Question 1

Figure 15-6
   
Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist earns a profit of

Accepted Answer

A) $0. 
B) $170. 
C) $248. 
D) $372. 
A) $0. 
B) $170. 
C) $248. 
D) $372.

Question 2

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Accepted Answer

A monopoly's marginal revenue curve lies

Question 3

Wendell can sell five motor homes per week at a price of $22,000.If he lowers the price of motor homes to $20,000 per week he will sell six motor homes.What is the marginal revenue of the sixth motor home?

Accepted Answer

A) $10,000 
B) $12,000 
C) $20,000 
D) $22,000 
A) $10,000 
B) $12,000 
C) $20,000 
D) $22,000

Question 4

Figure 15-4
   
Figure 15-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-4.What is the amount of the monopoly's total cost of production?

Accepted Answer

A) $21,600 
B) $17,700 
C) $9,340 
D) $7,800 
A) $21,600 
B) $17,700 
C) $9,340 
D) $7,800

Question 5

Figure 15-18
  
-Refer to Figure 15-18 to answer the following questions.
a.What quantity will this monopoly produce and what price will it charge?
b.Suppose the government decides to regulate this monopoly and imposes a price ceiling of $25.Now what quantity will the monopoly produce and what price will it charge?
c.Will every consumer who is willing to pay the ceiling price of $25 be able to buy the product? Briefly explain.

Accepted Answer

a.To maximize profits, the monopoly will

Question 6

The first important federal law passed to regulate monopolies in the United States was the

Accepted Answer

A) Cellar-Kefauver Act. 
B) Clayton Act. 
C) Federal Trade Commission Act. 
D) Sherman Act. 
A) Cellar-Kefauver Act. 
B) Clayton Act. 
C) Federal Trade Commission Act. 
D) Sherman Act.

Question 7

Figure 15-16
   
Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

Accepted Answer

A) Q₁ units; P₄ 
B) Q₁ units; P₁ 
C) Q₅ units; P₃ 
D) Q₃ units; P₄ 
A) Q₁ units; P₄ 
B) Q₁ units; P₁ 
C) Q₅ units; P₃ 
D) Q₃ units; P₄

Question 8

Which one of the following about a monopoly is false?

Accepted Answer

A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary. 
A) A monopoly could make profits in the long run. 
B) A monopoly could break even in the long run. 
C) A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D) A monopoly status could be temporary.

Question 9

Figure 15-10
  
-Refer to Figure 15-10.Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A) area FHE. 
B) area FGE. 
C) area P₁P₂EF. 
D) area P₁P₂GF. 
A) area FHE. 
B) area FGE. 
C) area P₁P₂EF. 
D) area P₁P₂GF.

Question 10

A possible advantage of a horizontal merger for the economy is that

Accepted Answer

A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue. 
A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue.

Question 11

Figure 15-9
   
Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?

Accepted Answer

A) $8 
B) $11.50 
C) $21 
D) There is no difference. 
A) $8 
B) $11.50 
C) $21 
D) There is no difference.

Question 12

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Accepted Answer

A) Since few diamonds are ever destroyed, De Beers has constantly faced possible competition from other firms reselling diamonds. 
B) Competition from imitation diamonds. Technology has made it possible to make fake diamonds look exactly like real diamonds. 
C) Competition from other gemstones, including rubies and emeralds, that have become more popular over time. 
D) At different times in the past some countries have banned the importation of diamonds from South Africa for political reasons. 
A) Since few diamonds are ever destroyed, De Beers has constantly faced possible competition from other firms reselling diamonds. 
B) Competition from imitation diamonds. Technology has made it possible to make fake diamonds look exactly like real diamonds. 
C) Competition from other gemstones, including rubies and emeralds, that have become more popular over time. 
D) At different times in the past some countries have banned the importation of diamonds from South Africa for political reasons.

Question 13

Figure 15-17
   
Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not.The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 15-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." What price should you recommend?

Accepted Answer

A) $0 
B) $40 
C) $88 
D) $150 
A) $0 
B) $40 
C) $88 
D) $150

Question 14

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

Accepted Answer

A) adding up the market shares of all firms in the industry, squaring this number and then dividing by the number of firms in the industry. 
B) squaring the market shares of each firm in an industry and then adding up the values of the squares. 
C) squaring the four-firm concentration ratio of the industry and dividing this number by the total number of firms in the industry. 
D) determining the market shares of the four largest firms in the industry, but unlike the concentration ratio, the Index includes sales in the United States by foreign firms. 
A) adding up the market shares of all firms in the industry, squaring this number and then dividing by the number of firms in the industry. 
B) squaring the market shares of each firm in an industry and then adding up the values of the squares. 
C) squaring the four-firm concentration ratio of the industry and dividing this number by the total number of firms in the industry. 
D) determining the market shares of the four largest firms in the industry, but unlike the concentration ratio, the Index includes sales in the United States by foreign firms.

Question 15

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 16

Market power in the United States causes a huge loss of economic efficiency.

Accepted Answer

A) True 
 B)False

Question 17

BHP Billiton is a Canadian company that owns mines in Canada that

Accepted Answer

A) produce nickel. After World War II, BHP Billiton began to compete with another Canadian firm, the International Nickel Company. This competition eventually ended International Nickel's monopoly in this market. 
B) produce bauxite, the mineral needed to produce aluminum. BHP Billiton began to mine bauxite after World War II. This competition eventually ended the Aluminum Company of America (ALCO
A) 's monopoly in this market. 
C) produce coal. Until World War II, BHP Billiton had a monopoly on coal in Canada. 
D) produce diamonds. 
A) produce nickel. After World War II, BHP Billiton began to compete with another Canadian firm, the International Nickel Company. This competition eventually ended International Nickel's monopoly in this market. 
B) produce bauxite, the mineral needed to produce aluminum. BHP Billiton began to mine bauxite after World War II. This competition eventually ended the Aluminum Company of America (ALCO
A) 's monopoly in this market. 
C) produce coal. Until World War II, BHP Billiton had a monopoly on coal in Canada. 
D) produce diamonds.

Question 18

Consider an industry that is made up of nine firms each with a market share (percent of sales)as follows:
A.Firm A: 30%
B.Firm B: 20%
C.Firms C, D, and E: 10% each
D.Firms F, G, H, and J: 5% each
What is the value of the four-firm concentration ratio and how is the industry categorized?

Accepted Answer

A) 50%; monopolistic competition 
B) 70%; oligopoly 
C) 75%; oligopoly 
D) 80%; strongly oligopolistic 
A) 50%; monopolistic competition 
B) 70%; oligopoly 
C) 75%; oligopoly 
D) 80%; strongly oligopolistic

Question 19

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?

Accepted Answer

A) a, b, c, and d 
B) a, b, and d 
C) a, c, and d 
D) a and d 
A) a, b, c, and d 
B) a, b, and d 
C) a, c, and d 
D) a and d

Question 20

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A) Yes, there are no substitutes to Peet's coffee. 
B) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C) Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No, Peet's is not a monopoly because there are many branches of Peet's. 
A) Yes, there are no substitutes to Peet's coffee. 
B) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C) Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No, Peet's is not a monopoly because there are many branches of Peet's.

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Wendell can sell five motor homes per week at a price of $22,000.If he lowers the price of motor homes to $20,000 per week he will sell six motor homes.What is the marginal revenue of the sixth motor home?

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is the amount of the monopoly's total cost of production?

The first important federal law passed to regulate monopolies in the United States was the

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of and charge a price of .

Which one of the following about a monopoly is false?

Figure 15-10 -Refer to Figure 15-10.Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

A possible advantage of a horizontal merger for the economy is that

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

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.

Market power in the United States causes a huge loss of economic efficiency.

BHP Billiton is a Canadian company that owns mines in Canada that

Consider an industry that is made up of nine firms each with a market share (percent of sales)as follows: A.Firm A: 30% B.Firm B: 20% C.Firms C, D, and E: 10% each D.Firms F, G, H, and J: 5% each What is the value of the four-firm concentration ratio and how is the industry categorized?

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 15: Monopoly and Antitrust Policy

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Wendell can sell five motor homes per week at a price of $22,000.If he lowers the price of motor homes to $20,000 per week he will sell six motor homes.What is the marginal revenue of the sixth motor home?

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is the amount of the monopoly's total cost of production?

The first important federal law passed to regulate monopolies in the United States was the

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

Which one of the following about a monopoly is false?

Figure 15-10 -Refer to Figure 15-10.Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

A possible advantage of a horizontal merger for the economy is that

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

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.

Market power in the United States causes a huge loss of economic efficiency.

BHP Billiton is a Canadian company that owns mines in Canada that

Consider an industry that is made up of nine firms each with a market share (percent of sales)as follows: A.Firm A: 30% B.Firm B: 20% C.Firms C, D, and E: 10% each D.Firms F, G, H, and J: 5% each What is the value of the four-firm concentration ratio and how is the industry categorized?

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of and charge a price of .