Question 1

The demand for Egg McMuffins will likely be ________ the demand for breakfast foods.

Accepted Answer

A)  more price elastic than 
B)  less price elastic than 
C)  equally price elastic as 
D)  indeterminate from the given information 
A)  more price elastic than 
B)  less price elastic than 
C)  equally price elastic as 
D)  indeterminate from the given information A

Question 2

Monopolists who perfectly price discriminate produce the socially efficient level of output.

Accepted Answer

A) True 
 B)False  True

Question 3

From society's viewpoint, a monopolist produces ________ because price is ________ marginal cost.

Accepted Answer

A)  too little; less than 
B)  too much; less than 
C)  too much; greater than 
D)  too little; greater than 
A)  too little; less than 
B)  too much; less than 
C)  too much; greater than 
D)  too little; greater than D

Question 4

Imperfect competition results in inefficiency but greater equity than pure competition.

Accepted Answer

A) True 
 B)False

Question 5

Although patents are a ________, they also provide ________.

Accepted Answer

A)  collusive agreement; for free entry of new firms 
B)  collusive agreement; an incentive for invention and innovation 
C)  barrier to entry; for free entry of new firms 
D)  barrier to entry; an incentive for invention and innovation 
A)  collusive agreement; for free entry of new firms 
B)  collusive agreement; an incentive for invention and innovation 
C)  barrier to entry; for free entry of new firms 
D)  barrier to entry; an incentive for invention and innovation

Question 6

When an industry is monopolized, the move from a competitive environment to a monopoly leads to a decrease in consumer surplus and an increase in industry profits in a one-to-one ratio.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the information provided in Table 13.1 below to answer the question(s) that follow.
Table 13.1
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 2,000 \
\hline 3.50 & 2,400 \
\hline 3.00 & 2,800 \
\hline 2.50 & 3,200 \
\hline 2.00 & 3,600 \
\hline 1.50 & 4,000 \
\hline 1.00 & 4,400 \
\hline
\end{array}$$
-Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the most the monopoly would expend in rent-seeking activity?

Accepted Answer

A)  $4,800 
B)  $5,600 
C)  $6,000 
D)  $8,400 
A)  $4,800 
B)  $5,600 
C)  $6,000 
D)  $8,400

Question 8

The Federal Trade Commission was given the power to issue "cease-and-desist" orders where it found behavior to violate antitrust laws.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the information provided in Figure 13.11 below to answer the question(s) that follow.   Figure 13.11
-Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. The monopolist will ________ $16,000.

Accepted Answer

A)  have total revenues equal to 
B)  earn a profit of 
C)  have total costs equal to 
D)  lose 
A)  have total revenues equal to 
B)  earn a profit of 
C)  have total costs equal to 
D)  lose

Question 10

For a monopoly to be a natural monopoly,

Accepted Answer

A)  economies of scale must be realized at a scale that is close to total demand in the market. 
B)  economies of scale must be realized at a scale that is small relative to the market. 
C)  there must be constant returns to scale. 
D)  the long-run average cost curve must continue to increase until it hits the market demand curve. 
A)  economies of scale must be realized at a scale that is close to total demand in the market. 
B)  economies of scale must be realized at a scale that is small relative to the market. 
C)  there must be constant returns to scale. 
D)  the long-run average cost curve must continue to increase until it hits the market demand curve.

Question 11

Refer to Scenario 13.1 below to answer the question(s) that follow.
SCENARIO 13.1: The government of Catalina Island is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P = 55 - 0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR = 55 - 0.02Q. Universal Entertainment is interested in bidding for the right to provide cable service on Catalina Island. It has a constant average and marginal cost of $15 for providing cable service to each household.
-Refer to Scenario 13.1. At what level of output (number of households) is Universal Entertainment's total revenue maximized?

Accepted Answer

A)  2,500 
B)  2,750 
C)  5,000 
D)  Indeterminate from the given information 
A)  2,500 
B)  2,750 
C)  5,000 
D)  Indeterminate from the given information

Question 12

The criterion introduced by the Supreme Court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman Act is called the

Accepted Answer

A)  Interstate Commerce Rule. 
B)  Clayton Act Rule. 
C)  Federal Trade Commission Rule. 
D)  Rule of Reason. 
A)  Interstate Commerce Rule. 
B)  Clayton Act Rule. 
C)  Federal Trade Commission Rule. 
D)  Rule of Reason.

Question 13

In the short run, a monopoly

Accepted Answer

A)  will usually earn zero economic profits. 
B)  may earn positive economic profits due to entry barriers. 
C)  will often suffer economic losses. 
D)  results in an efficient outcome. 
A)  will usually earn zero economic profits. 
B)  may earn positive economic profits due to entry barriers. 
C)  will often suffer economic losses. 
D)  results in an efficient outcome.

Question 14

Which of the following is a major source of inefficiency?

Accepted Answer

A)  market power 
B)  perfect competition 
C)  price taking 
D)  all of the above 
A)  market power 
B)  perfect competition 
C)  price taking 
D)  all of the above

Question 15

Congress established the ________ to investigate "…the organization, business conduct, practices, and management" of companies that engage in interstate commerce.

Accepted Answer

A)  Federal Trade Commission 
B)  Antitrust Division of the Justice Department 
C)  Interstate Commerce Commission 
D)  National Transportation Board 
A)  Federal Trade Commission 
B)  Antitrust Division of the Justice Department 
C)  Interstate Commerce Commission 
D)  National Transportation Board

Question 16

Refer to the information provided in Figure 13.8 below to answer the question that follows.   Figure 13.8
-Refer to Figure 13.8. The long-run average cost curve is for the only firm producing electricity, and the market demand for electricity from all buyers is 100,000 kilowatts per hour. Due to economies of scale

Accepted Answer

A)  it makes economic sense for this firm to be the only producer of electricity. 
B)  many firms should be in this industry. 
C)  this firm should not be allowed to provide electricity. 
D)  the government should take over the electricity market. 
A)  it makes economic sense for this firm to be the only producer of electricity. 
B)  many firms should be in this industry. 
C)  this firm should not be allowed to provide electricity. 
D)  the government should take over the electricity market.

Question 17

Refer to the information provided in Table 13.1 below to answer the question(s) that follow.
Table 13.1
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 2,000 \
\hline 3.50 & 2,400 \
\hline 3.00 & 2,800 \
\hline 2.50 & 3,200 \
\hline 2.00 & 3,600 \
\hline 1.50 & 4,000 \
\hline 1.00 & 4,400 \
\hline
\end{array}$$
-Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the level of output that would maximize its profits?

Accepted Answer

A)  2,000 
B)  2,400 
C)  2,800 
D)  3,200 
A)  2,000 
B)  2,400 
C)  2,800 
D)  3,200

Question 18

When the demand curve is a downward sloping straight line, the quantity at which the marginal revenue curve intersects the horizontal (quantity) axis is ________ the quantity at which the demand curve intersects the horizontal (quantity) axis.

Accepted Answer

A)  equal to 
B)  half 
C)  twice 
D)  four times 
A)  equal to 
B)  half 
C)  twice 
D)  four times

Question 19

Due to the network externalities in the smartphone market, we would expect this market to

Accepted Answer

A)  overproduce game consoles. 
B)  be highly concentrated. 
C)  be efficient. 
D)  be serviced by a natural monopoly. 
A)  overproduce game consoles. 
B)  be highly concentrated. 
C)  be efficient. 
D)  be serviced by a natural monopoly.

Question 20

________ provide an incentive for invention and innovation.

Accepted Answer

A)  Economies of scale 
B)  Network effects 
C)  Natural monopolies 
D)  Patents 
A)  Economies of scale 
B)  Network effects 
C)  Natural monopolies 
D)  Patents

The demand for Egg McMuffins will likely be ________ the demand for breakfast foods.

Monopolists who perfectly price discriminate produce the socially efficient level of output.

From society's viewpoint, a monopolist produces because price is marginal cost.

Imperfect competition results in inefficiency but greater equity than pure competition.

Although patents are a , they also provide .

When an industry is monopolized, the move from a competitive environment to a monopoly leads to a decrease in consumer surplus and an increase in industry profits in a one-to-one ratio.

The Federal Trade Commission was given the power to issue "cease-and-desist" orders where it found behavior to violate antitrust laws.

Refer to the information provided in Figure 13.11 below to answer the question(s) that follow. Figure 13.11 -Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. The monopolist will ________ $16,000.

For a monopoly to be a natural monopoly,

The criterion introduced by the Supreme Court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman Act is called the

In the short run, a monopoly

Which of the following is a major source of inefficiency?

Congress established the ________ to investigate "…the organization, business conduct, practices, and management" of companies that engage in interstate commerce.

When the demand curve is a downward sloping straight line, the quantity at which the marginal revenue curve intersects the horizontal (quantity) axis is ________ the quantity at which the demand curve intersects the horizontal (quantity) axis.

Due to the network externalities in the smartphone market, we would expect this market to

________ provide an incentive for invention and innovation.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 13: Monopoly and Antitrust Policy

The demand for Egg McMuffins will likely be ________ the demand for breakfast foods.

Monopolists who perfectly price discriminate produce the socially efficient level of output.

From society's viewpoint, a monopolist produces ________ because price is ________ marginal cost.

Imperfect competition results in inefficiency but greater equity than pure competition.

Although patents are a ________, they also provide ________.

When an industry is monopolized, the move from a competitive environment to a monopoly leads to a decrease in consumer surplus and an increase in industry profits in a one-to-one ratio.

The Federal Trade Commission was given the power to issue "cease-and-desist" orders where it found behavior to violate antitrust laws.

Refer to the information provided in Figure 13.11 below to answer the question(s) that follow. Figure 13.11 -Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. The monopolist will ________ $16,000.

For a monopoly to be a natural monopoly,

The criterion introduced by the Supreme Court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman Act is called the

In the short run, a monopoly

Which of the following is a major source of inefficiency?

Congress established the ________ to investigate "…the organization, business conduct, practices, and management" of companies that engage in interstate commerce.

When the demand curve is a downward sloping straight line, the quantity at which the marginal revenue curve intersects the horizontal (quantity) axis is ________ the quantity at which the demand curve intersects the horizontal (quantity) axis.

Due to the network externalities in the smartphone market, we would expect this market to

________ provide an incentive for invention and innovation.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

From society's viewpoint, a monopolist produces because price is marginal cost.

Although patents are a , they also provide .