Question 1

Figure 15-6   Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6. The profit-maximizing output and price for the monopolist are

Accepted Answer

A)  output = 62; price = $24. 
B)  output = 62; price = $18. 
C)  output = 83; price = $22. 
D)  output = 104; price = $20.80. 
A)  output = 62; price = $24. 
B)  output = 62; price = $18. 
C)  output = 83; price = $22. 
D)  output = 104; price = $20.80.

Question 2

A monopoly is defined as a firm that has the largest market share in an industry.

Accepted Answer

A) True 
 B)False

Question 3

Article Summary
In late 2017, informed sources announced that telecommunications companies T-Mobile and Sprint were engaged in active discussions about a potential merger. The 3rd and 4th largest wireless carriers in the United States have had frequent conversations about a stock-for-stock merger, with T-Mobile parent Deutsche Telekom becoming the majority owner of the combined firms and T-Mobile CEO John Legere expected to lead the company. Part of the discussions have been whether the Department of Justice and the Federal Trade Commission would approve the merger, and based on those discussions, whether both companies will choose to proceed with a deal.

-Refer to the Article Summary. A merger between two competitors such as T-Mobile and Sprint may ultimately be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Accepted Answer

A)  increases in revenue for the merged company 
B)  an increase in the HHI to over 2,500 
C)  decreases in marginal revenue for the merged company 
D)  increases in economic efficiency 
A)  increases in revenue for the merged company 
B)  an increase in the HHI to over 2,500 
C)  decreases in marginal revenue for the merged company 
D)  increases in economic efficiency

Question 4

Figure 15-10  
-Refer to Figure 15-10. What is the area that represents producer surplus under a monopoly?

Accepted Answer

A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the area 0P1FH 
D)  the rectangle P1P3HF 
A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the area 0P1FH 
D)  the rectangle P1P3HF

Question 5

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 6

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 7

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 8

Figure 15-10  
-Refer to Figure 15-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF. 
A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF.

Question 9

Figure 15-10  
-Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area

Accepted Answer

A)  FHE. 
B)  FGE. 
C)  GEH. 
D)  FQ1Q2E. 
A)  FHE. 
B)  FGE. 
C)  GEH. 
D)  FQ1Q2E.

Question 10

Figure 15-11   In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region. Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11. Following the entry of Verizon, the subscription price falls from PM to PC. What is the increase in consumer surplus as a result of this change?

Accepted Answer

A)  the area A + B + C 
B)  the area B + C 
C)  the area D + F 
D)  the area B + C + D 
A)  the area A + B + C 
B)  the area B + C 
C)  the area D + F 
D)  the area B + C + D

Question 11

Figure 15-6   Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6. The monopolist's total cost is

Accepted Answer

A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40. 
A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40.

Question 12

What type of protection does U.S. law grant the creator of a book, film, or piece of music?

Accepted Answer

A)  A public franchise, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
B)  A copyright, which grants exclusive rights to the creator for 20 years after the work is created. 
C)  A patent, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
D)  A copyright, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
A)  A public franchise, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
B)  A copyright, which grants exclusive rights to the creator for 20 years after the work is created. 
C)  A patent, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
D)  A copyright, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death.

Question 13

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?

Accepted Answer

A)  It was a public enterprise; therefore, the Canadian government blocked entry into the market for nickel. 
B)  There were important network externalities in the production of nickel. 
C)  Economies of scale resulted in the company becoming a natural monopoly. 
D)  control of a key resource 
A)  It was a public enterprise; therefore, the Canadian government blocked entry into the market for nickel. 
B)  There were important network externalities in the production of nickel. 
C)  Economies of scale resulted in the company becoming a natural monopoly. 
D)  control of a key resource

Question 14

Figure 15-12   Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12. What is the amount of consumer surplus if, instead of monopoly, the industry was organized as a perfectly competitive industry?

Accepted Answer

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

Question 15

Figure 15-17   Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 15-17. The dean of the college argues: "I think the course should be priced to maximize the profit the college earns, so these funds can be used to pay some other expenses." How much profit (or loss) will the college make on the course if it charges this price?

Accepted Answer

A)  -$2,592,000 
B)  -$1,080,000 
C)  $0 
D)  $450,000 
A)  -$2,592,000 
B)  -$1,080,000 
C)  $0 
D)  $450,000

Question 16

The Federal Trade Commission (FTC) Act

Accepted Answer

A)  gave the FTC full power to regulate mergers. 
B)  closed the loopholes in the Sherman and Clayton Acts. 
C)  divided authority to police mergers between the FTC and the Department of Justice. 
D)  prohibited charging buyers different prices if the result would reduce competition. 
A)  gave the FTC full power to regulate mergers. 
B)  closed the loopholes in the Sherman and Clayton Acts. 
C)  divided authority to police mergers between the FTC and the Department of Justice. 
D)  prohibited charging buyers different prices if the result would reduce competition.

Question 17

A monopolist faces

Accepted Answer

A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  a horizontal demand curve. 
D)  a downward-sloping demand curve. 
A)  a perfectly elastic demand curve. 
B)  a perfectly inelastic demand curve. 
C)  a horizontal demand curve. 
D)  a downward-sloping demand curve.

Question 18

Figure 15-16   Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Accepted Answer

A)  This results in a misallocation of resources. 
B)  The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C)  The firm will sustain persistent losses and will not continue in business in the long run. 
D)  The firm will break even. 
A)  This results in a misallocation of resources. 
B)  The marginal cost of producing the last unit sold exceeds the marginal benefit. 
C)  The firm will sustain persistent losses and will not continue in business in the long run. 
D)  The firm will break even.

Question 19

Which of the following statements is true?

Accepted Answer

A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximize its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic. 
A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximize its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic.

Question 20

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Accepted Answer

A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms. 
A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms.

Exam 15: Monopoly and Antitrust Policy

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6. The profit-maximizing output and price for the monopolist are

A monopoly is defined as a firm that has the largest market share in an industry.

Figure 15-10 -Refer to Figure 15-10. What is the area that represents producer surplus under a monopoly?

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

Which of the following is true for a monopolist?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Figure 15-10 -Refer to Figure 15-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Figure 15-10 -Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6. The monopolist's total cost is

What type of protection does U.S. law grant the creator of a book, film, or piece of music?

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?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12. What is the amount of consumer surplus if, instead of monopoly, the industry was organized as a perfectly competitive industry?

The Federal Trade Commission (FTC) Act

A monopolist faces

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Which of the following statements is true?

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

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 More Realistic Setting

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

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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