Question 1

Which of the following statements is not correct?

Accepted Answer

A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A) Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B) Antitrust laws automatically prevent mergers between companies that produce similar products. 
C) Antitrust laws give the government power to increase competition. 
D) Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 2

In order for antitrust laws to raise social welfare, the government must

Accepted Answer

A) disallow synergy benefits from accruing to monopolists. 
B) disallow any mergers from taking place. 
C) be able to determine which mergers are desirable and which are not. 
D) always attempt to keep markets in their most competitive form. 
A) disallow synergy benefits from accruing to monopolists. 
B) disallow any mergers from taking place. 
C) be able to determine which mergers are desirable and which are not. 
D) always attempt to keep markets in their most competitive form.

Question 3

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Accepted Answer

A) True 
 B)False

Question 4

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 5

For a monopoly firm,

Accepted Answer

A) price always equals marginal revenue. 
B) price always exceeds average revenue. 
C) any price-quantity combination will maximize profits. 
D) None of the above is correct. 
A) price always equals marginal revenue. 
B) price always exceeds average revenue. 
C) any price-quantity combination will maximize profits. 
D) None of the above is correct.

Question 6

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will charge a price of

Accepted Answer

A) $50. 
B) $40. 
C) $20. 
D) $10. 
A) $50. 
B) $40. 
C) $20. 
D) $10.

Question 7

Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is (are) correct?
(i)She will be able to set the price of high-speed Internet service at whatever level she wishes.
(ii)The customers will be forced to purchase high-speed Internet service at whatever price she wants to set.
(iii)She will be able to achieve any profit level that she desires.

Accepted Answer

A) (i) only 
B) (ii) only 
C) (i) and (iii) only 
D) (i), (ii), and (iii) 
A) (i) only 
B) (ii) only 
C) (i) and (iii) only 
D) (i), (ii), and (iii)

Question 8

In reality, perfect price discrimination is

Accepted Answer

A) used by about 75 percent of all monopolies. 
B) used by about 50 percent of all monopolies. 
C) seldom used by monopolies because it leads to lower profits. 
D) rarely possible. 
A) used by about 75 percent of all monopolies. 
B) used by about 50 percent of all monopolies. 
C) seldom used by monopolies because it leads to lower profits. 
D) rarely possible.

Question 9

Figure 15-16  
-Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Accepted Answer

A) the triangle with vertical lines that is bordered by ACT 
B) the triangle with vertical lines and light grey shading that is bordered by ABH 
C) the triangle with vertical lines and dark grey shading that is bordered by HIT 
D) the triangle with dark grey shading that is bordered by HKT 
A) the triangle with vertical lines that is bordered by ACT 
B) the triangle with vertical lines and light grey shading that is bordered by ABH 
C) the triangle with vertical lines and dark grey shading that is bordered by HIT 
D) the triangle with dark grey shading that is bordered by HKT

Question 10

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A) increase the availability of expensive but useful medications. 
B) increase the overall welfare of society through better health because drug companies continually produce better medications. 
C) encourage research. 
D) All of the above are correct. 
A) increase the availability of expensive but useful medications. 
B) increase the overall welfare of society through better health because drug companies continually produce better medications. 
C) encourage research. 
D) All of the above are correct.

Question 11

A competitive firm

Accepted Answer

A) and a monopolist are price takers. 
B) and a monopolist are price makers. 
C) is a price taker, whereas a monopolist is a price maker. 
D) is a price maker, whereas a monopolist is a price taker. 
A) and a monopolist are price takers. 
B) and a monopolist are price makers. 
C) is a price taker, whereas a monopolist is a price maker. 
D) is a price maker, whereas a monopolist is a price taker.

Question 12

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Accepted Answer

A) less incentive to advertise than it would otherwise have. 
B) less market power than it would otherwise have. 
C) more control over the price of diamonds than it would otherwise have. 
D) higher profits than it would otherwise have. 
A) less incentive to advertise than it would otherwise have. 
B) less market power than it would otherwise have. 
C) more control over the price of diamonds than it would otherwise have. 
D) higher profits than it would otherwise have.

Question 13

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A) children's meals at a restaurant 
B) a natural gas company charging customers a higher rate in the winter than in the summer 
C) a senior citizens' discount 
D) coupons in the Sunday newspaper 
A) children's meals at a restaurant 
B) a natural gas company charging customers a higher rate in the winter than in the summer 
C) a senior citizens' discount 
D) coupons in the Sunday newspaper

Question 14

When a firm operates under conditions of monopoly, its price is

Accepted Answer

A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda. 
A) not constrained. 
B) constrained by marginal cost. 
C) constrained by demand. 
D) constrained only by its social agenda.

Question 15

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 16

A monopolist faces a

Accepted Answer

A) horizontal demand curve. 
B) vertical demand curve. 
C) downward-sloping demand curve. 
D) U-shaped demand curve. 
A) horizontal demand curve. 
B) vertical demand curve. 
C) downward-sloping demand curve. 
D) U-shaped demand curve.

Question 17

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Accepted Answer

A) $60 
B) $70 
C) $100 
D) $120 
A) $60 
B) $70 
C) $100 
D) $120

Question 18

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A) resource monopolies. 
B) natural monopolies. 
C) government-created monopolies. 
D) breaking up monopolies into smaller firms. 
A) resource monopolies. 
B) natural monopolies. 
C) government-created monopolies. 
D) breaking up monopolies into smaller firms.

Question 19

Figure 15-18  
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000. 
A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000.

Question 20

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Accepted Answer

A) Morgan Act. 
B) Sherman Act. 
C) Clayton Act. 
D) 14th Amendment. 
A) Morgan Act. 
B) Sherman Act. 
C) Clayton Act. 
D) 14th Amendment.

Exam 15: Monopoly

Which of the following statements is not correct?

In order for antitrust laws to raise social welfare, the government must

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

A monopolist produces where P = MC = MR.

For a monopoly firm,

In reality, perfect price discrimination is

Figure 15-16 -Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Drug companies are allowed to be monopolists in the drugs they discover in order to

A competitive firm

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Which of the following is not an example of price discrimination by a firm?

When a firm operates under conditions of monopoly, its price is

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

A monopolist faces a

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.