efficient output level?

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

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 ATC₃, the firm will

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

Figure 15-14 -Refer to Figure 15-14.From the monopoly graph above, identify the following: a.The profit-maximizing price b.The profit-maximizing quantity c.The area representing deadweight loss d.The area representing the transfer of consumer surplus to the monopoly

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

The first important law regulating monopolies in the United States was

The most profitable price for a monopolist is

Which one of the following about a monopoly is false?

Which of the following is true for a monopolist?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

A patent or copyright is a barrier to entry based on

To maintain a monopoly, a firm must have

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7.

The possibility that the economy may benefit from having market power, rather than being very competitive, is closely identified with which famous economist?

According to the Department of Justice merger guidelines, a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

There are several types of barriers to entry that can create a monopoly.Which of the following barriers is the result of government action?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

Assume a hypothetical case where an industry begins as perfect competition and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.What is the economically efficient output level?

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

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 ATC₃, the firm will

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

Figure 15-14 -Refer to Figure 15-14.From the monopoly graph above, identify the following: a.The profit-maximizing price b.The profit-maximizing quantity c.The area representing deadweight loss d.The area representing the transfer of consumer surplus to the monopoly

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