Exam 10: Monopoly and Antitrust Policy

Consider the following characteristics: a.a market structure with barriers to entry b.demand curves that are easily identified c.firm cannot make zero profits in the long run d.firm can reap long run profits. Which of the characteristics in the list above is shared by an oligopolist and a monopolist?

The first important law regulating monopolies in the United States was

Compared to perfect competition,the consumer surplus in a monopoly

Market power refers to

Table 10-3 Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost \ 17 3 \ 51 \@cdots- \ 56 \ldots 16 4 64 \ 13 63 \ 7 15 5 75 11 71 8 14 6 84 9 80 9 13 7 91 7 90 10 12 8 96 5 101 11 Assume Table 10-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia. -Refer to Table 10-3.If Comcast wants to maximize its profits,what price (P)should it charge and how many cable subscriptions per month (Q)should it sell?

Figure 10-5 -Refer to Figure 10-5.If the monopolist charges price P* for output Q*,in order to maximize profit or minimize loss in the short run,it should

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

Explain why the monopolist has no supply curve?

A virtuous cycle occurs

To maintain a monopoly,a firm must have

Governments grant patents to encourage

A monopolist's profit maximizing price and output correspond to the point on a graph

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

A monopoly is a firm that is the only seller of a good or service that does not have

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

a.What is the defining characteristic of a natural monopoly? b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive? c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal,it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain. d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

Table 10-4 Price per Dose Quantity Demanded (dose) Total Cost of Production (dollars) \ 80 0 \ 80 72 1 82 64 2 88 56 3 100 48 4 124 40 5 164 32 6 208 24 7 268 16 8 340 Shakti Inc.has been granted a patent for its Arnica toothache balm. Table 10-4 shows the demand and the total cost schedule for the firm. -Refer to Table 10-4.What is the amount of Shakti's profit?

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.As a result of this change