Question 1

The fundamental source of monopoly power is

Accepted Answer

A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes. 
A)  barriers to entry. 
B)  profit. 
C)  decreasing average total cost. 
D)  a product without close substitutes.

Question 2

Many movie theaters allow discount tickets to be sold to senior citizens because

Accepted Answer

A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts show community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices. 
A)  senior-citizen laws mandate such discounts. 
B)  goodwill efforts show community respect and win loyal patrons. 
C)  the theaters are profit maximizers. 
D)  senior citizens lobby city councils for lower prices.

Question 3

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits is called the

Accepted Answer

A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment. 
A)  Morgan Act. 
B)  Sherman Act. 
C)  Clayton Act. 
D)  14th Amendment.

Question 4

Some companies merge in order to lower costs through efficient joint production.

Accepted Answer

A) True 
 B)False

Question 5

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Accepted Answer

A)  average revenue exceeds marginal cost. 
B)  average revenue exceeds average total cost. 
C)  marginal revenue exceeds marginal cost. 
D)  marginal revenue exceeds average total cost. 
A)  average revenue exceeds marginal cost. 
B)  average revenue exceeds average total cost. 
C)  marginal revenue exceeds marginal cost. 
D)  marginal revenue exceeds average total cost.

Question 6

Which of the following is not an example of a barrier to entry?

Accepted Answer

A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania,under which lies the only large deposit of Tanzanite in the world. 
B)  A college student starts a part-time tutoring business. 
C)  A novelist obtains a copyright for her new book. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City. 
A)  Mighty Mitch's Mining Company owns a unique plot of land in Tanzania,under which lies the only large deposit of Tanzanite in the world. 
B)  A college student starts a part-time tutoring business. 
C)  A novelist obtains a copyright for her new book. 
D)  A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.

Question 7

Which of the following is an example of a barrier to entry?

Accepted Answer

A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)only 
D)  (i),(ii),and (iii) 
A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)only 
D)  (i),(ii),and (iii)

Question 8

When we compare economic welfare in a monopoly market to a competitive market,the profits earned by the monopolist represent

Accepted Answer

A)  a transfer of benefits from the consumer to the producer. 
B)  a loss in total welfare. 
C)  the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D)  the higher marginal revenues gained by the monopolists in comparison to competitive firms. 
A)  a transfer of benefits from the consumer to the producer. 
B)  a loss in total welfare. 
C)  the higher marginal costs incurred by the monopolists in comparison to competitive firms. 
D)  the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Question 9

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Accepted Answer

The defining characteristic of

Question 10

Patent and copyright laws are major sources of

Accepted Answer

A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation. 
A)  natural monopolies. 
B)  government-created monopolies. 
C)  resource monopolies. 
D)  antitrust regulation.

Question 11

Which of the following statements is not correct?

Accepted Answer

A)  Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws give the government power to increase competition. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production. 
A)  Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts. 
B)  Antitrust laws automatically prevent mergers between companies that produce similar products. 
C)  Antitrust laws give the government power to increase competition. 
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question 12

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the

Accepted Answer

A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)and (iii)only 
D)  (i),(ii),and (iii) 
A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)and (iii)only 
D)  (i),(ii),and (iii)

Question 13

Figure 15-1  
-Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

Accepted Answer

A)  must lie entirely above the average total cost curve. 
B)  must lie entirely below the average total cost curve. 
C)  must be upward sloping. 
D)  does not exist. 
A)  must lie entirely above the average total cost curve. 
B)  must lie entirely below the average total cost curve. 
C)  must be upward sloping. 
D)  does not exist.

Question 14

In the market for "home heating" consumers typically have several options (e.g. ,electricity,heating fuel,natural gas,propane,etc. ),yet we often think of firms in this industry as behaving like monopolists.Discuss the context in which your electricity provider is a monopolist.Is this characterization universally applicable? Explain your answer.

Accepted Answer

In this case,the firms are monopolists i

Question 15

Table 15-5
  
-Suppose that a monopolist produces good A.The profit-maximizing quantity is 40 units,the profit-maximizing price is $160,and the marginal cost of the 40th unit is $120.If good A were produced in a perfectly competitive market,the equilibrium quantity would be 50,and the equilibrium price would be $150.What is the value of the deadweight loss created by the monopolist?

Accepted Answer

A)  $40 
B)  $100 
C)  $200 
D)  $400 
A)  $40 
B)  $100 
C)  $200 
D)  $400

Question 16

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

Accepted Answer

A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)and (iii)only 
D)  (i),(ii),and (iii) 
A)  (i)and (ii)only 
B)  (ii)and (iii)only 
C)  (i)and (iii)only 
D)  (i),(ii),and (iii)

Question 17

A monopolist

Accepted Answer

A)  has a supply curve that is upward-sloping,just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve,just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products. 
A)  has a supply curve that is upward-sloping,just like a competitive firm. 
B)  does not have a supply curve because the monopolist sets its price at the same time it chooses the quantity to supply. 
C)  has a horizontal supply curve,just like a competitive firm. 
D)  does not have a supply curve because marginal revenue exceeds the price it charges for its products.

Question 18

When a firm has a natural monopoly,the firm's

Accepted Answer

A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve. 
A)  marginal cost always exceeds its average total cost. 
B)  total cost curve is horizontal. 
C)  average total cost curve is downward sloping. 
D)  marginal cost curve must lie above the firm's average total cost curve.

Question 19

If a social planner were running a monopoly,that planner could achieve an efficient outcome by charging the price that is determined by the

Accepted Answer

A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve. 
A)  minimum point on the average total cost curve. 
B)  intersection of the average total cost curve and the demand curve. 
C)  intersection of the marginal cost curve and the demand curve. 
D)  intersection of the marginal cost curve and the marginal revenue curve.

Question 20

What happens to the price and quantity sold of a drug when its patent runs out?

Accepted Answer

A)  (i)only 
B)  (i)and (ii)only 
C)  (ii)and (iii)only 
D)  (i),(ii),and (iii) 
A)  (i)only 
B)  (i)and (ii)only 
C)  (ii)and (iii)only 
D)  (i),(ii),and (iii)

Exam 15: Monopoly

The fundamental source of monopoly power is

Many movie theaters allow discount tickets to be sold to senior citizens because

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits is called the

Some companies merge in order to lower costs through efficient joint production.

Suppose a monopolist chooses the price and production level that maximizes its profit.From that point,to increase society's economic welfare,output would need to be increased as long as

Which of the following is not an example of a barrier to entry?

Which of the following is an example of a barrier to entry?

When we compare economic welfare in a monopoly market to a competitive market,the profits earned by the monopolist represent

What is the defining characteristic of a natural monopoly? Give an example of a natural monopoly.

Patent and copyright laws are major sources of

Which of the following statements is not correct?

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the

Figure 15-1 -Refer to Figure 15-1.Considering the relationship between average total cost and marginal cost,the marginal cost curve for this firm

Name brand drugs are able to continue capitalizing on their market power even after generic drugs enter the market because

A monopolist

When a firm has a natural monopoly,the firm's

If a social planner were running a monopoly,that planner could achieve an efficient outcome by charging the price that is determined by the

What happens to the price and quantity sold of a drug when its patent runs out?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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