Question 1

Both Eastman Kodak and International Harvester were found guilty of antitrust violations under the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow.   Figure 13.9
-Refer to Figure 13.9. Under monopoly, the level of electricity production is ________ megawatts.

Accepted Answer

A)  500 
B)  600 
C)  800 
D)  1200 
A)  500 
B)  600 
C)  800 
D)  1200

Question 3

A monopolist who has a horizontal ATC schedule and charges the same monopoly price to all buyers

Accepted Answer

A)  appropriates more consumer surplus as profit than a perfect price discriminator does. 
B)  appropriates less consumer surplus as profit than a perfect price discriminator does. 
C)  appropriates less consumer surplus as profit than a perfectly competitive firm does. 
D)  does not lower the amount of consumer surplus that buyers have compared with what they would have if instead they faced a perfectly competitive firm. 
A)  appropriates more consumer surplus as profit than a perfect price discriminator does. 
B)  appropriates less consumer surplus as profit than a perfect price discriminator does. 
C)  appropriates less consumer surplus as profit than a perfectly competitive firm does. 
D)  does not lower the amount of consumer surplus that buyers have compared with what they would have if instead they faced a perfectly competitive firm.

Question 4

When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. When the monopolist sells three units of output, the price per unit is

Accepted Answer

A)  $210. 
B)  $230. 
C)  $300. 
D)  $630. 
A)  $210. 
B)  $230. 
C)  $300. 
D)  $630.

Question 5

Refer to the information provided in Figure 13.1 below to answer the question that follows.   Figure 13.1
-Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D. 
A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 6

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow.   Figure 13.9
-Refer to Figure 13.9. If Ohio Edison is regulated to act as a perfectly competitive firm (instead of the monopoly level), ________ the area FGBC.

Accepted Answer

A)  producer surplus would increase by 
B)  consumer surplus would increase by 
C)  welfare loss would be represented by 
D)  net social gain would be reduced by 
A)  producer surplus would increase by 
B)  consumer surplus would increase by 
C)  welfare loss would be represented by 
D)  net social gain would be reduced by

Question 7

Related to the Economics in Practice on page 267: When trying to determine the price to charge for a new product, firms sometimes charge one price in one market and another price in a second market. Firms call this approach

Accepted Answer

A)  price rationing. 
B)  using a focus group. 
C)  test marketing. 
D)  benchmark pricing. 
A)  price rationing. 
B)  using a focus group. 
C)  test marketing. 
D)  benchmark pricing.

Question 8

For a monopoly, marginal cost equals average total cost at every level of output.

Accepted Answer

A) True 
 B)False

Question 9

A monopoly earns total revenue of $5,000 when it sells 500 units of output and total revenue of $5,400 when it sells 600 units of output. Thus, the marginal revenue of the 600th unit is $9.

Accepted Answer

A) True 
 B)False

Question 10

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 maximum profit the monopoly can earn?

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 11

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow.   Figure 13.10
-Refer to Figure 13.10. If Armstrong Cable were free to sell to any number of subscribers it desires and set any price, it would sell to ________ subscribers at a price of ________.

Accepted Answer

A)  800; $15 
B)  1,000; $16 
C)  2,200; $13 
D)  2,500; $12 
A)  800; $15 
B)  1,000; $16 
C)  2,200; $13 
D)  2,500; $12

Question 12

In imperfectly competitive markets

Accepted Answer

A)  there is no competition in the markets. 
B)  some competition may exist in the markets. 
C)  some competition may exist but only on price and not in other ways. 
D)  some competition may exist but only in other ways and not on price. 
A)  there is no competition in the markets. 
B)  some competition may exist in the markets. 
C)  some competition may exist but only on price and not in other ways. 
D)  some competition may exist but only in other ways and not on price.

Question 13

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. What is the value of the deadweight loss?

Accepted Answer

A)  $0 
B)  $16,000 
C)  $32,000 
D)  Indeterminate from the given information. 
A)  $0 
B)  $16,000 
C)  $32,000 
D)  Indeterminate from the given information.

Question 14

The U.S. law that declared monopolies illegal is the Sherman Act of 1890.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow.   Figure 13.10
-Refer to Figure 13.10. If the government imposed a price ceiling of $12 on this firm, the firm would sell to

Accepted Answer

A)  1,000 subscribers and earn a profit of $4,000. 
B)  more than 2,500 subscribers so that price would equal average total cost. 
C)  2,500 subscribers but would require a subsidy of $1,250 to stay in business. 
D)  2,200 subscribers and would require a subsidy of $2,200 to stay in business. 
A)  1,000 subscribers and earn a profit of $4,000. 
B)  more than 2,500 subscribers so that price would equal average total cost. 
C)  2,500 subscribers but would require a subsidy of $1,250 to stay in business. 
D)  2,200 subscribers and would require a subsidy of $2,200 to stay in business.

Question 16

A firm has market power if it can raise the price of its product and still sell product to customers.

Accepted Answer

A) True 
 B)False

Question 17

One source of inefficiency associated with monopolies stems from their insulation from competition and thus reduced incentive to cut costs and innovate.

Accepted Answer

A) True 
 B)False

Question 18

Monopolistic competition is an industry market structure with

Accepted Answer

A)  a single firm in which the entry of new firms is blocked. 
B)  a small number of firms each large enough to impact the market price of its output. 
C)  many firms each able to differentiate their product. 
D)  many firms each too small to impact the market price of its output. 
A)  a single firm in which the entry of new firms is blocked. 
B)  a small number of firms each large enough to impact the market price of its output. 
C)  many firms each able to differentiate their product. 
D)  many firms each too small to impact the market price of its output.

Question 19

________ is an industry market structure with a small number of firms each large enough to impact the market price of its output.

Accepted Answer

A)  A monopoly 
B)  An oligopoly 
C)  Monopolistic competition 
D)  Perfect competition 
A)  A monopoly 
B)  An oligopoly 
C)  Monopolistic competition 
D)  Perfect competition

Question 20

Imperfect competition and market power

Accepted Answer

A)  are major sources of inefficiency. 
B)  result in higher output than in perfect competition. 
C)  are always the result of product differentiation. 
D)  result from diseconomies of scale. 
A)  are major sources of inefficiency. 
B)  result in higher output than in perfect competition. 
C)  are always the result of product differentiation. 
D)  result from diseconomies of scale.

Exam 13: Monopoly and Antitrust Policy

Both Eastman Kodak and International Harvester were found guilty of antitrust violations under the Sherman Act.

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow. Figure 13.9 -Refer to Figure 13.9. Under monopoly, the level of electricity production is ________ megawatts.

A monopolist who has a horizontal ATC schedule and charges the same monopoly price to all buyers

When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. When the monopolist sells three units of output, the price per unit is

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1 -Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow. Figure 13.9 -Refer to Figure 13.9. If Ohio Edison is regulated to act as a perfectly competitive firm (instead of the monopoly level), ________ the area FGBC.

Related to the Economics in Practice on page 267: When trying to determine the price to charge for a new product, firms sometimes charge one price in one market and another price in a second market. Firms call this approach

For a monopoly, marginal cost equals average total cost at every level of output.

A monopoly earns total revenue of $5,000 when it sells 500 units of output and total revenue of $5,400 when it sells 600 units of output. Thus, the marginal revenue of the 600th unit is $9.

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow. Figure 13.10 -Refer to Figure 13.10. If Armstrong Cable were free to sell to any number of subscribers it desires and set any price, it would sell to ________ subscribers at a price of ________.

In imperfectly competitive markets

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. What is the value of the deadweight loss?

The U.S. law that declared monopolies illegal is the Sherman Act of 1890.

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow. Figure 13.10 -Refer to Figure 13.10. If the government imposed a price ceiling of $12 on this firm, the firm would sell to

A firm has market power if it can raise the price of its product and still sell product to customers.

One source of inefficiency associated with monopolies stems from their insulation from competition and thus reduced incentive to cut costs and innovate.

Monopolistic competition is an industry market structure with

________ is an industry market structure with a small number of firms each large enough to impact the market price of its output.

Imperfect competition and market power

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

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow. Figure 13.10 -Refer to Figure 13.10. If Armstrong Cable were free to sell to any number of subscribers it desires and set any price, it would sell to subscribers at a price of .