Question 1

A merger between Rona building supplies and West Fraser Timber Co Ltd would be an example of a

Accepted Answer

A) vertical merger. 
B) horizontal merger. 
C) conglomerate merger. 
D) conspiracy in restraint of trade. 
A) vertical merger. 
B) horizontal merger. 
C) conglomerate merger. 
D) conspiracy in restraint of trade.

Question 2

For which of the following firms is patent protection of vital importance?

Accepted Answer

A) furniture producers 
B) software firms 
C) pharmaceutical firms 
D) auto makers 
A) furniture producers 
B) software firms 
C) pharmaceutical firms 
D) auto makers

Question 3

Figure 13.8
  
-Refer to Figure 13.8.From the monopoly graph above, identify the following:
a.The profit maximizing price
b.The profit maximizing quantity
c.The area representing deadweight loss
d.The area representing the transfer of consumer surplus to the monopoly

Accepted Answer

a.Price = P₃
b.Quantity = Q₁
c

Question 4

Compared to a monopolistic competitor, a monopolist faces

Accepted Answer

A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero. 
A) a more elastic demand curve. 
B) a more inelastic demand curve. 
C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D) a demand curve that has a price elasticity coefficient of zero.

Question 5

The size of a deadweight loss in a market is reduced by

Accepted Answer

A) government legislating a ceiling price. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction. 
A) government legislating a ceiling price. 
B) government legislating a price floor. 
C) market price being close to marginal cost. 
D) creative destruction.

Question 6

Table 13.2
 $\begin{array}{|c|c|c|}
\hline \text { Price per Dose } & \begin{array}{c}
\text { Quantity } \
\text { Demanded } \
\text { (dose) }
\end{array} & \begin{array}{c}
\text { Total Cost of } \
\text { Production } \
\text { (dollars) }
\end{array} \
\hline \$ 80 & 0 & \$ 80 \
\hline 72 & 1 & 82 \
\hline 64 & 2 & 88 \
\hline 56 & 3 & 100 \
\hline 48 & 4 & 124 \
\hline 40 & 5 & 164 \
\hline 32 & 6 & 208 \
\hline 24 & 7 & 268 \
\hline 16 & 8 & 340 \
\hline
\end{array}$ 
Onawy Inc. has been granted a patent for its birch root toothache balm. Table 13.2 shows the demand and the total cost schedule for the firm.
-Refer to Table 13.2.What is Onawy's profit-maximizing output?

Accepted Answer

A) 4 units 
B) 5 units 
C) 6 units 
D) 7 units 
A) 4 units 
B) 5 units 
C) 6 units 
D) 7 units

Question 7

Long-run economic profits would most likely exist in which market structure?

Accepted Answer

A) monopoly, monopolistic competition and oligopoly 
B) monopoly and oligopoly 
C) monopoly and monopolistic competition 
D) monopoly only 
A) monopoly, monopolistic competition and oligopoly 
B) monopoly and oligopoly 
C) monopoly and monopolistic competition 
D) monopoly only

Question 8

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

Accepted Answer

A) True 
 B)False

Question 9

A firm that has the ability to control to some degree the price of the product it sells

Accepted Answer

A) is also able to dictate the quantity purchased. 
B) faces a demand curve that is inelastic throughout the range of market demand. 
C) is a price maker. 
D) faces a perfectly inelastic demand curve. 
A) is also able to dictate the quantity purchased. 
B) faces a demand curve that is inelastic throughout the range of market demand. 
C) is a price maker. 
D) faces a perfectly inelastic demand curve.

Question 10

Figure 13.4
  
-Refer to Figure 13.4.Use the figure above to answer the following questions.
A)What is the profit-maximizing quantity and what price will the monopolist charge?
B)What is the total revenue at the profit-maximizing output level?
C)What is the total cost at the profit-maximizing output level?
D)What is the profit?
E)What is the profit per unit (average profit)at the profit-maximizing output level?
F)If this industry was organized as a perfectly competitive industry, what would be the profit-maximizing price and quantity?

Accepted Answer

A.QUANTITY = 50; PRICE = 32
b.Total reve

Question 11

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

A) after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B) firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C) the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D) after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug. 
A) after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B) firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C) the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D) after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.

Question 12

Figure 13.6
  
-Refer to Figure 13.6.What is the area that represents producer surplus under a monopoly?

Accepted Answer

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

Question 13

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Accepted Answer

A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) corresponding to the demand curve where marginal revenue equals zero. 
A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) corresponding to the demand curve where marginal revenue equals zero.

Question 14

Which of the following statements is consistent with the views of Joseph Schumpeter?

Accepted Answer

A) Research and development by competitive firms is responsible for most technological changes. 
B) An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C) Enforcement of antitrust laws is necessary to promote competition among firms. 
D) A lack of competition discourages firms from developing new technologies. 
A) Research and development by competitive firms is responsible for most technological changes. 
B) An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C) Enforcement of antitrust laws is necessary to promote competition among firms. 
D) A lack of competition discourages firms from developing new technologies.

Question 15

Figure 13.3
   
Figure 13.3 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.3.What is the amount of the monopoly's profit?

Accepted Answer

A) $2,700 
B) $4,200 
C) $10,400 
D) $12,600 
A) $2,700 
B) $4,200 
C) $10,400 
D) $12,600

Question 16

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Accepted Answer

A) to maximize profit the firm should increase output. 
B) to maximize profit the firm should decrease output. 
C) to maximize profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximize profit. 
A) to maximize profit the firm should increase output. 
B) to maximize profit the firm should decrease output. 
C) to maximize profit the firm should continue to produce the output it is producing. 
D) Not enough information is given to say what the firm should do to maximize profit.

Question 17

Economic efficiency requires that a natural monopoly's price be

Accepted Answer

A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit. 
A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit.

Question 18

Economic efficiency in a free market occurs when

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) price is as low as possible. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) price is as low as possible.

Question 19

Guidelines for mergers between firms are laid out in the

Accepted Answer

A) Mergers and Acquisitions Act. 
B) Sherman Act. 
C) Competition Act. 
D) Antimonopoly Act. 
A) Mergers and Acquisitions Act. 
B) Sherman Act. 
C) Competition Act. 
D) Antimonopoly Act.

Question 20

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

Accepted Answer

A) True 
 B)False

A merger between Rona building supplies and West Fraser Timber Co Ltd would be an example of a

For which of the following firms is patent protection of vital importance?

Figure 13.8 -Refer to Figure 13.8.From the monopoly graph above, identify the following: a.The profit maximizing price b.The profit maximizing quantity c.The area representing deadweight loss d.The area representing the transfer of consumer surplus to the monopoly

Compared to a monopolistic competitor, a monopolist faces

The size of a deadweight loss in a market is reduced by

Long-run economic profits would most likely exist in which market structure?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

A firm that has the ability to control to some degree the price of the product it sells

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Figure 13.6 -Refer to Figure 13.6.What is the area that represents producer surplus under a monopoly?

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Which of the following statements is consistent with the views of Joseph Schumpeter?

Figure 13.3 Figure 13.3 shows the demand and cost curves for a monopolist. -Refer to Figure 13.3.What is the amount of the monopoly's profit?

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Economic efficiency requires that a natural monopoly's price be

Economic efficiency in a free market occurs when

Guidelines for mergers between firms are laid out in the

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

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

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 13: Monopoly and Antitrust Policy

A merger between Rona building supplies and West Fraser Timber Co Ltd would be an example of a

For which of the following firms is patent protection of vital importance?

Figure 13.8 -Refer to Figure 13.8.From the monopoly graph above, identify the following: a.The profit maximizing price b.The profit maximizing quantity c.The area representing deadweight loss d.The area representing the transfer of consumer surplus to the monopoly

Compared to a monopolistic competitor, a monopolist faces

The size of a deadweight loss in a market is reduced by

Long-run economic profits would most likely exist in which market structure?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the average profit is $7.

A firm that has the ability to control to some degree the price of the product it sells

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Figure 13.6 -Refer to Figure 13.6.What is the area that represents producer surplus under a monopoly?

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

Which of the following statements is consistent with the views of Joseph Schumpeter?

Figure 13.3 Figure 13.3 shows the demand and cost curves for a monopolist. -Refer to Figure 13.3.What is the amount of the monopoly's profit?

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then

Economic efficiency requires that a natural monopoly's price be

Economic efficiency in a free market occurs when

Guidelines for mergers between firms are laid out in the

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

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

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters