Question 1

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 2

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

Accepted Answer

A) that has been granted special production rights by the government. 
B) that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C) that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D) that has the largest market share in an industry. 
A) that has been granted special production rights by the government. 
B) that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C) that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D) that has the largest market share in an industry.

Question 3

To maintain a monopoly, a firm must have

Accepted Answer

A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors. 
A) a perfectly inelastic demand. 
B) an insurmountable barrier to entry. 
C) marginal revenue equal to demand. 
D) few competitors.

Question 4

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

Question 5

The first important law regulating monopolies in the United States was

Accepted Answer

A) the Grant Act, which was passed in 1890. 
B) the Clayton Act, which was passed in 1890. 
C) the Sherman Act, which was passed in 1890. 
D) the Federal Trade Commission Act, which was passed in 1914. 
A) the Grant Act, which was passed in 1890. 
B) the Clayton Act, which was passed in 1890. 
C) the Sherman Act, which was passed in 1890. 
D) the Federal Trade Commission Act, which was passed in 1914.

Question 6

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.The dean of the college argues: "I think the course should be priced to maximize the profit the college earns, so these funds can be used to pay some other expenses." How much profit (or loss)will the college make on the course if it charges this price?

Accepted Answer

A) -$2,592,000 
B) -$1,080,000 
C) $0 
D) $450,000 
A) -$2,592,000 
B) -$1,080,000 
C) $0 
D) $450,000

Question 7

A firm that is the only seller of a good or service that does not have a close substitute is called

Accepted Answer

A) a monopoly. 
B) an oligopolist. 
C) a market maker. 
D) a price maker. 
A) a monopoly. 
B) an oligopolist. 
C) a market maker. 
D) a price maker.

Question 8

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

Accepted Answer

A) the greater the difference between marginal cost and price. 
B) the smaller the difference between marginal cost and average total cost. 
C) the smaller the difference between marginal cost and price. 
D) the greater the difference between marginal cost and average revenue. 
A) the greater the difference between marginal cost and price. 
B) the smaller the difference between marginal cost and average total cost. 
C) the smaller the difference between marginal cost and price. 
D) the greater the difference between marginal cost and average revenue.

Question 9

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

Accepted Answer

A) True 
 B)False

Question 10

The Clayton Act is an antitrust law that was passed to

Accepted Answer

A) outlaw monopolization. 
B) address loopholes in the Sherman Act. 
C) prohibit charging buyers different prices if the result would reduce competition. 
D) toughen restrictions on mergers by prohibiting mergers that reduce competition. 
A) outlaw monopolization. 
B) address loopholes in the Sherman Act. 
C) prohibit charging buyers different prices if the result would reduce competition. 
D) toughen restrictions on mergers by prohibiting mergers that reduce competition.

Question 11

Figure 15-15
   
Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.The firm would maximize profit by producing

Accepted Answer

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

Question 12

The 10-year protection period from generic competition for drug manufacturers is a form of

Accepted Answer

A) copyright. 
B) trademark. 
C) hallmark. 
D) patent. 
A) copyright. 
B) trademark. 
C) hallmark. 
D) patent.

Question 13

Figure 15-11
   
In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region.Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11.What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?

Accepted Answer

A) The deadweight loss of area D is converted to consumer surplus. 
B) The deadweight loss of area C+D is converted to consumer surplus. 
C) The deadweight loss of area D is converted to producer surplus. 
D) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus. 
A) The deadweight loss of area D is converted to consumer surplus. 
B) The deadweight loss of area C+D is converted to consumer surplus. 
C) The deadweight loss of area D is converted to producer surplus. 
D) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus.

Question 14

If a firm is a natural monopoly, competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

Accepted Answer

A) Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost. 
B) Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice. 
C) Natural monopolies are privately owned and are allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses. 
D) Local or state regulatory commissions usually set prices for natural monopolies. 
A) Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost. 
B) Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice. 
C) Natural monopolies are privately owned and are allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses. 
D) Local or state regulatory commissions usually set prices for natural monopolies.

Question 15

Figure 15-14
  
-Refer to Figure 15-14.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 16

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 entire 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 entire range of market demand. 
C) is a price maker. 
D) faces a perfectly inelastic demand curve.

Question 17

Figure 15-3
   
Figure 15-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the profit/loss per unit?

Accepted Answer

A) loss of $7 per unit 
B) profit of $30 per unit 
C) loss of $21 per unit 
D) profit of $14 per unit 
A) loss of $7 per unit 
B) profit of $30 per unit 
C) loss of $21 per unit 
D) profit of $14 per unit

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

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

Accepted Answer

Market power allows a firm to set its pr

Question 20

Figure 15-3
   
Figure 15-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Accepted Answer

A) $38 
B) $54 
C) $68 
D) $75 
A) $38 
B) $54 
C) $68 
D) $75

Compared to a monopolistic competitor, a monopolist faces

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

To maintain a monopoly, a firm must have

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

The first important law regulating monopolies in the United States was

A firm that is the only seller of a good or service that does not have a close substitute is called

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

The Clayton Act is an antitrust law that was passed to

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

The 10-year protection period from generic competition for drug manufacturers is a form of

If a firm is a natural monopoly, competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

Figure 15-14 -Refer to Figure 15-14.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

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

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the profit/loss per unit?

Compared to perfect competition, the consumer surplus in a monopoly

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

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

Compared to a monopolistic competitor, a monopolist faces

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

To maintain a monopoly, a firm must have

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

The first important law regulating monopolies in the United States was

A firm that is the only seller of a good or service that does not have a close substitute is called

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117.

The Clayton Act is an antitrust law that was passed to

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

The 10-year protection period from generic competition for drug manufacturers is a form of

If a firm is a natural monopoly, competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

Figure 15-14 -Refer to Figure 15-14.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

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

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the profit/loss per unit?

Compared to perfect competition, the consumer surplus in a monopoly

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

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