Question 1

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

Accepted Answer

A)  a copyright. 
B)  a network externality. 
C)  a quota. 
D)  a public franchise. 
A)  a copyright. 
B)  a network externality. 
C)  a quota. 
D)  a public franchise.

Question 2

A merger between U.S.Steel and General Motors would be an example of a

Accepted Answer

A)  vertical merger. 
B)  horizontal merger. 
C)  conglomerate merger. 
D)  conspiracy in restraint of trade. 
A)  vertical merger. 
B)  horizontal merger. 
C)  conglomerate merger. 
D)  conspiracy in restraint of trade.

Question 3

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 4

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 5

A public franchise

Accepted Answer

A)  is a corporation that is owned by stockholders. 
B)  results from ownership of a key raw material. 
C)  is a government designation that a private firm is the only legal producer of a good or service. 
D)  is an unregulated monopoly necessary for the public good. 
A)  is a corporation that is owned by stockholders. 
B)  results from ownership of a key raw material. 
C)  is a government designation that a private firm is the only legal producer of a good or service. 
D)  is an unregulated monopoly necessary for the public good.

Question 6

Identify the type of merger in each of the following situations and indicate how the post-merger concentration ratio for the industry is affected.
a.A steel company merges with a coal and iron ore mining company.b.Staples,a retailer of office supplies,acquires Office Depot,another retailer of office supplies.c.An oil company merges with pipeline,shipping,and railroad companies as well as refineries and gas stations.

Accepted Answer

a∙This would be a vertical merger; the c

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A monopoly firm is the only seller of a good or service that

Accepted Answer

A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute. 
A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute.

Question 9

Long-run economic profits would most likely exist in which market structure?

Accepted Answer

A)  monopoly, monopolistic competition, and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only 
A)  monopoly, monopolistic competition, and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only

Question 10

Figure 10-4
   Figure 10-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-4.What is the price charged for the profit-maximizing output level?

Accepted Answer

A)  $13 
B)  $21 
C)  $27 
D)  $34 
A)  $13 
B)  $21 
C)  $27 
D)  $34

Question 11

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

Accepted Answer

Profit maximization is not the same thin

Question 12

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 13

A Herfindahl-Hirschman Index is calculated by

Accepted Answer

A)  summing the amount of sales by the four largest firms and dividing by total industry sales. 
B)  dividing the number of firms wanting to merge by the total number in the industry. 
C)  summing the squares of the market shares of each firm in the industry. 
D)  dividing the advertising expenditures of the firms that want to merge by total industry advertising expenditures. 
A)  summing the amount of sales by the four largest firms and dividing by total industry sales. 
B)  dividing the number of firms wanting to merge by the total number in the industry. 
C)  summing the squares of the market shares of each firm in the industry. 
D)  dividing the advertising expenditures of the firms that want to merge by total industry advertising expenditures.

Question 14

Identify four reasons for high entry barriers.Briefly explain each reason.

Accepted Answer

1∙Economies of scale.This occurs when a

Question 15

Figure 10-9
   Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.What is the economically efficient output level?

Accepted Answer

A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units 
A)  600 units 
B)  800 units 
C)  940 units 
D)  1160 units

Question 16

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

Accepted Answer

A) True 
 B)False

Question 17

Some economists believe that the economy benefits from firms having market power.Which of the following is an argument that has been made to support this position?

Accepted Answer

A)  Large firms are better able than small firms to spend funds on research and development required to develop new products. 
B)  Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. 
C)  Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. 
D)  Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries. 
A)  Large firms are better able than small firms to spend funds on research and development required to develop new products. 
B)  Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. 
C)  Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. 
D)  Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.

Question 18

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 19

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Accepted Answer

A)  the Clayton Act 
B)  the Securities and Exchange Act 
C)  the Sherman Act 
D)  the Robinson-Patman Act 
A)  the Clayton Act 
B)  the Securities and Exchange Act 
C)  the Sherman Act 
D)  the Robinson-Patman Act

Question 20

Which of the following statements is true?

Accepted Answer

A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximize its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic. 
A)  If a tax is imposed on a product sold by a monopolist, the monopolist will maximize its profits by producing where marginal revenue equals marginal cost. 
B)  A monopolist will always charge the highest possible price. 
C)  If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers. 
D)  Because a monopolist faces no competition, the demand for its product is perfectly inelastic.

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

A merger between U.S.Steel and General Motors would be an example of a

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

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

A public franchise

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

A monopoly firm is the only seller of a good or service that

Long-run economic profits would most likely exist in which market structure?

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the price charged for the profit-maximizing output level?

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

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

A Herfindahl-Hirschman Index is calculated by

Identify four reasons for high entry barriers.Briefly explain each reason.

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the economically efficient output level?

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

Some economists believe that the economy benefits from firms having market power.Which of the following is an argument that has been made to support this position?

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

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Which of the following statements is true?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 10: Monopoly and Antitrust Policy

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

A merger between U.S.Steel and General Motors would be an example of a

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

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

A public franchise

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

A monopoly firm is the only seller of a good or service that

Long-run economic profits would most likely exist in which market structure?

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the price charged for the profit-maximizing output level?

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

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

A Herfindahl-Hirschman Index is calculated by

Identify four reasons for high entry barriers.Briefly explain each reason.

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the economically efficient output level?

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

Some economists believe that the economy benefits from firms having market power.Which of the following is an argument that has been made to support this position?

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

Which antitrust law prohibited firms from buying stock in competitors and from having directors serve on the boards of competing firms?

Which of the following statements is true?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters