Question 1

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

A) prevent mergers that would decrease competition and lower the costs of production. 
B) prevent mergers that would decrease competition and raise the costs of production. 
C) allow mergers that would decrease competition and raise the costs of production. 
D) allow mergers that would decrease competition regardless of what happens to the costs of production. 
A) prevent mergers that would decrease competition and lower the costs of production. 
B) prevent mergers that would decrease competition and raise the costs of production. 
C) allow mergers that would decrease competition and raise the costs of production. 
D) allow mergers that would decrease competition regardless of what happens to the costs of production.

Question 2

Figure 15-5
The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.  
-Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?

Accepted Answer

A) $7 
B) $10.50 
C) $14 
D) $12 
A) $7 
B) $10.50 
C) $14 
D) $12

Question 3

If a monopolist is able to perfectly price discriminate,

Accepted Answer

A) consumer surplus is always increased. 
B) total surplus is always decreased. 
C) consumer surplus and deadweight losses are transformed into monopoly profits. 
D) the price effect dominates the output effect on monopoly revenue. 
A) consumer surplus is always increased. 
B) total surplus is always decreased. 
C) consumer surplus and deadweight losses are transformed into monopoly profits. 
D) the price effect dominates the output effect on monopoly revenue.

Question 4

Give some examples of the benefits and costs of antitrust laws.

Accepted Answer

Benefits include promoting com

Question 5

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Accepted Answer

A) True 
 B)False

Question 6

Figure 15-6   ​
​
-Refer to Figure 15-6. What is the monopoly price and quantity?

Accepted Answer

A) Price = X; quantity = J 
B) Price = Y; quantity = K 
C) Price = Y; quantity = J 
D) Price = Z; quantity = J 
A) Price = X; quantity = J 
B) Price = Y; quantity = K 
C) Price = Y; quantity = J 
D) Price = Z; quantity = J

Question 7

Figure 15-11
​   ​
-Refer to Figure 15-11. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Accepted Answer

The answer of Figure 15-11
​   ​
-Refer to Figure...

Question 8

One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?

Accepted Answer

Under average-cost pricing, the monopoli

Question 9

Figure 15-10
​   ​
-Refer to Figure 15-10. If the firm profit-maximizes, what amount of output will it produce?

Accepted Answer

The answer of Figure 15-10
​   ​
-Refer to Figure...

Question 10

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing?

Accepted Answer

A) Policymakers can regulate prices that the monopoly charges. 
B) Prohibit the monopoly from price discriminating. 
C) Force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D) There is nothing the government can do to eliminate any inefficiency associated with a monopoly. 
A) Policymakers can regulate prices that the monopoly charges. 
B) Prohibit the monopoly from price discriminating. 
C) Force the monopoly to operate at a point where its marginal revenue is equal to its marginal cost. 
D) There is nothing the government can do to eliminate any inefficiency associated with a monopoly.

Question 11

The proper level of government intervention is unclear when dealing with a monopoly.

Accepted Answer

A) True 
 B)False

Question 12

Figure 15-12
​   ​
-Refer to Figure 15-12. If this firm profit maximizes, which letter represents the price it will charge?

Accepted Answer

The answer of Figure 15-12
​   ​
-Refer to Figure...

Question 13

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is not correct?

Accepted Answer

A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Economists usually prefer private ownership to public ownership of natural monopolies. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem. 
A) The government may use antitrust laws to break up an existing company to improve competition. 
B) The government may break up a natural monopoly to lower the price charged to customers. 
C) Economists usually prefer private ownership to public ownership of natural monopolies. 
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Question 15

Scenario 15-1
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.
-If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm

Accepted Answer

A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years. 
A) partial ownership of the right to sell the drug for a limited number of years. 
B) partial ownership of the right to sell the drug for an unlimited number of years. 
C) sole ownership of the right to sell the drug for a limited number of years. 
D) sole ownership of the right to sell the drug for an unlimited number of years.

Question 16

Figure 15-4   ​
​
-Refer to Figure 15-4. How much output will the monopolist produce in order to maximize profit?

Accepted Answer

A) 0 
B) N 
C) O 
D) P 
A) 0 
B) N 
C) O 
D) P

Question 17

Figure 15-6   ​
​
-Refer to Figure 15-6. What is the socially efficient price and quantity?

Accepted Answer

A) Price = X; quantity = J 
B) Price = Y; quantity = K 
C) Price = Y; quantity = J 
D) Price = Z; quantity = K 
A) Price = X; quantity = J 
B) Price = Y; quantity = K 
C) Price = Y; quantity = J 
D) Price = Z; quantity = K

Question 18

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Accepted Answer

perfectly

Question 19

Figure 15-12
​   ​
-Refer to Figure 15-12. If this firm profit maximizes, which letter represents the quantity it will produce?

Accepted Answer

The answer of Figure 15-12
​   ​
-Refer to Figure...

Question 20

Some companies merge in order to lower costs through efficient joint production.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly

Antitrust laws have economic benefits that outweigh the costs if they

Figure 15-5 The following graph depicts the market situation for a monopoly pastry shop called Bearclaws. -Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to maximize profits?

If a monopolist is able to perfectly price discriminate,

Give some examples of the benefits and costs of antitrust laws.

The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.

Figure 15-6 ​ ​ -Refer to Figure 15-6. What is the monopoly price and quantity?

Figure 15-11 ​ ​ -Refer to Figure 15-11. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Figure 15-10 ​ ​ -Refer to Figure 15-10. If the firm profit-maximizes, what amount of output will it produce?

Which of the following governmental actions would eliminate some or all of the inefficiency that results from monopoly pricing?

The proper level of government intervention is unclear when dealing with a monopoly.

Figure 15-12 ​ ​ -Refer to Figure 15-12. If this firm profit maximizes, which letter represents the price it will charge?

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly.

Which of the following statements is not correct?

Figure 15-4 ​ ​ -Refer to Figure 15-4. How much output will the monopolist produce in order to maximize profit?

Figure 15-6 ​ ​ -Refer to Figure 15-6. What is the socially efficient price and quantity?

Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?

Figure 15-12 ​ ​ -Refer to Figure 15-12. If this firm profit maximizes, which letter represents the quantity it will produce?

Some companies merge in order to lower costs through efficient joint production.

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 Nations 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

Figure 15-6 -Refer to Figure 15-6. What is the monopoly price and quantity?

Figure 15-11 -Refer to Figure 15-11. If this firm were able to perfectly price discriminate, which letter represents the amount of output it would produce?

Figure 15-10 -Refer to Figure 15-10. If the firm profit-maximizes, what amount of output will it produce?

Figure 15-12 -Refer to Figure 15-12. If this firm profit maximizes, which letter represents the price it will charge?

Figure 15-4 -Refer to Figure 15-4. How much output will the monopolist produce in order to maximize profit?

Figure 15-6 -Refer to Figure 15-6. What is the socially efficient price and quantity?

Figure 15-12 -Refer to Figure 15-12. If this firm profit maximizes, which letter represents the quantity it will produce?