Question 1

A monopoly is defined as a firm that has the largest market share in an industry.

Accepted Answer

A) True 
 B)False  False

Question 2

If a firm's average total cost is less than price where MR=MC,

Accepted Answer

A)  the firm should shut down. 
B)  the firm should raise its price. 
C)  the firm should continue to produce the output it is producing. 
D)  the firm should cut back on its output to lower its cost. 
A)  the firm should shut down. 
B)  the firm should raise its price. 
C)  the firm should continue to produce the output it is producing. 
D)  the firm should cut back on its output to lower its cost. C

Question 3

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Accepted Answer

A)  the greater the difference between marginal cost and price. 
B)  the smaller the difference between marginal cost and average total cost. 
C)  the smaller the difference between marginal cost and price. 
D)  the greater the difference between marginal cost and average revenue. 
A)  the greater the difference between marginal cost and price. 
B)  the smaller the difference between marginal cost and average total cost. 
C)  the smaller the difference between marginal cost and price. 
D)  the greater the difference between marginal cost and average revenue. C

Question 4

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A firm that is the only seller of a good or service that does not have a close substitute is called

Accepted Answer

A)  a monopoly. 
B)  an oligopolist. 
C)  a market maker. 
D)  a price maker. 
A)  a monopoly. 
B)  an oligopolist. 
C)  a market maker. 
D)  a price maker.

Question 7

A monopoly differs from monopolistic competition in that

Accepted Answer

A)  a monopoly has market power while a firm in monopolistic competition does not have any market power. 
B)  a monopoly can never make a loss but a firm in monopolistic competition can. 
C)  in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. 
D)  a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve. 
A)  a monopoly has market power while a firm in monopolistic competition does not have any market power. 
B)  a monopoly can never make a loss but a firm in monopolistic competition can. 
C)  in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. 
D)  a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

Question 8

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 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

If a monopolist's marginal revenue is $35 per 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 11

Collusion is

Accepted Answer

A)  common among monopoly firms. 
B)  an agreement among firms to charge the same price or otherwise not to compete. 
C)  necessary for firms to raise money by borrowing from investors or from banks in order to fund research and development required to develop new products. 
D)  legal under U.S. antitrust laws if the intent is to increase competition. 
A)  common among monopoly firms. 
B)  an agreement among firms to charge the same price or otherwise not to compete. 
C)  necessary for firms to raise money by borrowing from investors or from banks in order to fund research and development required to develop new products. 
D)  legal under U.S. antitrust laws if the intent is to increase competition.

Question 12

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

Accepted Answer

A) True 
 B)False

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

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 15

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Accepted Answer

A monopoly is the only seller

Question 16

Table 15-4
   Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows the demand and the total cost schedule for the firm.
-Refer to Table 15-4.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

Accepted Answer

A)  $124 
B)  $42 
C)  $36 
D)  $12 
A)  $124 
B)  $42 
C)  $36 
D)  $12

Question 17

A monopoly firm is the only seller of a good or service that

Accepted Answer

A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute. 
A)  has a perfectly elastic demand. 
B)  has no close complements. 
C)  does not need to be advertised. 
D)  does not have a close substitute.

Question 18

What is a public franchise? Are all public franchises natural monopolies?

Accepted Answer

A public franchise is a firm which the g

Question 19

A virtuous cycle occurs

Accepted Answer

A)  when lobbyists petition members of Congress to grant a public franchise; the lobbyist then raise money for those Congress members who granted the franchise. 
B)  when monopoly profits are used to create new products for additional monopoly profits. 
C)  when a firm can attract enough buyers initially to increase a product's usefulness to attract even more buyers. 
D)  when a firm's sales volume reaches a level where the firm can take advantage of economies of scale; thereby reducing the price of the product to further boost its sales. 
A)  when lobbyists petition members of Congress to grant a public franchise; the lobbyist then raise money for those Congress members who granted the franchise. 
B)  when monopoly profits are used to create new products for additional monopoly profits. 
C)  when a firm can attract enough buyers initially to increase a product's usefulness to attract even more buyers. 
D)  when a firm's sales volume reaches a level where the firm can take advantage of economies of scale; thereby reducing the price of the product to further boost its sales.

Question 20

Figure 15-16   Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

Accepted Answer

A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3 
A)  Q1 units; P4 
B)  Q1 units; P1 
C)  Q5 units; P3 
D)  Q3 units; P3

A monopoly is defined as a firm that has the largest market share in an industry.

If a firm's average total cost is less than price where MR=MC,

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

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

A firm that is the only seller of a good or service that does not have a close substitute is called

A monopoly differs from monopolistic competition in that

The only firms that do not have market power are

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.

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Collusion is

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

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

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.

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Table 15-4 Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows the demand and the total cost schedule for the firm. -Refer to Table 15-4.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

A monopoly firm is the only seller of a good or service that

What is a public franchise? Are all public franchises natural monopolies?

A virtuous cycle occurs

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of and charge a price of .

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

Filters

Exam 15: Monopoly and Antitrust Policy

A monopoly is defined as a firm that has the largest market share in an industry.

If a firm's average total cost is less than price where MR=MC,

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

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

A firm that is the only seller of a good or service that does not have a close substitute is called

A monopoly differs from monopolistic competition in that

The only firms that do not have market power are

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.

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25,then

Collusion is

Producers in perfect competition receive a smaller producer surplus than a monopoly producer.

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

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.

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Table 15-4 Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows the demand and the total cost schedule for the firm. -Refer to Table 15-4.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

A monopoly firm is the only seller of a good or service that

What is a public franchise? Are all public franchises natural monopolies?

A virtuous cycle occurs

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

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

Filters

Figure 15-16 Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of and charge a price of .