Question 1

Figure 15-3   Figure 15-3 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-3.What is the price charged for the profit-maximizing output level?

Accepted Answer

A)  $13 
B)  $21 
C)  $27 
D)  $34 
A)  $13 
B)  $21 
C)  $27 
D)  $34

Question 2

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 3

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 four-firm concentration ratio and how is the industry categorized?
A) 50%; monopolistic competition
B) 70%; oligopoly
C) 75%; oligopoly
D) 80%; strongly oligopolistic

Accepted Answer

The answer of Consider an industry that is made up...

Question 4

To enter a local cable television market,a firm needs a license from the city government.This is an example of

Accepted Answer

A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  a natural monopoly. 
D)  the government maintaining consistent standards in the broadcast industry. 
A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  a natural monopoly. 
D)  the government maintaining consistent standards in the broadcast industry.

Question 5

The Clayton Act prohibited

Accepted Answer

A)  all vertical mergers. 
B)  all horizontal mergers. 
C)  any merger if its effect was to substantially lessen competition or create a monopoly. 
D)  all conglomerate mergers. 
A)  all vertical mergers. 
B)  all horizontal mergers. 
C)  any merger if its effect was to substantially lessen competition or create a monopoly. 
D)  all conglomerate mergers.

Question 6

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's. 
A)  Yes, there are no substitutes to Peet's coffee. 
B)  No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. 
C)  Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D)  No, Peet's is not a monopoly because there are many branches of Peet's.

Question 7

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

Accepted Answer

A) True 
 B)False

Question 8

To maximize profit,a monopolist will produce and sell a quantity such that for the last unit sold,marginal revenue equals marginal cost,and charges a price given by the demand curve at that output level.

Accepted Answer

A) True 
 B)False

Question 9

Figure 15-2   
Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Accepted Answer

A)  $38 
B)  $54 
C)  $68 
D)  $75 
A)  $38 
B)  $54 
C)  $68 
D)  $75

Question 10

In Walnut Creek,California,there are three very popular supermarkets: Safeway,Whole Foods and Lunardi's.While Safeway remains open twenty-four hours a day,Whole Foods and Lunardi's close at 9 pm.Which of the following statements is true?

Accepted Answer

A)  Safeway is a monopoly all day because it produces a service that has no close substitutes. 
B)  Safeway has a monopoly at midnight but not during the day. 
C)  Safeway can ignore the pricing decisions of the other two supermarkets. 
D)  Safeway probably has a higher markup to compensate for its higher cost of production. 
A)  Safeway is a monopoly all day because it produces a service that has no close substitutes. 
B)  Safeway has a monopoly at midnight but not during the day. 
C)  Safeway can ignore the pricing decisions of the other two supermarkets. 
D)  Safeway probably has a higher markup to compensate for its higher cost of production.

Question 11

Because a monopoly's demand curve is the same as the market demand curve for its product,

Accepted Answer

A)  the monopoly's marginal revenue equals its price. 
B)  the monopoly is a price taker. 
C)  the monopoly must lower its price to sell more of its product. 
D)  the monopoly's average total cost always falls as it increases its output. 
A)  the monopoly's marginal revenue equals its price. 
B)  the monopoly is a price taker. 
C)  the monopoly must lower its price to sell more of its product. 
D)  the monopoly's average total cost always falls as it increases its output.

Question 12

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

Accepted Answer

A) True 
 B)False

Question 13

The demand curve for the monopoly's product is

Accepted Answer

A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined. 
A)  the market demand for the product. 
B)  more elastic than the market demand for the product. 
C)  more inelastic than the market demand for the product. 
D)  undefined.

Question 14

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 15

Firms do not have market power in which of the following market structures?

Accepted Answer

A)  perfect competition only 
B)  perfect competition and monopolistic competition 
C)  oligopoly 
D)  monopoly 
A)  perfect competition only 
B)  perfect competition and monopolistic competition 
C)  oligopoly 
D)  monopoly

Question 16

In regulating a natural monopoly,the price strategy that ensures the highest possible output and zero profit is one that sets price

Accepted Answer

A)  equal to average total cost where it intersects the demand curve. 
B)  equal to marginal cost where it intersects the demand curve. 
C)  equal to average variable cost where it intersects the demand curve. 
D)  corresponding to the demand curve where marginal revenue equals zero. 
A)  equal to average total cost where it intersects the demand curve. 
B)  equal to marginal cost where it intersects the demand curve. 
C)  equal to average variable cost where it intersects the demand curve. 
D)  corresponding to the demand curve where marginal revenue equals zero.

Question 17

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximize profit the firm should decrease output.

Accepted Answer

A) True 
 B)False

Question 18

A firm that has the ability to control to some degree the price of the product it sells

Accepted Answer

A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve. 
A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve.

Question 19

Economic efficiency in a free market occurs when

Accepted Answer

A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  price is as low as possible. 
A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  price is as low as possible.

Question 20

The United States Post Office

Accepted Answer

A)  faces no competition for its mail services. 
B)  has a monopoly in the provision of first-class mail service. 
C)  can safely ignore the prices for mail services charges by its rivals such as FedEx and UPS. 
D)  is an example of a monopoly that results from the ownership of a key resource: first class mail service. 
A)  faces no competition for its mail services. 
B)  has a monopoly in the provision of first-class mail service. 
C)  can safely ignore the prices for mail services charges by its rivals such as FedEx and UPS. 
D)  is an example of a monopoly that results from the ownership of a key resource: first class mail service.

Exam 15: Monopoly and Antitrust Policy

Figure 15-3 Figure 15-3 shows the demand and cost curves for a monopolist. -Refer to Figure 15-3.What is the price charged for the profit-maximizing output level?

A United States government patent lasts

To enter a local cable television market,a firm needs a license from the city government.This is an example of

The Clayton Act prohibited

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

To maximize profit,a monopolist will produce and sell a quantity such that for the last unit sold,marginal revenue equals marginal cost,and charges a price given by the demand curve at that output level.

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

In Walnut Creek,California,there are three very popular supermarkets: Safeway,Whole Foods and Lunardi's.While Safeway remains open twenty-four hours a day,Whole Foods and Lunardi's close at 9 pm.Which of the following statements is true?

Because a monopoly's demand curve is the same as the market demand curve for its product,

A vertical merger is one that takes place between two companies producing different goods or services for one specific finished product.

The demand curve for the monopoly's product is

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

Firms do not have market power in which of the following market structures?

In regulating a natural monopoly,the price strategy that ensures the highest possible output and zero profit is one that sets price

If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25,then to maximize profit the firm should decrease output.

A firm that has the ability to control to some degree the price of the product it sells

Economic efficiency in a free market occurs when

The United States Post Office

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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