Exam 15: Monopoly and Antitrust Policy

Figure 15-5 Figure 15-5 shows the cost and demand curves for a monopolist. -Refer to Figure 15-5.Assume the firm maximizes its profits.What is the amount of consumer surplus?

a.What is the defining characteristic of a natural monopoly? b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive? c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal,it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain. d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

If the OpenTable Website was a natural monopoly,its

The ability of a firm to charge a price greater than marginal cost is called

The Google search engine has a market share of ________ in the United States and ________ in Europe.

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

The International Nickel Company of Canada is often cited as an example of monopoly.What was the source of the barrier to entry that gave this firm monopoly power?

The Herfindahl-Hirschman Index is one factor used to determine whether a merger between two firms should be allowed.Which of the following statements regarding the value of the Index for a given industry is true?

A patent

Few firms in the United States are monopolies because

Figure 15-4 Figure 15-4 reflects the cost and revenue structure for a monopoly that has been in business for a very long time. -Refer to Figure 15-4.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?

If you own the only bookstore in a small town,do you have a monopoly?

A monopolist will maximize profit where marginal revenue equals marginal cost.

Figure 15-3 Figure 15-3 shows the cost and demand curves for a monopolist. -Refer to Figure 15-3.The monopolist's total cost is

Figure 15-6 -Refer to Figure 15-6.From the monopoly graph above,identify the area representing the deadweight loss. Would the deadweight loss be larger if the demand curve was more elastic or less elastic?

Some economists believe that the economy benefits from firms having market power.Which of the following is an argument that has been made to support this position?

The term "trust" in antitrust refers to a board of trustees that has collusive control over different companies.

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

Figure 15-7 Figure 15-7 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-7.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

Using a broad definition,a firm would have a monopoly if