Question 1

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 2

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 3

a.What is the difference between a horizontal merger and a vertical merger?
b.Give an example of each type of merger.
c.Could a horizontal merger be welfare improving?

Accepted Answer

a.A horizontal merger is a merger betwee

Question 4

If a merger creates a firm with 65% of the sales in the market

Accepted Answer

A) the merger will be reviewed by the Competition Bureau. 
B) the merger is unlikely to be reviewed. 
C) the merger is certain to be prevented by the Competition Bureau. 
D) the merger will be reviewed by the Prime Minister's Office. 
A) the merger will be reviewed by the Competition Bureau. 
B) the merger is unlikely to be reviewed. 
C) the merger is certain to be prevented by the Competition Bureau. 
D) the merger will be reviewed by the Prime Minister's Office.

Question 5

One reason patent protection is vitally important to pharmaceutical firms is

Accepted Answer

A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. 
B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. 
C) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes. 
D) the high salaries pharmaceutical firms pay to scientists and doctors make their labour costs higher than for any other business. Profits from patents are needed to pay these labour costs. 
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. 
B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. 
C) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes. 
D) the high salaries pharmaceutical firms pay to scientists and doctors make their labour costs higher than for any other business. Profits from patents are needed to pay these labour costs.

Question 6

A local or provincial electrical company has a monopoly that is protected by an entry barrier that takes the form of

Accepted Answer

A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve. 
A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve.

Question 7

Tickets to Toronto Maple Leafs games regularly sell out, despite a relatively high price.The Pheonix Coyotes have struggled financially for years.What is an economic reason why the National Hockey League would prevent the Coyotes from moving to the greater Toronto area?

Accepted Answer

A) The commisioner of the league is from the southern US. 
B) The Toronto City Council refuses to grant permission. 
C) The National Hockey League understands that a new team in Toronto could reduce the Maple Leaf's profits. 
D) A second team in Toronto would be too confusing for fans. 
A) The commisioner of the league is from the southern US. 
B) The Toronto City Council refuses to grant permission. 
C) The National Hockey League understands that a new team in Toronto could reduce the Maple Leaf's profits. 
D) A second team in Toronto would be too confusing for fans.

Question 8

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result the monopoly's profit will fall.

Accepted Answer

A) True 
 B)False

Question 9

Many natural monopolies in Canada are regulated by

Accepted Answer

A) the Federal Trade Commission. 
B) the Competition Bureau. 
C) local or provincial public utility boards. 
D) Industry Canada. 
A) the Federal Trade Commission. 
B) the Competition Bureau. 
C) local or provincial public utility boards. 
D) Industry Canada.

Question 10

The demand curve for the monopoly's product is

Accepted Answer

A) the market demand for the product. 
B) more elastic than the market demand for the product. 
C) more inelastic than the market demand for the product. 
D) undefined. 
A) the market demand for the product. 
B) more elastic than the market demand for the product. 
C) more inelastic than the market demand for the product. 
D) undefined.

Question 11

Figure 13.9
   
Figure 13.9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 13.9.What is the economically efficient output level and what is the price at that level?

Accepted Answer

A)  Q₄; P₁ 
B) Q₃; P₂ 
C) Q₂; P₂ 
D) Q₂; P₃ 
A)  Q₄; P₁ 
B) Q₃; P₂ 
C) Q₂; P₂ 
D) Q₂; P₃

Question 12

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 13

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

Accepted Answer

A) the triangle P₀P₁F 
B) the triangle P₀P₂E 
C) the trapezium P₁P₂EF 
D) the rectangle P₁P₃HF 
A) the triangle P₀P₁F 
B) the triangle P₀P₂E 
C) the trapezium P₁P₂EF 
D) the rectangle P₁P₃HF

Question 14

Provide two examples of a government barrier to entry?

Accepted Answer

1.A patent or copyright which gives an i

Question 15

Figure 13.1
   
Figure 13.1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 13.1.To maximize profit, the firm will produce

Accepted Answer

A) Q₁. 
B) Q₂. 
C) Q₃. 
D) Q₄. 
A) Q₁. 
B) Q₂. 
C) Q₃. 
D) Q₄.

Question 16

A market economy benefits from market power

Accepted Answer

A) if the majority of the population are entrepreneurs. 
B) if firms with market power do research and development with the profits earned. 
C) if market power gets so bad the government creates public enterprises. 
D) under no circumstances. 
A) if the majority of the population are entrepreneurs. 
B) if firms with market power do research and development with the profits earned. 
C) if market power gets so bad the government creates public enterprises. 
D) under no circumstances.

Question 17

Figure 13.1
   
Figure 13.1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 13.1.If the firm's average total cost curve is ATC₃, the firm will

Accepted Answer

A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition. 
A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition.

Question 18

Compared to perfect competition, the consumer surplus in a monopoly

Accepted Answer

A) is unchanged because price and output are the same. 
B) is lower because price is higher and output is lower. 
C) is higher because price is higher and output is the same. 
D) is eliminated. 
A) is unchanged because price and output are the same. 
B) is lower because price is higher and output is lower. 
C) is higher because price is higher and output is the same. 
D) is eliminated.

Question 19

Figure 13.1
   
Figure 13.1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 13.1.If the firm's average total cost curve is ATC₁, the firm will

Accepted Answer

A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition. 
A) suffer a loss. 
B) break even. 
C) make a profit. 
D) face competition.

Question 20

The Competition Bureau considers markets to have

Accepted Answer

A) a product dimension and a price dimension. 
B) a product dimension and a geographic dimension. 
C) a quality dimension and a quantity dimension. 
D) a time dimension and a space dimension. 
A) a product dimension and a price dimension. 
B) a product dimension and a geographic dimension. 
C) a quality dimension and a quantity dimension. 
D) a time dimension and a space dimension.

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

A product's price approaches its marginal cost as market concentration increases.

a.What is the difference between a horizontal merger and a vertical merger? b.Give an example of each type of merger. c.Could a horizontal merger be welfare improving?

If a merger creates a firm with 65% of the sales in the market

One reason patent protection is vitally important to pharmaceutical firms is

A local or provincial electrical company has a monopoly that is protected by an entry barrier that takes the form of

Tickets to Toronto Maple Leafs games regularly sell out, despite a relatively high price.The Pheonix Coyotes have struggled financially for years.What is an economic reason why the National Hockey League would prevent the Coyotes from moving to the greater Toronto area?

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result the monopoly's profit will fall.

Many natural monopolies in Canada are regulated by

The demand curve for the monopoly's product is

Figure 13.9 Figure 13.9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 13.9.What is the economically efficient output level and what is the price at that level?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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

Provide two examples of a government barrier to entry?

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.To maximize profit, the firm will produce

A market economy benefits from market power

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.If the firm's average total cost curve is ATC₃, the firm will

Compared to perfect competition, the consumer surplus in a monopoly

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.If the firm's average total cost curve is ATC₁, the firm will

The Competition Bureau considers markets to have

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

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.

A product's price approaches its marginal cost as market concentration increases.

a.What is the difference between a horizontal merger and a vertical merger? b.Give an example of each type of merger. c.Could a horizontal merger be welfare improving?

If a merger creates a firm with 65% of the sales in the market

One reason patent protection is vitally important to pharmaceutical firms is

A local or provincial electrical company has a monopoly that is protected by an entry barrier that takes the form of

Tickets to Toronto Maple Leafs games regularly sell out, despite a relatively high price.The Pheonix Coyotes have struggled financially for years.What is an economic reason why the National Hockey League would prevent the Coyotes from moving to the greater Toronto area?

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output.As a result the monopoly's profit will fall.

Many natural monopolies in Canada are regulated by

The demand curve for the monopoly's product is

Figure 13.9 Figure 13.9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 13.9.What is the economically efficient output level and what is the price at that level?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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

Provide two examples of a government barrier to entry?

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.To maximize profit, the firm will produce

A market economy benefits from market power

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.If the firm's average total cost curve is ATC₃, the firm will

Compared to perfect competition, the consumer surplus in a monopoly

Figure 13.1 Figure 13.1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 13.1.If the firm's average total cost curve is ATC₁, the firm will

The Competition Bureau considers markets to have

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