Question 1

Figure 15-6   Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist's total cost is

Accepted Answer

A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40. 
A)  $1,116. 
B)  $1,240. 
C)  $1,660. 
D)  $1,726.40.

Question 2

A merger between firms at different stages of production of a good

Accepted Answer

A)  is a vertical merger. 
B)  was made illegal by the Sherman Act. 
C)  was made legal by the Clayton Act. 
D)  is a horizontal merger. 
A)  is a vertical merger. 
B)  was made illegal by the Sherman Act. 
C)  was made legal by the Clayton Act. 
D)  is a horizontal merger.

Question 3

Consider the following characteristics: 
a.a market structure with barriers to entry
b.demand curves that are easily identified
c.firm cannot make zero profits in the long run
d.firm can reap long run profits.
Which of the characteristics in the list above is shared by an oligopolist and a monopolist?

Accepted Answer

A)  a, b, c, and d 
B)  a, b, and d 
C)  a, c, and d 
D)  a and d 
A)  a, b, c, and d 
B)  a, b, and d 
C)  a, c, and d 
D)  a and d

Question 4

Figure 15-3   Figure 15-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-3.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 5

Figure 15-15   Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.Why won't regulators require that Erickson Power produce the economically efficient output level?

Accepted Answer

A)  because there is insufficient demand at that output level 
B)  because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C)  because Erickson Power will earn zero profit 
D)  because Erickson Power will sustain persistent losses and will not continue in business in the long run 
A)  because there is insufficient demand at that output level 
B)  because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C)  because Erickson Power will earn zero profit 
D)  because Erickson Power will sustain persistent losses and will not continue in business in the long run

Question 6

Compared to a monopolistic competitor,a monopolist faces

Accepted Answer

A)  a more elastic demand curve. 
B)  a more inelastic demand curve. 
C)  a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D)  a demand curve that has a price elasticity coefficient of zero. 
A)  a more elastic demand curve. 
B)  a more inelastic demand curve. 
C)  a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. 
D)  a demand curve that has a price elasticity coefficient of zero.

Question 7

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 8

a.What is the difference between a horizontal merger and a vertical merger?
b.Give an example of each type of merger.
c.Could a horizontal merger be welfare improving?

Accepted Answer

a.A horizontal merger is a merger betwee

Question 9

A price maker is

Accepted Answer

A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product. 
A)  a person who actively seeks out the best price for a product that he or she wishes to buy. 
B)  a firm that has some control over the price of the product it sells. 
C)  a firm that is able to sell any quantity at the highest possible price. 
D)  a consumer who participates in an auction where she announces her willingness to pay for a product.

Question 10

A horizontal merger

Accepted Answer

A)  is a merger between firms in the same industry. 
B)  results in a trust (for example, the Standard Oil Company). 
C)  is a merger between firms at different stages of production of a good. 
D)  was illegal in the United States until the Federal Trade Commission Act was passed by Congress in 1914. 
A)  is a merger between firms in the same industry. 
B)  results in a trust (for example, the Standard Oil Company). 
C)  is a merger between firms at different stages of production of a good. 
D)  was illegal in the United States until the Federal Trade Commission Act was passed by Congress in 1914.

Question 11

If you own the only bookstore in a small town,do you have a monopoly?

Accepted Answer

Because consumers in your town could buy

Question 12

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

Accepted Answer

A)  most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B)  prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C)  other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D)  firms will find ways to obtain additional patent protection - often by making cosmetic changes in drugs that were patented - so that they can continue charging high prices. 
A)  most patients will continue to buy the drugs from the same firms because their doctors recommend they buy brand-name drugs. 
B)  prices remain high without patent protection because of a lack of competition. Firms that are not granted patents cannot compete with firms that are granted patents. 
C)  other firms are free to produce chemically identical drugs. Competition reduces the profits that had been earned by the firms that received patents. 
D)  firms will find ways to obtain additional patent protection - often by making cosmetic changes in drugs that were patented - so that they can continue charging high prices.

Question 13

A Herfindahl-Hirschman Index is calculated by

Accepted Answer

A)  summing the amount of sales by the four largest firms and dividing by total industry sales. 
B)  dividing the number of firms wanting to merge by the total number in the industry. 
C)  summing the squares of the market shares of each firm in the industry. 
D)  summing the advertising expenditures of the firms that want to merge by total industry advertising expenditures. 
A)  summing the amount of sales by the four largest firms and dividing by total industry sales. 
B)  dividing the number of firms wanting to merge by the total number in the industry. 
C)  summing the squares of the market shares of each firm in the industry. 
D)  summing the advertising expenditures of the firms that want to merge by total industry advertising expenditures.

Question 14

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

Accepted Answer

A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the trapezium 0P1FH 
D)  the rectangle P1P3HF 
A)  the triangle 0P2E 
B)  the triangle 0P3H 
C)  the trapezium 0P1FH 
D)  the rectangle P1P3HF

Question 15

Natural monopolies in the United States are generally regulated by

Accepted Answer

A)  the Federal Trade Commission. 
B)  the Department of Justice. 
C)  local or state regulatory commissions. 
D)  the Department of Commerce. 
A)  the Federal Trade Commission. 
B)  the Department of Justice. 
C)  local or state regulatory commissions. 
D)  the Department of Commerce.

Question 16

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 17

A profit-maximizing monopoly produces a lower output level than would be produced if the
industry was perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 18

In 2011,Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business.Microsoft's primary complaint was that

Accepted Answer

A)  Google is the only Internet search engine available to Windows operating system users. 
B)  the European Union contracts exclusively with Google for its Internet search engine use. 
C)  Google was using its dominant position as an Internet search engine to exclude competitors. 
D)  Google owns the Internet advertising companies that pay for ads on search engine sites, and has prohibited ads from being sold to competitors. 
A)  Google is the only Internet search engine available to Windows operating system users. 
B)  the European Union contracts exclusively with Google for its Internet search engine use. 
C)  Google was using its dominant position as an Internet search engine to exclude competitors. 
D)  Google owns the Internet advertising companies that pay for ads on search engine sites, and has prohibited ads from being sold to competitors.

Question 19

Figure 15-9   Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the difference between the monopoly output and the perfectly competitive output?

Accepted Answer

A)  140 units 
B)  240 units 
C)  340 units 
D)  560 units 
A)  140 units 
B)  240 units 
C)  340 units 
D)  560 units

Question 20

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 total revenue?

Accepted Answer

A)  $21,600 
B)  $20,400 
C)  $19,740 
D)  $7,800 
A)  $21,600 
B)  $20,400 
C)  $19,740 
D)  $7,800

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist's total cost is

A merger between firms at different stages of production of a good

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.Why won't regulators require that Erickson Power produce the economically efficient output level?

Compared to a monopolistic competitor,a monopolist faces

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

a.What is the difference between a horizontal merger and a vertical merger? b.Give an example of each type of merger. c.Could a horizontal merger be welfare improving?

A price maker is

A horizontal merger

If you own the only bookstore in a small town,do you have a monopoly?

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

A Herfindahl-Hirschman Index is calculated by

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

Natural monopolies in the United States are generally regulated by

The Clayton Act prohibited

A profit-maximizing monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

In 2011,Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business.Microsoft's primary complaint was that

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.What is the difference between the monopoly output and the perfectly competitive output?

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 total revenue?

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

Figure 15-6 Figure 15-6 shows the cost and demand curves for a monopolist. -Refer to Figure 15-6.The monopolist's total cost is

A merger between firms at different stages of production of a good

Figure 15-3 Figure 15-3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-3.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.Why won't regulators require that Erickson Power produce the economically efficient output level?

Compared to a monopolistic competitor,a monopolist faces

If the market for a product begins as perfectly competitive and then becomes a monopoly,there will be a reduction in economic efficiency and a deadweight loss.

a.What is the difference between a horizontal merger and a vertical merger? b.Give an example of each type of merger. c.Could a horizontal merger be welfare improving?

A price maker is

A horizontal merger

If you own the only bookstore in a small town,do you have a monopoly?

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire

A Herfindahl-Hirschman Index is calculated by

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

Natural monopolies in the United States are generally regulated by

The Clayton Act prohibited

A profit-maximizing monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

In 2011,Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business.Microsoft's primary complaint was that

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.What is the difference between the monopoly output and the perfectly competitive output?

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 total revenue?

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