Question 1

Unlike a perfect competitor,a monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 2

Figure 15-11   In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region. Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11.Following the entry of Verizon,the subscription price falls from PM to PC.What is the increase in consumer surplus as a result of this change?

Accepted Answer

A)  the area A + B + C 
B)  the area B + C 
C)  the area D + F 
D)  the area B + C + D 
A)  the area A + B + C 
B)  the area B + C 
C)  the area D + F 
D)  the area B + C + D

Question 3

Table 15-1
   A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
-Refer to Table 15-1.What is the amount of the firm's profit?

Accepted Answer

A)  $335 
B)  $350 
C)  $880 
D)  $910 
A)  $335 
B)  $350 
C)  $880 
D)  $910

Question 4

Relative to a perfectly competitive market,a monopoly results in

Accepted Answer

A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency. 
A)  a gain in producer surplus equal to the gain in consumer surplus. 
B)  a gain in producer surplus equal to the loss in consumer surplus. 
C)  a gain in producer surplus less than the loss in consumer surplus. 
D)  greater economic efficiency.

Question 5

Figure 15-2   Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.If the firm's average total cost curve is ATC2,the firm will

Accepted Answer

A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition. 
A)  suffer a loss. 
B)  break even. 
C)  make a profit. 
D)  face competition.

Question 6

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

Accepted Answer

A)  the draft of college players, which grants teams exclusive signing rights to individual players. 
B)  long-term leases teams sign for stadiums and ballparks in major cities. 
C)  television contracts, which give networks the exclusive rights to broadcast games. 
D)  the reserve clause, which is a provision in contracts of professional athletes that require them to play for specific teams over the length of their contracts. 
A)  the draft of college players, which grants teams exclusive signing rights to individual players. 
B)  long-term leases teams sign for stadiums and ballparks in major cities. 
C)  television contracts, which give networks the exclusive rights to broadcast games. 
D)  the reserve clause, which is a provision in contracts of professional athletes that require them to play for specific teams over the length of their contracts.

Question 7

When the government wants to give an exclusive right to one firm to produce a product,it

Accepted Answer

A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market. 
A)  imposes a tariff on imports of the product. 
B)  imposes a quota on imports of the product. 
C)  grants a patent or copyright to an individual or firm. 
D)  uses antitrust laws to keep other firms from entering the market.

Question 8

Figure 15-2   Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.To maximize profit,the firm will produce

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q4.

Question 9

A product's price approaches its marginal cost as market concentration increases.

Accepted Answer

A) True 
 B)False

Question 10

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 11

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Accepted Answer

Average revenue is equal to price for an

Question 12

Figure 15-10  
-Refer to Figure 15-10.What is the area that represents consumer surplus under a monopoly?

Accepted Answer

A)  the triangle P0P1F 
B)  the triangle P0P2E 
C)  the trapezium P1P2EF 
D)  the rectangle P1P3HF 
A)  the triangle P0P1F 
B)  the triangle P0P2E 
C)  the trapezium P1P2EF 
D)  the rectangle P1P3HF

Question 13

Provide two examples of a government barrier to entry.

Accepted Answer

1. A patent or copyright which gives an

Question 14

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 15

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Accepted Answer

A)  that has been granted special production rights by the government. 
B)  that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C)  that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D)  that has the largest market share in an industry. 
A)  that has been granted special production rights by the government. 
B)  that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. 
C)  that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. 
D)  that has the largest market share in an industry.

Question 16

Article Summary
Arguing that a merger would lead to higher prices, reduced service, and significantly less competition, the Justice Department and attorneys general from 6 states and the District of Columbia filed a lawsuit in August to challenge the pending merger of American Airlines and US Airways. The lawsuit took some by surprise as the Justice Department has in recent years approved the mergers of Delta with Northwest and United with Continental. The European Union approved the merger in August, and American and US Airways had hoped to complete the merger by September.
Source: Even Perez, "US government seeks to block American-US Airways merger," CNN.com, August 13, 2013.
-Refer to the Article Summary.A merger between two competitors such as American Airlines and US Airways may ultimately be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Accepted Answer

A)  increases in revenue for the merged company 
B)  an increase in the HHI to over 1,800 
C)  decreases in marginal revenue for the merged company 
D)  increases in economic efficiency 
A)  increases in revenue for the merged company 
B)  an increase in the HHI to over 1,800 
C)  decreases in marginal revenue for the merged company 
D)  increases in economic efficiency

Question 17

Figure 15-6   Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The profit-maximizing output and price for the monopolist are

Accepted Answer

A)  output = 62; price = $24. 
B)  output = 62; price = $18. 
C)  output = 83; price = $22. 
D)  output = 104; price = $20.80. 
A)  output = 62; price = $24. 
B)  output = 62; price = $18. 
C)  output = 83; price = $22. 
D)  output = 104; price = $20.80.

Question 18

Compared to perfect competition,the consumer surplus in a monopoly

Accepted Answer

A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated. 
A)  is unchanged because price and output are the same. 
B)  is lower because price is higher and output is lower. 
C)  is higher because price is higher and output is the same. 
D)  is eliminated.

Question 19

What is the difference between a public franchise and a public enterprise?

Accepted Answer

A)  A public franchise grants a firm the right to be the sole legal provider of a good or service. A public enterprise refers to a service that is provided directly to consumers through the government. 
B)  A public enterprise grants a firm the right to be the sole legal provider of a good or service. A public franchise refers to a service that is provided directly to consumers through the government. 
C)  A public enterprise is owned by the public through its holdings of shares of stock in the enterprise. A public franchise is a firm owned by the government. 
D)  Both refer to a service provided directly to consumers through the government, but "public franchise" is a term more commonly used in the United States while "public enterprise" is more commonly used in European countries. 
A)  A public franchise grants a firm the right to be the sole legal provider of a good or service. A public enterprise refers to a service that is provided directly to consumers through the government. 
B)  A public enterprise grants a firm the right to be the sole legal provider of a good or service. A public franchise refers to a service that is provided directly to consumers through the government. 
C)  A public enterprise is owned by the public through its holdings of shares of stock in the enterprise. A public franchise is a firm owned by the government. 
D)  Both refer to a service provided directly to consumers through the government, but "public franchise" is a term more commonly used in the United States while "public enterprise" is more commonly used in European countries.

Question 20

A patent or copyright is a barrier to entry based on

Accepted Answer

A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities. 
A)  ownership of a key necessary raw material. 
B)  large economies of scale as output increases. 
C)  government action to protect a producer. 
D)  widespread network externalities.

Unlike a perfect competitor,a monopolist faces the market demand curve.

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the amount of the firm's profit?

Relative to a perfectly competitive market,a monopoly results in

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.If the firm's average total cost curve is ATC₂,the firm will

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

When the government wants to give an exclusive right to one firm to produce a product,it

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.To maximize profit,the firm will produce

A product's price approaches its marginal cost as market concentration increases.

Economic efficiency in a free market occurs when

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Figure 15-10 -Refer to Figure 15-10.What is the area that represents consumer surplus under a monopoly?

Provide two examples of a government barrier to entry.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The profit-maximizing output and price for the monopolist are

Compared to perfect competition,the consumer surplus in a monopoly

What is the difference between a public franchise and a public enterprise?

A patent or copyright is a barrier to entry based on

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

Unlike a perfect competitor,a monopolist faces the market demand curve.

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the amount of the firm's profit?

Relative to a perfectly competitive market,a monopoly results in

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.If the firm's average total cost curve is ATC2,the firm will

In the United States,barriers to entry in professional team sports (for example,football and baseball)result from

When the government wants to give an exclusive right to one firm to produce a product,it

Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.To maximize profit,the firm will produce

A product's price approaches its marginal cost as market concentration increases.

Economic efficiency in a free market occurs when

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Figure 15-10 -Refer to Figure 15-10.What is the area that represents consumer surplus under a monopoly?

Provide two examples of a government barrier to entry.

Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The profit-maximizing output and price for the monopolist are

Compared to perfect competition,the consumer surplus in a monopoly

What is the difference between a public franchise and a public enterprise?

A patent or copyright is a barrier to entry based on

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 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.If the firm's average total cost curve is ATC₂,the firm will