Question 1

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

Accepted Answer

A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms. 
A)  government antitrust laws. 
B)  the pricing decisions of its suppliers. 
C)  the pricing decisions of firms that produce complementary products. 
D)  the actions of all other firms.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

Accepted Answer

Profit maximization is not the same thin

Question 4

To maximize profit a monopolist will produce where

Accepted Answer

A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximized. 
D)  average total cost is equal to average revenue. 
A)  marginal revenue is equal to marginal cost. 
B)  demand for its product is unit-elastic. 
C)  revenue per unit is maximized. 
D)  average total cost is equal to average revenue.

Question 5

Baxter International,a manufacturer of hospital supplies,acquired American Hospital Supply,a distributor of hospital supplies.This is an example of

Accepted Answer

A)  a conglomerate merger. 
B)  a horizontal merger. 
C)  a vertical merger. 
D)  a two-dimensional merger. 
A)  a conglomerate merger. 
B)  a horizontal merger. 
C)  a vertical merger. 
D)  a two-dimensional merger.

Question 6

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

Accepted Answer

A)  because Microsoft is large enough to hire the best people in the field 
B)  because Microsoft could potentially lose sales if it sets prices indiscriminately 
C)  because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D)  because unlike Microsoft, the wealthy corn farmer is probably a monopolist 
A)  because Microsoft is large enough to hire the best people in the field 
B)  because Microsoft could potentially lose sales if it sets prices indiscriminately 
C)  because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D)  because unlike Microsoft, the wealthy corn farmer is probably a monopolist

Question 7

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 8

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

Accepted Answer

A) True 
 B)False

Question 9

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 Herfindahl-Hirschman Index and how is the industry categorized?

Accepted Answer

A)  1700; moderately concentrated 
B)  1425; moderately concentrated 
C)  1600; moderately concentrated 
D)  2600; highly concentrated 
A)  1700; moderately concentrated 
B)  1425; moderately concentrated 
C)  1600; moderately concentrated 
D)  2600; highly concentrated

Question 10

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Accepted Answer

A)  Arnold Harberger 
B)  Joseph Schumpeter 
C)  Sergey Brin 
D)  Donald Turner 
A)  Arnold Harberger 
B)  Joseph Schumpeter 
C)  Sergey Brin 
D)  Donald Turner

Question 11

Figure 15-5  
-Refer to Figure 15-5.If the monopolist charges price P* for output Q*,in order to maximize profit or minimize loss in the short run,it should

Accepted Answer

A)  continue to produce because price is greater than average variable cost. 
B)  shut down because price is greater than marginal cost. 
C)  shut down because price is less than average total cost. 
D)  continue to produce because a monopolist always earns a profit. 
A)  continue to produce because price is greater than average variable cost. 
B)  shut down because price is greater than marginal cost. 
C)  shut down because price is less than average total cost. 
D)  continue to produce because a monopolist always earns a profit.

Question 12

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Accepted Answer

A)  Since few diamonds are ever destroyed, De Beers has constantly faced possible competition from other firms reselling diamonds. 
B)  Competition from imitation diamonds. Technology has made it possible to make fake diamonds look exactly like real diamonds. 
C)  Competition from other gemstones, including rubies and emeralds, that have become more popular over time. 
D)  At different times in the past some countries have banned the importation of diamonds from South Africa for political reasons. 
A)  Since few diamonds are ever destroyed, De Beers has constantly faced possible competition from other firms reselling diamonds. 
B)  Competition from imitation diamonds. Technology has made it possible to make fake diamonds look exactly like real diamonds. 
C)  Competition from other gemstones, including rubies and emeralds, that have become more popular over time. 
D)  At different times in the past some countries have banned the importation of diamonds from South Africa for political reasons.

Question 13

Few firms in the United States are monopolies because

Accepted Answer

A)  few firms experience economies of scale. 
B)  of antitrust laws. 
C)  when a firm earns profits, other firms will enter its market. 
D)  most products that firms produce have substitutes. 
A)  few firms experience economies of scale. 
B)  of antitrust laws. 
C)  when a firm earns profits, other firms will enter its market. 
D)  most products that firms produce have substitutes.

Question 14

Figure 15-8   Figure 15-8 reflects the cost and revenue structure for a monopoly that has been in business for a very long time.
-Refer to Figure 15-8.Use the figure above to answer the following questions.
a. Identify the curves labeled A and B.Identify the curve which contains both point Y and point Z.Identify the curve which contains both point V and point W.
b.What is the profit-maximizing quantity and what price will the monopolist charge?
c.What area represents total revenue at the profit-maximizing output level?
d.What area represents total cost at the profit-maximizing output level?
e.What area represents profit?
f.What is the profit per unit (average profit)at the profit-maximizing output level?
g.If this industry was organized as a perfectly competitive industry,what would be the profit-maximizing price and quantity?
h.What area represents the deadweight loss as a result of a monopoly?

Accepted Answer

a.A = Demand curve; B = Marginal revenue

Question 15

The demand curve for a monopoly firm

Accepted Answer

A)  is perfectly inelastic. 
B)  lies below its marginal revenue curve. 
C)  is the same as the market demand curve. 
D)  is horizontal. 
A)  is perfectly inelastic. 
B)  lies below its marginal revenue curve. 
C)  is the same as the market demand curve. 
D)  is horizontal.

Question 16

Figure 15-6   Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist earns a profit of

Accepted Answer

A)  $0. 
B)  $170. 
C)  $248. 
D)  $372. 
A)  $0. 
B)  $170. 
C)  $248. 
D)  $372.

Question 17

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs?

Accepted Answer

A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost. 
A)  Marginal revenue is less than price. 
B)  Marginal revenue equals marginal cost. 
C)  Price equals marginal cost. 
D)  Average revenue equals average cost.

Question 18

If a monopolist's marginal revenue is $25 a 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 19

Figure 15-4   Figure 15-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-4.What is the amount of the monopoly's profit?

Accepted Answer

A)  $2,700 
B)  $4,200 
C)  $10,400 
D)  $12,600 
A)  $2,700 
B)  $4,200 
C)  $10,400 
D)  $12,600

Question 20

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

A narrow definition of monopoly is that a firm is a monopoly if it can ignore

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

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

To maximize profit a monopolist will produce where

Baxter International,a manufacturer of hospital supplies,acquired American Hospital Supply,a distributor of hospital supplies.This is an example of

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

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 Herfindahl-Hirschman Index and how is the industry categorized?

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Figure 15-5 -Refer to Figure 15-5.If the monopolist charges price P* for output Q*,in order to maximize profit or minimize loss in the short run,it should

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Few firms in the United States are monopolies because

The demand curve for a monopoly firm

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs?

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

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is the amount of the monopoly's profit?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

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 narrow definition of monopoly is that a firm is a monopoly if it can ignore

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

Explain whether a monopoly that maximizes profit will also be maximizing revenue and production.

To maximize profit a monopolist will produce where

Baxter International,a manufacturer of hospital supplies,acquired American Hospital Supply,a distributor of hospital supplies.This is an example of

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

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 Herfindahl-Hirschman Index and how is the industry categorized?

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Figure 15-5 -Refer to Figure 15-5.If the monopolist charges price P* for output Q*,in order to maximize profit or minimize loss in the short run,it should

The De Beers diamond mining and marketing company of South Africa became one of the most profitable and longest-lived monopolies in history.Which of the following has always threatened De Beers' control of the diamond market?

Few firms in the United States are monopolies because

The demand curve for a monopoly firm

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist earns a profit of

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs?

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

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is the amount of the monopoly's profit?

A monopolist's demand curve is the same as the marginal revenue curve for the product.

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