Question 1

In 2014, the NCAA was the subject of two antitrust lawsuits related to video games.The NCAA reached a settlement in which it agreed to

Accepted Answer

A) stop authorizing the production of NCAA-branded video games. 
B) allow schools to pay athletes so it could continue to use their images in the video games. 
C) pay current and former athletes whose names or images had been used in NCAA-branded video games. 
D) split into two separate entities, one which monitors college athletics and the other which markets products. 
A) stop authorizing the production of NCAA-branded video games. 
B) allow schools to pay athletes so it could continue to use their images in the video games. 
C) pay current and former athletes whose names or images had been used in NCAA-branded video games. 
D) split into two separate entities, one which monitors college athletics and the other which markets products.

Question 2

A monopoly is defined as a firm that has the largest market share in an industry.

Accepted Answer

A) True 
 B)False

Question 3

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the
Use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

Accepted Answer

A) The original trademark expired well before Hasbro bought Parker Brothers, so they never had a trademark on Monopoly. 
B) Trademarks never expire, so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011, 20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955, 20 years after the trademark was issued to Parker Brothers. 
A) The original trademark expired well before Hasbro bought Parker Brothers, so they never had a trademark on Monopoly. 
B) Trademarks never expire, so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011, 20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955, 20 years after the trademark was issued to Parker Brothers.

Question 4

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 5

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Accepted Answer

A monopoly is the only seller

Question 6

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

Accepted Answer

A) decrease marginal cost. 
B) raise average total cost. 
C) increase total revenue. 
D) make marginal revenue less elastic. 
A) decrease marginal cost. 
B) raise average total cost. 
C) increase total revenue. 
D) make marginal revenue less elastic.

Question 7

If a monopolist's marginal revenue is $35 per 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 8

Whenever a firm can charge a price greater than marginal cost

Accepted Answer

A) the firm must be a monopolist. 
B) there is some loss of economic efficiency. 
C) consumers have the ability to choose a close substitute. 
D) the firm will earn economic profits. 
A) the firm must be a monopolist. 
B) there is some loss of economic efficiency. 
C) consumers have the ability to choose a close substitute. 
D) the firm will earn economic profits.

Question 9

An example of a monopoly based on control of a key resource is

Accepted Answer

A) Major League Baseball. 
B) NASA. 
C) Microsoft's Windows operating system. 
D) the U.S. Food and Drug Administration. 
A) Major League Baseball. 
B) NASA. 
C) Microsoft's Windows operating system. 
D) the U.S. Food and Drug Administration.

Question 10

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.Suppose the local government imposes a $2.50 per month tax on cable companies.What happens to the price charged by the cable company following the imposition of this tax?

Accepted Answer

A) The price rises from PM to (PM + $2.50). 
B) The price rises from PM but it increases by an amount less than $2.50. 
C) The price rises from PM but it increases by an amount greater than $2.50 to reflect the monopoly's markup. 
D) The price remains at PM. 
A) The price rises from PM to (PM + $2.50). 
B) The price rises from PM but it increases by an amount less than $2.50. 
C) The price rises from PM but it increases by an amount greater than $2.50 to reflect the monopoly's markup. 
D) The price remains at PM.

Question 11

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

Accepted Answer

A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft, the wealthy corn farmer is probably a monopolist 
A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft, the wealthy corn farmer is probably a monopolist

Question 12

Figure 15-4
   
Figure 15-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

Accepted Answer

A) New firms will enter the market to eliminate its profits. 
B) It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C) As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D) It will be regulated by the government because of its excess profits. 
A) New firms will enter the market to eliminate its profits. 
B) It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C) As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D) It will be regulated by the government because of its excess profits.

Question 13

Figure 15-12
   
Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

Accepted Answer

A) $21 
B) $124 
C) $186 
D) $332 
A) $21 
B) $124 
C) $186 
D) $332

Question 14

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

Accepted Answer

A) marginal revenue of the sixth performance is $288,000. 
B) marginal revenue of the sixth performance is $38,000. 
C) cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D) company will be making a loss on the sixth performance because its ticket sales will be less than the average revenue received from the previous five. 
A) marginal revenue of the sixth performance is $288,000. 
B) marginal revenue of the sixth performance is $38,000. 
C) cost of staging the sixth performance is probably higher than the cost of staging the previous five. 
D) company will be making a loss on the sixth performance because its ticket sales will be less than the average revenue received from the previous five.

Question 15

What is a public franchise? Are all public franchises natural monopolies?

Accepted Answer

A public franchise is a firm which the g

Question 16

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

Accepted Answer

A) most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B) prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C) other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D) firms will find ways to obtain additional patent protection - often by making cosmetic changes in drugs that were patented - so that they can continue charging high prices. 
A) most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B) prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C) other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D) firms will find ways to obtain additional patent protection - often by making cosmetic changes in drugs that were patented - so that they can continue charging high prices.

Question 17

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 18

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Accepted Answer

A natural monopoly arises when the produ

Question 19

Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power.Harberger found that

Accepted Answer

A) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production. 
B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States. 
C) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production. 
D) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent. 
A) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production. 
B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States. 
C) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production. 
D) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent.

Question 20

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.

Accepted Answer

A) True 
 B)False

In 2014, the NCAA was the subject of two antitrust lawsuits related to video games.The NCAA reached a settlement in which it agreed to

A monopoly is defined as a firm that has the largest market share in an industry.

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the Use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Whenever a firm can charge a price greater than marginal cost

An example of a monopoly based on control of a key resource is

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

What is a public franchise? Are all public franchises natural monopolies?

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

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

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power.Harberger found that

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.

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

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Exam 15: Monopoly and Antitrust Policy

In 2014, the NCAA was the subject of two antitrust lawsuits related to video games.The NCAA reached a settlement in which it agreed to

A monopoly is defined as a firm that has the largest market share in an industry.

In 1935, the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the Use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Whenever a firm can charge a price greater than marginal cost

An example of a monopoly based on control of a key resource is

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

What is a public franchise? Are all public franchises natural monopolies?

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

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

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power.Harberger found that

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.

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