Question 1

A market economy benefits from market power

Accepted Answer

A)  if the majority of the population are entrepreneurs. 
B)  if firms with market power do research and development with the profits earned. 
C)  if market power gets so bad the government creates public enterprises. 
D)  under no circumstances. 
A)  if the majority of the population are entrepreneurs. 
B)  if firms with market power do research and development with the profits earned. 
C)  if market power gets so bad the government creates public enterprises. 
D)  under no circumstances.

Question 2

Figure 10-16
   Figure 10-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 10-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Accepted Answer

A)  Q₀ units; P₀ 
B)  Q₂ units; P₂ 
C)  Q₁ units; P₄ 
D)  Q₃ units; P₃ 
A)  Q₀ units; P₀ 
B)  Q₂ units; P₂ 
C)  Q₁ units; P₄ 
D)  Q₃ units; P₃

Question 3

Equilibrium in a perfectly competitive market results in the greatest amount of economic surplus,or total benefit to society,from the production of a good.Why,then,did Joseph Schumpeter argue that an economy may benefit more from firms that have market power than from firms that are perfectly competitive?

Accepted Answer

Schumpeter did not deny that perfectly c

Question 4

Figure 10-6
   Figure 10-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-6.The monopolist's total revenue is

Accepted Answer

A)  $1,116. 
B)  $1,488. 
C)  $1,726.40 
D)  $1,826. 
A)  $1,116. 
B)  $1,488. 
C)  $1,726.40 
D)  $1,826.

Question 5

Consider two industries,industry W and industry X.In industry W there are five companies,each with a market share of 20% of total sales.In industry X,there are six companies.One company has a 50% market share and each of the other five firms has a market share of 10%.
a.Calculate the four-firm concentration ratio for each industry.
b.Calculate the Herfindahl-Hirschman Index (HHI)for each industry.
c.What do the values of the two concentration measures imply about the degree of market power in the two industries?

Accepted Answer

a∙The concentration ratio in industry W

Question 6

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 7

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 8

If a monopolist's price is $50 and average total cost is $43,then the average profit is $7.

Accepted Answer

A) True 
 B)False

Question 9

A natural monopoly is most likely to occur in which of the following industries?

Accepted Answer

A)  the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  the diamond mining and marketing industry because one firm can control a key resource 
C)  the software industry because of the importance of network externalities 
D)  an industry where fixed costs are very large relative to variable costs 
A)  the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years 
B)  the diamond mining and marketing industry because one firm can control a key resource 
C)  the software industry because of the importance of network externalities 
D)  an industry where fixed costs are very large relative to variable costs

Question 10

Economists played a key role in the development of merger guidelines by the Department of Justice and the Federal Trade Commission in 1982.These guidelines have three main parts.What are these parts?

Accepted Answer

A)  concentration ratios; the Herfindahl-Hirschman Index; market standards 
B)  concentration standards; concentration ratios; competitive analysis 
C)  economic analysis; political analysis; dynamic analysis 
D)  market definition; measure of concentration; merger standards 
A)  concentration ratios; the Herfindahl-Hirschman Index; market standards 
B)  concentration standards; concentration ratios; competitive analysis 
C)  economic analysis; political analysis; dynamic analysis 
D)  market definition; measure of concentration; merger standards

Question 11

Figure 10-17
   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 10-17.The faculty member who designed the course argues: "I think the course should be priced so that the maximum number of students enroll." 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 12

A monopoly is the only seller of a product

Accepted Answer

A)  with many substitutes. 
B)  without a close substitute. 
C)  with a perfectly inelastic demand. 
D)  without a well-defined demand curve. 
A)  with many substitutes. 
B)  without a close substitute. 
C)  with a perfectly inelastic demand. 
D)  without a well-defined demand curve.

Question 13

Governments grant patents to

Accepted Answer

A)  compensate firms for research and development costs. 
B)  encourage competition. 
C)  encourage low prices. 
D)  encourage firms to reveal secret production techniques. 
A)  compensate firms for research and development costs. 
B)  encourage competition. 
C)  encourage low prices. 
D)  encourage firms to reveal secret production techniques.

Question 14

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 15

Figure 10-10
  
-Refer to Figure 10-10.What is the area that represents producer surplus under a monopoly?

Accepted Answer

A)  the triangle 0P₂E 
B)  the triangle 0P₃H 
C)  the area 0P₁FH 
D)  the rectangle P₁P₃HF 
A)  the triangle 0P₂E 
B)  the triangle 0P₃H 
C)  the area 0P₁FH 
D)  the rectangle P₁P₃HF

Question 16

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

Accepted Answer

A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost. 
A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost.

Question 17

Which of the following statements is consistent with the views of Joseph Schumpeter?

Accepted Answer

A)  Research and development by competitive firms is responsible for most technological changes. 
B)  An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C)  Enforcement of antitrust laws is necessary to promote competition among firms. 
D)  A lack of competition discourages firms from developing new technologies. 
A)  Research and development by competitive firms is responsible for most technological changes. 
B)  An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. 
C)  Enforcement of antitrust laws is necessary to promote competition among firms. 
D)  A lack of competition discourages firms from developing new technologies.

Question 18

Unlike a perfect competitor,a monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 19

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

Accepted Answer

A) True 
 B)False

Question 20

Figure 10-17
   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 10-17.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." 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

A market economy benefits from market power

Figure 10-16 Figure 10-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 10-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce units and charge a price of .

Figure 10-6 Figure 10-6 shows the cost and demand curves for a monopolist. -Refer to Figure 10-6.The monopolist's total revenue is

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

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?

If a monopolist's price is $50 and average total cost is $43,then the average profit is $7.

A natural monopoly is most likely to occur in which of the following industries?

Economists played a key role in the development of merger guidelines by the Department of Justice and the Federal Trade Commission in 1982.These guidelines have three main parts.What are these parts?

A monopoly is the only seller of a product

Governments grant patents to

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

Figure 10-10 -Refer to Figure 10-10.What is the area that represents producer surplus under a monopoly?

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

Which of the following statements is consistent with the views of Joseph Schumpeter?

Unlike a perfect competitor,a monopolist faces the market demand curve.

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

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

A market economy benefits from market power

Figure 10-16 Figure 10-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 10-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Figure 10-6 Figure 10-6 shows the cost and demand curves for a monopolist. -Refer to Figure 10-6.The monopolist's total revenue is

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

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?

If a monopolist's price is $50 and average total cost is $43,then the average profit is $7.

A natural monopoly is most likely to occur in which of the following industries?

Economists played a key role in the development of merger guidelines by the Department of Justice and the Federal Trade Commission in 1982.These guidelines have three main parts.What are these parts?

A monopoly is the only seller of a product

Governments grant patents to

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

Figure 10-10 -Refer to Figure 10-10.What is the area that represents producer surplus under a monopoly?

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs?

Which of the following statements is consistent with the views of Joseph Schumpeter?

Unlike a perfect competitor,a monopolist faces the market demand curve.

In reality,because few markets are perfectly competitive,some loss of economic efficiency occurs in the market for nearly every good or service.

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

Figure 10-16 Figure 10-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 10-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce units and charge a price of .