Question 1

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Accepted Answer

A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio 
A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio

Question 2

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

Accepted Answer

A)  the draft of college players, which grants teams exclusive signing rights to individual players. 
B)  long-term leases teams sign for stadiums and ballparks in major cities. 
C)  television contracts, which give networks the exclusive rights to broadcast games. 
D)  the reserve clause, which is a provision in contracts of professional athletes that require them to play for specific teams over the length of their contracts. 
A)  the draft of college players, which grants teams exclusive signing rights to individual players. 
B)  long-term leases teams sign for stadiums and ballparks in major cities. 
C)  television contracts, which give networks the exclusive rights to broadcast games. 
D)  the reserve clause, which is a provision in contracts of professional athletes that require them to play for specific teams over the length of their contracts.

Question 3

When the government wants to give an exclusive right to one firm to produce a product,it

Accepted Answer

A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market. 
A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market.

Question 4

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximize its revenue. 
C)  Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximizes profits by producing a quantity for which price equals marginal cost. 
A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximize its revenue. 
C)  Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximizes profits by producing a quantity for which price equals marginal cost.

Question 5

If a monopolist's marginal revenue is $25 a 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 6

Figure 10-12
   Figure 10-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

Accepted Answer

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

Question 7

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 Herfindahl-Hirschman Index?

Accepted Answer

A)  1,425 
B)  1,600 
C)  1,700 
D)  2,600 
A)  1,425 
B)  1,600 
C)  1,700 
D)  2,600

Question 8

If a monopolist's price is $50 at 63 units of output and average total cost equals $43,then the firm's total profit is

Accepted Answer

A)  $3,150. 
B)  $2,709. 
C)  $441. 
D)  $7. 
A)  $3,150. 
B)  $2,709. 
C)  $441. 
D)  $7.

Question 9

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately in the long run,the monopoly will start earning profits.

Accepted Answer

A) True 
 B)False

Question 10

Which two factors make regulating mergers complicated?

Accepted Answer

A)  First, firms may lobby government officials to influence their decision to approve the merger. Second, by the time the government officials reach a decision regarding the merger, the firms often decide not to merge. 
B)  First, the time it takes to reach a decision to approve a merger is so long that the firms often have new owners and mangers. Second, by law, government officials are not allowed to consider the impact of foreign trade (exports and imports) on the degree of competition in the markets of the merged firms. 
C)  First, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice must both approve mergers. Second, the concentration ratios that are used to evaluate the degree of competition the merged firms face are flawed. 
D)  First, it is not always clear what market firms are in. Second, the newly merged firm might be more efficient than the merging firms were individually. 
A)  First, firms may lobby government officials to influence their decision to approve the merger. Second, by the time the government officials reach a decision regarding the merger, the firms often decide not to merge. 
B)  First, the time it takes to reach a decision to approve a merger is so long that the firms often have new owners and mangers. Second, by law, government officials are not allowed to consider the impact of foreign trade (exports and imports) on the degree of competition in the markets of the merged firms. 
C)  First, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice must both approve mergers. Second, the concentration ratios that are used to evaluate the degree of competition the merged firms face are flawed. 
D)  First, it is not always clear what market firms are in. Second, the newly merged firm might be more efficient than the merging firms were individually.

Question 11

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 12

Table 10-1
 $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Price per } \
\text { Unit }
\end{array} & \begin{array}{c}
\text { Quantity Demanded } \
\text { (units) }
\end{array} & \begin{array}{c}
\text { Total Cost of Production } \
\text { (dollars) }
\end{array} \
\hline \$ 85 & 10 & \$ 530 \
\hline 80 & 11 & 540 \
\hline 75 & 12 & 550 \
\hline 70 & 13 & 560 \
\hline 65 & 14 & 575 \
\hline 60 & 15 & 595 \
\hline 55 & 16 & 625 \
\hline
\end{array}$ A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 10-1
-Refer to Table 10-1.When producing the profit-maximizing output,what is the amount of the firm's profit?

Accepted Answer

A)  $335 
B)  $350 
C)  $880 
D)  $910 
A)  $335 
B)  $350 
C)  $880 
D)  $910

Question 13

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 14

Figure 10-2
   Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.If the firm's average total cost curve is ATC₂,the firm will

Accepted Answer

A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition. 
A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition.

Question 15

Figure 10-4
   Figure 10-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-4.What is the amount of the monopoly's total revenue?

Accepted Answer

A)  $21,600 
B)  $20,400 
C)  $19,740 
D)  $7,800 
A)  $21,600 
B)  $20,400 
C)  $19,740 
D)  $7,800

Question 16

The most profitable price for a monopolist is

Accepted Answer

A)  the highest price a consumer is willing to pay for the monopolist's product. 
B)  the price at which demand is unit elastic. 
C)  a price that maximizes the quantity sold. 
D)  found where the profit-maximizing quantity hits the demand curve. 
A)  the highest price a consumer is willing to pay for the monopolist's product. 
B)  the price at which demand is unit elastic. 
C)  a price that maximizes the quantity sold. 
D)  found where the profit-maximizing quantity hits the demand curve.

Question 17

Joe Santos owns the only pizza parlor in a small town that is also home to a McDonald's,a Taco Bell,and a Kentucky Fried Chicken.Using a broad definition of a monopoly,Joe has a monopoly if the menu items sold at the other restaurants are not considered close substitutes for the food sold at the pizza parlor.

Accepted Answer

A) True 
 B)False

Question 18

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

Accepted Answer

A)  the antitrust division of the Department of State and the Securities and Exchange Commission. 
B)  the Federal Trade Commission and the Internal Revenue Service. 
C)  the Antitrust Division of the U.S. Department of Justice and the Council of Economic Advisors. 
D)  the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice. 
A)  the antitrust division of the Department of State and the Securities and Exchange Commission. 
B)  the Federal Trade Commission and the Internal Revenue Service. 
C)  the Antitrust Division of the U.S. Department of Justice and the Council of Economic Advisors. 
D)  the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.

Question 19

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Accepted Answer

A)  whether or not there are close substitutes for the products of the two firms. 
B)  how elastic the demand is for each firm's product. 
C)  counting the number of firms that produce the same product. 
D)  how much advertising is done in the industry. 
A)  whether or not there are close substitutes for the products of the two firms. 
B)  how elastic the demand is for each firm's product. 
C)  counting the number of firms that produce the same product. 
D)  how much advertising is done in the industry.

Question 20

Figure 10-4
   Figure 10-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-4.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

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

When the government wants to give an exclusive right to one firm to produce a product,it

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

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

Figure 10-12 Figure 10-12 shows the cost and demand curves for a monopolist. -Refer to Figure 10-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

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 Herfindahl-Hirschman Index?

If a monopolist's price is $50 at 63 units of output and average total cost equals $43,then the firm's total profit is

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately in the long run,the monopoly will start earning profits.

Which two factors make regulating mergers complicated?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.If the firm's average total cost curve is ATC₂,the firm will

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the amount of the monopoly's total revenue?

The most profitable price for a monopolist is

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the amount of the monopoly's total cost of production?

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

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Exam 10: Monopoly and Antitrust Policy

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

When the government wants to give an exclusive right to one firm to produce a product,it

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

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

Figure 10-12 Figure 10-12 shows the cost and demand curves for a monopolist. -Refer to Figure 10-12.Assume the firm maximizes its profits.What is the amount of the consumer surplus?

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 Herfindahl-Hirschman Index?

If a monopolist's price is $50 at 63 units of output and average total cost equals $43,then the firm's total profit is

In the short run,even if a monopoly's total revenue does not cover its variable costs,it should continue to produce because ultimately in the long run,the monopoly will start earning profits.

Which two factors make regulating mergers complicated?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

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?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.If the firm's average total cost curve is ATC₂,the firm will

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the amount of the monopoly's total revenue?

The most profitable price for a monopolist is

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

When a proposed merger between two companies is reviewed by the government,the relevant market is defined by

Figure 10-4 Figure 10-4 shows the demand and cost curves for a monopolist. -Refer to Figure 10-4.What is the amount of the monopoly's total cost of production?

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