Question 1

Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm

Accepted Answer

A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning a zero profit. 
A)  could increase profits by reducing output. 
B)  could increase profits by increasing output. 
C)  is maximizing profits. 
D)  must be earning a zero profit.

Question 2

Government failure occurs when the government runs a budget deficit.

Accepted Answer

A) True 
 B)False

Question 3

________ is an industry with a single firm in which the entry of new firms is blocked.

Accepted Answer

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

Question 4

Refer to the information provided in Figure 13.6 below to answer the question that follows.   Figure 13.6
-Refer to Figure 13.6. The profit-maximizing level of output for the Memory Company is ________ high school yearbooks.

Accepted Answer

A)  0 
B)  200 
C)  300 
D)  350 
A)  0 
B)  200 
C)  300 
D)  350

Question 5

Refer to the information provided in Table 13.3 below to answer the question(s) that follow.
Table 13.3
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 100 \
\hline 3.50 & 200 \
\hline 3.00 & 300 \
\hline 2.50 & 400 \
\hline 2.00 & 500 \
\hline 1.50 & 600 \
\hline 1.00 & 700 \
\hline
\end{array}$$
-Refer to Table 13.3. If a monopoly faces the demand schedule given in the table, what is its marginal revenue from the 200th unit it sells?

Accepted Answer

A)  $2 
B)  $3 
C)  $3.50 
D)  $300 
A)  $2 
B)  $3 
C)  $3.50 
D)  $300

Question 6

Related to the Economics in Practice on page 274: According to the Economics in Practice, relative to a longer life cycle, a shorter life cycle for a product

Accepted Answer

A)  increases the benefit of strong intellectual property protection. 
B)  reduces the benefit of strong intellectual property protection. 
C)  does not change the benefit of strong intellectual property protection. 
D)  There is no conclusive evidence of a relationship between a product's life cycle and intellectual property protection. 
A)  increases the benefit of strong intellectual property protection. 
B)  reduces the benefit of strong intellectual property protection. 
C)  does not change the benefit of strong intellectual property protection. 
D)  There is no conclusive evidence of a relationship between a product's life cycle and intellectual property protection.

Question 7

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),

Accepted Answer

A)  output would increase from 500 to 600 units. 
B)  consumer surplus would increase by the area FGBC. 
C)  the firm will earn profits of BEC. 
D)  the net social gain to society equals ACF. 
A)  output would increase from 500 to 600 units. 
B)  consumer surplus would increase by the area FGBC. 
C)  the firm will earn profits of BEC. 
D)  the net social gain to society equals ACF.

Question 8

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. The amount of ________ under monopoly equals area GAB.

Accepted Answer

A)  welfare loss 
B)  consumer surplus 
C)  social gain 
D)  producer surplus 
A)  welfare loss 
B)  consumer surplus 
C)  social gain 
D)  producer surplus

Question 9

In 2000, Microsoft was

Accepted Answer

A)  issued a consent decree requiring it to be sold to new owners. 
B)  found not guilty of violating U.S. antitrust laws. 
C)  ordered by a judge to split into two companies. 
D)  fined more than $1 billion for violating U.S. antitrust laws. 
A)  issued a consent decree requiring it to be sold to new owners. 
B)  found not guilty of violating U.S. antitrust laws. 
C)  ordered by a judge to split into two companies. 
D)  fined more than $1 billion for violating U.S. antitrust laws.

Question 10

Why do price discriminating firms often offer lower prices to children and the elderly?

Accepted Answer

A)  They have a lower willingness to pay than other consumers. 
B)  Their demand for goods and services tends to be less elastic than other consumers. 
C)  Such a strategy lowers the costs of the firm. 
D)  These firms are more interested in equity than profit maximizing. 
A)  They have a lower willingness to pay than other consumers. 
B)  Their demand for goods and services tends to be less elastic than other consumers. 
C)  Such a strategy lowers the costs of the firm. 
D)  These firms are more interested in equity than profit maximizing.

Question 11

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. How much surplus is realized by consumers?

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 12

Refer to the information provided in Table 13.3 below to answer the question(s) that follow.
Table 13.3
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 100 \
\hline 3.50 & 200 \
\hline 3.00 & 300 \
\hline 2.50 & 400 \
\hline 2.00 & 500 \
\hline 1.50 & 600 \
\hline 1.00 & 700 \
\hline
\end{array}$$
-Refer to Table 13.3. If a monopoly faces the demand schedule given in the table, its marginal revenue is positive

Accepted Answer

A)  at prices above $2.00. 
B)  at all prices. 
C)  at prices below $2.00. 
D)  at all price but $2.00. 
A)  at prices above $2.00. 
B)  at all prices. 
C)  at prices below $2.00. 
D)  at all price but $2.00.

Question 13

Which of the following declared monopoly and trade restraints illegal?

Accepted Answer

A)  the Clayton Act 
B)  the Federal Trade Commission Act 
C)  the Sherman Act 
D)  the Cellar-Kefauver Act 
A)  the Clayton Act 
B)  the Federal Trade Commission Act 
C)  the Sherman Act 
D)  the Cellar-Kefauver Act

Question 14

The Antitrust Division of the Justice Department

Accepted Answer

A)  is composed of five members appointed by the president and confirmed by the Senate for terms of 7 years. 
B)  can issue cease‐and‐desist orders to offenders. 
C)  has established a set of trade regulations that make clear what practices it deems unfair and subject to action. 
D)  initiates action against those who violate antitrust laws and decides which cases to prosecute. 
A)  is composed of five members appointed by the president and confirmed by the Senate for terms of 7 years. 
B)  can issue cease‐and‐desist orders to offenders. 
C)  has established a set of trade regulations that make clear what practices it deems unfair and subject to action. 
D)  initiates action against those who violate antitrust laws and decides which cases to prosecute.

Question 15

Refer to the information provided in Figure 13.1 below to answer the question that follows.   Figure 13.1
-Refer to Figure 13.1. Of the following choices, Panel A best represents the demand curve for

Accepted Answer

A)  an individual producer of soybeans. 
B)  Dell computers. 
C)  insulin. 
D)  all of the above 
A)  an individual producer of soybeans. 
B)  Dell computers. 
C)  insulin. 
D)  all of the above

Question 16

All of the following are barriers to entry except

Accepted Answer

A)  network effects. 
B)  control of scarce resources. 
C)  externalities. 
D)  economies of scale. 
A)  network effects. 
B)  control of scarce resources. 
C)  externalities. 
D)  economies of scale.

Question 17

In perfect competition, price is equal to marginal revenue, while in monopoly, price is greater than marginal revenue.

Accepted Answer

A) True 
 B)False

Question 18

A monopolist is currently maximizing profits. In addition, if P > ATC > MC, then the monopolist

Accepted Answer

A)  just breaks even. 
B)  earns positive economic profits. 
C)  is covering total variable costs but not total fixed costs. 
D)  is covering total fixed costs but not total variable costs. 
A)  just breaks even. 
B)  earns positive economic profits. 
C)  is covering total variable costs but not total fixed costs. 
D)  is covering total fixed costs but not total variable costs.

Question 19

Refer to the information provided in Figure 13.7 below to answer the question(s) that follow.   Figure 13.7
-Refer to Figure 13.7. The figure shows a ________ monopoly.

Accepted Answer

A)  patent 
B)  natural 
C)  strategic resource 
D)  profit-maximizing 
A)  patent 
B)  natural 
C)  strategic resource 
D)  profit-maximizing

Question 20

Refer to the information provided in Figure 13.5 below to answer the question that follows.   Figure 13.5
-Refer to Figure 13.5. The Silver Exchange has a monopoly over the sale of solid silver walking sticks. This company is

Accepted Answer

A)  earning an economic profit. 
B)  suffering an economic loss but covering its variable costs. 
C)  breaking even. 
D)  suffering an economic loss and not covering its variable costs. 
A)  earning an economic profit. 
B)  suffering an economic loss but covering its variable costs. 
C)  breaking even. 
D)  suffering an economic loss and not covering its variable costs.

Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm

Government failure occurs when the government runs a budget deficit.

________ is an industry with a single firm in which the entry of new firms is blocked.

Refer to the information provided in Figure 13.6 below to answer the question that follows. Figure 13.6 -Refer to Figure 13.6. The profit-maximizing level of output for the Memory Company is ________ high school yearbooks.

Related to the Economics in Practice on page 274: According to the Economics in Practice, relative to a longer life cycle, a shorter life cycle for a product

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),

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. The amount of ________ under monopoly equals area GAB.

In 2000, Microsoft was

Why do price discriminating firms often offer lower prices to children and the elderly?

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. How much surplus is realized by consumers?

Which of the following declared monopoly and trade restraints illegal?

The Antitrust Division of the Justice Department

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1 -Refer to Figure 13.1. Of the following choices, Panel A best represents the demand curve for

All of the following are barriers to entry except

In perfect competition, price is equal to marginal revenue, while in monopoly, price is greater than marginal revenue.

A monopolist is currently maximizing profits. In addition, if P > ATC > MC, then the monopolist

Refer to the information provided in Figure 13.7 below to answer the question(s) that follow. Figure 13.7 -Refer to Figure 13.7. The figure shows a ________ monopoly.

Refer to the information provided in Figure 13.5 below to answer the question that follows. Figure 13.5 -Refer to Figure 13.5. The Silver Exchange has a monopoly over the sale of solid silver walking sticks. This company is

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

Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm

Government failure occurs when the government runs a budget deficit.

________ is an industry with a single firm in which the entry of new firms is blocked.

Refer to the information provided in Figure 13.6 below to answer the question that follows. Figure 13.6 -Refer to Figure 13.6. The profit-maximizing level of output for the Memory Company is ________ high school yearbooks.

Related to the Economics in Practice on page 274: According to the Economics in Practice, relative to a longer life cycle, a shorter life cycle for a product

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),

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. The amount of ________ under monopoly equals area GAB.

In 2000, Microsoft was

Why do price discriminating firms often offer lower prices to children and the elderly?

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. How much surplus is realized by consumers?

Which of the following declared monopoly and trade restraints illegal?

The Antitrust Division of the Justice Department

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1 -Refer to Figure 13.1. Of the following choices, Panel A best represents the demand curve for

All of the following are barriers to entry except

In perfect competition, price is equal to marginal revenue, while in monopoly, price is greater than marginal revenue.

A monopolist is currently maximizing profits. In addition, if P > ATC > MC, then the monopolist

Refer to the information provided in Figure 13.7 below to answer the question(s) that follow. Figure 13.7 -Refer to Figure 13.7. The figure shows a ________ monopoly.

Refer to the information provided in Figure 13.5 below to answer the question that follows. Figure 13.5 -Refer to Figure 13.5. The Silver Exchange has a monopoly over the sale of solid silver walking sticks. This company is

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