Question 1

As of late-2007, Apple Computer's use of music download software to reinforce its already dominant position in the audio hardware market has been

Accepted Answer

A) challenged by the U.S. government but not by the European Union. 
B) challenged by the European Union but not by the U.S. government. 
C) challenged by both the U.S. government and the European Union. 
D) challenged by both Napster and Kazaa as anti-competitive violation of the Sherman Anti-Trust Act. 
A) challenged by the U.S. government but not by the European Union. 
B) challenged by the European Union but not by the U.S. government. 
C) challenged by both the U.S. government and the European Union. 
D) challenged by both Napster and Kazaa as anti-competitive violation of the Sherman Anti-Trust Act. B

Question 2

In comparison to perfect competition, monopoly

Accepted Answer

A) motivates greater quality innovation. 
B) motivates greater cost saving by management. 
C) reduces the motivation to make a profit. 
D) reduces the motivation to innovate. 
A) motivates greater quality innovation. 
B) motivates greater cost saving by management. 
C) reduces the motivation to make a profit. 
D) reduces the motivation to innovate. D

Question 3

-In Figure 29.1 the area that represents the total variable cost to the producer under monopoly is

Accepted Answer

A) OPPCCQPC 
B) OPmonopolyBQmonopoly 
C) OFCQPC 
D) OFEQmonopoly 
A) OPPCCQPC 
B) OPmonopolyBQmonopoly 
C) OFCQPC 
D) OFEQmonopoly D

Question 4

-In Figure 29.1 the area that represents the producer surplus under perfect competition is

Accepted Answer

A) PPCAC 
B) PmonopolyAB 
C) FPPCC 
D) FPmonopolyBE 
A) PPCAC 
B) PmonopolyAB 
C) FPPCC 
D) FPmonopolyBE

Question 5

-In Figure 29.1 the area that represents the amount the consumers pay the producer under monopoly is

Accepted Answer

A) OPPCCQPC 
B) OPmonopolyBQmonopoly 
C) OFCQPC 
D) OFEQmonopoly 
A) OPPCCQPC 
B) OPmonopolyBQmonopoly 
C) OFCQPC 
D) OFEQmonopoly

Question 6

In comparison to perfect competition, monopoly price-quantity combinations generate

Accepted Answer

A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is larger. 
D) a reduction in deadweight loss. 
A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is larger. 
D) a reduction in deadweight loss.

Question 7

-In Figure 29.1 the area that represents the consumer surplus under perfect competition is

Accepted Answer

A) PPCAC 
B) PmonopolyAB 
C) FPPCC 
D) FPmonopolyBE 
A) PPCAC 
B) PmonopolyAB 
C) FPPCC 
D) FPmonopolyBE

Question 8

If two airlines wish to merge they must seek permission of the

Accepted Answer

A) Federal Trade Commission. 
B) Federal Communications Commission. 
C) Federal Anti-Trust Agency. 
D) Agency for International Air Traffic. 
A) Federal Trade Commission. 
B) Federal Communications Commission. 
C) Federal Anti-Trust Agency. 
D) Agency for International Air Traffic.

Question 9

Under the Sherman Anti-Trust Act it is illegal to

Accepted Answer

A) successfully undercut a competitor's price. 
B) use monopoly power in one market to foster a monopoly in another. 
C) charge high prices. 
D) innovate in such a way that others cannot keep up. 
A) successfully undercut a competitor's price. 
B) use monopoly power in one market to foster a monopoly in another. 
C) charge high prices. 
D) innovate in such a way that others cannot keep up.

Question 10

In comparison to perfect competition, monopoly price-quantity combinations generate

Accepted Answer

A) a consumer surplus that is larger. 
B) a producer surplus that is larger. 
C) total revenue to the producer that is smaller. 
D) a reduction in deadweight loss. 
A) a consumer surplus that is larger. 
B) a producer surplus that is larger. 
C) total revenue to the producer that is smaller. 
D) a reduction in deadweight loss.

Question 11

In comparison to perfect competition, monopoly price-quantity combinations generate

Accepted Answer

A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is smaller. 
D) deadweight loss. 
A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is smaller. 
D) deadweight loss.

Question 12

The European Union has prosecuted cases against Apple and Google for violations of their antitrust laws. Specifically they were accused of

Accepted Answer

A) using their dominance in one area to dominate another. 
B) producing products for less than their cost. 
C) producing products/services that are better than their European competition. 
D) paying their workers less than their European competition. 
A) using their dominance in one area to dominate another. 
B) producing products for less than their cost. 
C) producing products/services that are better than their European competition. 
D) paying their workers less than their European competition.

Question 13

Following court rulings against file-sharing services Napster and Kazaa, Apple Computer successfully introduced its iTunes music download software that exploited the company's

Accepted Answer

A) fear of entry by large competitors such as Microsoft. 
B) extensive political connections. 
C) popular iPod brand of audio hardware. 
D) clunky desktop user interface. 
A) fear of entry by large competitors such as Microsoft. 
B) extensive political connections. 
C) popular iPod brand of audio hardware. 
D) clunky desktop user interface.

Question 14

With a natural monopoly, the potentially insurmountable barrier to entry is the

Accepted Answer

A) increasing average costs. 
B) the absence of fixed costs. 
C) decreasing average total costs. 
D) low profit margins. 
A) increasing average costs. 
B) the absence of fixed costs. 
C) decreasing average total costs. 
D) low profit margins.

Question 15

The hypothesis that suggests that one firm who fears the arrival of competitors is all that is required to experience most of the benefits of perfect competition is the

Accepted Answer

A) law of demand hypothesis. 
B) all-about-me hypothesis. 
C) contestable markets hypothesis. 
D) rational expectations hypothesis. 
A) law of demand hypothesis. 
B) all-about-me hypothesis. 
C) contestable markets hypothesis. 
D) rational expectations hypothesis.

Question 16

Economists refer to a monopoly that results from very high fixed costs as a

Accepted Answer

A) unnatural monopoly. 
B) a necessary monopoly. 
C) a natural monopoly. 
D) a simple monopoly. 
A) unnatural monopoly. 
B) a necessary monopoly. 
C) a natural monopoly. 
D) a simple monopoly.

Question 17

In the Standard Oil case the company was accused of violating the law that prohibits

Accepted Answer

A) firms from using their monopoly in one market to increase market share in another. 
B) firms from attempting to undercut competitors' prices. 
C) firms from successfully achieving monopoly status. 
D) charging prices that are unfairly too high. 
A) firms from using their monopoly in one market to increase market share in another. 
B) firms from attempting to undercut competitors' prices. 
C) firms from successfully achieving monopoly status. 
D) charging prices that are unfairly too high.

Question 18

-In Figure 29.1 the deadweight loss associated with monopoly is

Accepted Answer

A) ABC 
B) EBC 
C) PmonopolyAB 
D) FPPCC 
A) ABC 
B) EBC 
C) PmonopolyAB 
D) FPPCC

Question 19

In comparison to perfect competition, monopoly price-quantity combinations generate

Accepted Answer

A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is smaller. 
D) a combination of producer and consumer surplus that is smaller. 
A) a consumer surplus that is larger. 
B) a producer surplus that is smaller. 
C) total revenue to the producer that is smaller. 
D) a combination of producer and consumer surplus that is smaller.

Question 20

A natural monopoly occurs when

Accepted Answer

A) there are high fixed costs. 
B) continuously decreasing average total costs. 
C) continuously increasing marginal costs. 
D) A and B 
A) there are high fixed costs. 
B) continuously decreasing average total costs. 
C) continuously increasing marginal costs. 
D) A and B

Exam 29: Antitrust

As of late-2007, Apple Computer's use of music download software to reinforce its already dominant position in the audio hardware market has been

In comparison to perfect competition, monopoly

-In Figure 29.1 the area that represents the total variable cost to the producer under monopoly is

-In Figure 29.1 the area that represents the producer surplus under perfect competition is

-In Figure 29.1 the area that represents the amount the consumers pay the producer under monopoly is

In comparison to perfect competition, monopoly price-quantity combinations generate

-In Figure 29.1 the area that represents the consumer surplus under perfect competition is

If two airlines wish to merge they must seek permission of the

Under the Sherman Anti-Trust Act it is illegal to

In comparison to perfect competition, monopoly price-quantity combinations generate

In comparison to perfect competition, monopoly price-quantity combinations generate

The European Union has prosecuted cases against Apple and Google for violations of their antitrust laws. Specifically they were accused of

Following court rulings against file-sharing services Napster and Kazaa, Apple Computer successfully introduced its iTunes music download software that exploited the company's

With a natural monopoly, the potentially insurmountable barrier to entry is the

The hypothesis that suggests that one firm who fears the arrival of competitors is all that is required to experience most of the benefits of perfect competition is the

Economists refer to a monopoly that results from very high fixed costs as a

In the Standard Oil case the company was accused of violating the law that prohibits

-In Figure 29.1 the deadweight loss associated with monopoly is

In comparison to perfect competition, monopoly price-quantity combinations generate

A natural monopoly occurs when

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