Question 1

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

Accepted Answer

A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  no competitors apparently found the profit level attractive enough to enter the market. 
D)  the restaurant owned all the fresh seafood in the state. 
A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  no competitors apparently found the profit level attractive enough to enter the market. 
D)  the restaurant owned all the fresh seafood in the state.

Question 2

The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

Accepted Answer

A) True 
 B)False

Question 3

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Accepted Answer

A)  lies between 1,500 and 2,500 and the merger raises the Index by 50 points. 
B)  lies between 1,500 and 2,500 and the merger raises the Index by more than 100 points. 
C)  lies above 2,500 and the merger raises the Index by less than 50 points. 
D)  lies below 1,000 and the merger raises the Index by 100 points. 
A)  lies between 1,500 and 2,500 and the merger raises the Index by 50 points. 
B)  lies between 1,500 and 2,500 and the merger raises the Index by more than 100 points. 
C)  lies above 2,500 and the merger raises the Index by less than 50 points. 
D)  lies below 1,000 and the merger raises the Index by 100 points.

Question 4

The only firms that do not have market power are

Accepted Answer

A)  firms in industries with low barriers to entry. 
B)  firms that do not advertise their products. 
C)  firms in perfectly competitive markets. 
D)  firms that sell identical products. 
A)  firms in industries with low barriers to entry. 
B)  firms that do not advertise their products. 
C)  firms in perfectly competitive markets. 
D)  firms that sell identical products.

Question 5

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

Question 6

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 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

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Accepted Answer

A) True 
 B)False

Question 8

Figure 10-12
   Figure 10-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

Accepted Answer

A)  output = 62; price = $24. 
B)  output = 83; price = $22. 
C)  output = 62; price = $18. 
D)  output = 104; price = $20.80. 
A)  output = 62; price = $24. 
B)  output = 83; price = $22. 
C)  output = 62; price = $18. 
D)  output = 104; price = $20.80.

Question 9

To be a natural monopoly,a firm must

Accepted Answer

A)  control a key resource input. 
B)  have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. 
C)  have significant network externalities. 
D)  be in a government-regulated market. 
A)  control a key resource input. 
B)  have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. 
C)  have significant network externalities. 
D)  be in a government-regulated market.

Question 10

Which one of the following about a monopoly is false?

Accepted Answer

A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary. 
A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary.

Question 11

Table 10-3
 $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Price } & \text { Quantity } & \begin{array}{l}
\text { Total } \
\text { Revenue }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Revenue }
\end{array} & \text { Total Cost } & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline \$ 17 & 3 & \$ 51 & \cdots & \$ 56 & \cdots \
\hline 16 & 4 & 64 & \$ 13 & 63 & \$ 7 \
\hline 15 & 5 & 75 & 11 & 71 & 8 \
\hline 14 & 6 & 84 & 9 & 80 & 9 \
\hline 13 & 7 & 91 & 7 & 90 & 10 \
\hline 12 & 8 & 96 & 5 & 101 & 11 \
\hline
\end{array}$ Assume Table 10-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia.
-Refer to Table 10-3.If Comcast wants to maximize its profits,what price (P)should it charge and how many cable subscriptions per month (Q)should it sell?

Accepted Answer

A)  P = $12; Q = 8 
B)  P = $14; Q = 6 
C)  P = $16; Q = 4 
D)  P = $15: Q = 5 
A)  P = $12; Q = 8 
B)  P = $14; Q = 6 
C)  P = $16; Q = 4 
D)  P = $15: Q = 5

Question 12

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Accepted Answer

If a perfectly competitive ind

Question 13

Local or state offices of the Department of Justice usually set prices for natural monopolies in their jurisdictions.

Accepted Answer

A) True 
 B)False

Question 14

A United States government patent lasts

Accepted Answer

A)  forever. 
B)  50 years. 
C)  20 years. 
D)  7 years. 
A)  forever. 
B)  50 years. 
C)  20 years. 
D)  7 years.

Question 15

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

Accepted Answer

A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40. 
A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40.

Question 16

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.

Accepted Answer

A network externality exists where the u

Question 17

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result the monopoly's profit will fall.

Accepted Answer

A) True 
 B)False

Question 18

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 19

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

A)  after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B)  firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C)  the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D)  after 20 years patent protection is ended and other firms can produce less-expensive generic versions of the drug. 
A)  after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B)  firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C)  the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D)  after 20 years patent protection is ended and other firms can produce less-expensive generic versions of the drug.

Question 20

To have a monopoly in an industry there must be

Accepted Answer

A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service. 
A)  barriers to entry so high that no other firms can enter the industry. 
B)  a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C)  an inelastic demand for the industry's product. 
D)  a public franchise, making the monopoly the exclusive legal provider of a good or service.

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

The only firms that do not have market power are

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.

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Figure 10-12 Figure 10-12 shows the cost and demand curves for a monopolist. -Refer to Figure 10-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

To be a natural monopoly,a firm must

Which one of the following about a monopoly is false?

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Local or state offices of the Department of Justice usually set prices for natural monopolies in their jurisdictions.

A United States government patent lasts

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

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result the monopoly's profit will fall.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

To have a monopoly in an industry there must be

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

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

The only firms that do not have market power are

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.

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Figure 10-12 Figure 10-12 shows the cost and demand curves for a monopolist. -Refer to Figure 10-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

To be a natural monopoly,a firm must

Which one of the following about a monopoly is false?

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Local or state offices of the Department of Justice usually set prices for natural monopolies in their jurisdictions.

A United States government patent lasts

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

How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain.

Suppose a monopoly is producing its profit-maximizing output level.Now suppose the government imposes a lump-sum tax on the monopoly,independent of its output.As a result the monopoly's profit will fall.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

To have a monopoly in an industry there must be

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