Question 1

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

Accepted Answer

A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  no competitors apparently found the profit level attractive enough to enter the market. 
D)  the restaurant owned all the fresh seafood in the state. 
A)  a government-imposed barrier. 
B)  occupational licensing. 
C)  no competitors apparently found the profit level attractive enough to enter the market. 
D)  the restaurant owned all the fresh seafood in the state.

Question 2

If a firm is a natural monopoly,competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

Accepted Answer

A)  Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost. 
B)  Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice. 
C)  Natural monopolies are privately owned and allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses. 
D)  Local or state regulatory commissions usually set prices for natural monopolies. 
A)  Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost. 
B)  Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice. 
C)  Natural monopolies are privately owned and allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses. 
D)  Local or state regulatory commissions usually set prices for natural monopolies.

Question 3

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Accepted Answer

Patents are designed to encourage creati

Question 4

Figure 15-10  
-Refer to Figure 15-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF. 
A)  area FHE. 
B)  area FGE. 
C)  area P1P2EF. 
D)  area P1P2GF.

Question 5

An example of a monopoly based on control of a key resource is

Accepted Answer

A)  Major League Baseball. 
B)  the Paul Ecke Ranch monopoly on poinsettias. 
C)  Microsoft's Windows operating system. 
D)  the U.S. Food and Drug Administration. 
A)  Major League Baseball. 
B)  the Paul Ecke Ranch monopoly on poinsettias. 
C)  Microsoft's Windows operating system. 
D)  the U.S. Food and Drug Administration.

Question 6

Market power in the United States causes a huge loss of economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Accepted Answer

A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio 
A)  The monopoly firm has control of a key resource necessary to produce a good. 
B)  There are important network externalities in supplying a good or service. 
C)  large economies of scale that result in a natural monopoly 
D)  a high concentration ratio

Question 10

Which one of the following about a monopoly is false?

Accepted Answer

A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary. 
A)  A monopoly could make profits in the long run. 
B)  A monopoly could break even in the long run. 
C)  A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. 
D)  A monopoly status could be temporary.

Question 11

Figure 15-15   Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.The firm would maximize profit by producing

Accepted Answer

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

Question 12

The lawsuit the Justice Department brought against Apple regarding the pricing of e-books for its iPad is an example of attempts by the government

Accepted Answer

A)  to prevent vertical mergers which would significantly reduce competition. 
B)  to prevent horizontal mergers which would significantly reduce competition. 
C)  to regulate a natural monopoly by establishing government-regulated prices. 
D)  to keep firms from artificially restricting competition to raise prices. 
A)  to prevent vertical mergers which would significantly reduce competition. 
B)  to prevent horizontal mergers which would significantly reduce competition. 
C)  to regulate a natural monopoly by establishing government-regulated prices. 
D)  to keep firms from artificially restricting competition to raise prices.

Question 13

The Sherman Act prohibited

Accepted Answer

A)  marginal cost pricing. 
B)  setting price above marginal cost. 
C)  collusive price agreements among rival sellers. 
D)  selling below average total cost. 
A)  marginal cost pricing. 
B)  setting price above marginal cost. 
C)  collusive price agreements among rival sellers. 
D)  selling below average total cost.

Question 14

The Clayton Act is an antitrust law that was passed to

Accepted Answer

A)  outlaw monopolization. 
B)  address loopholes in the Sherman Act. 
C)  prohibit charging buyers different prices if the result would reduce competition. 
D)  toughen restrictions on mergers by prohibiting mergers that reduce competition. 
A)  outlaw monopolization. 
B)  address loopholes in the Sherman Act. 
C)  prohibit charging buyers different prices if the result would reduce competition. 
D)  toughen restrictions on mergers by prohibiting mergers that reduce competition.

Question 15

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 16

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 profit-maximizing/loss-minimizing output level?

Accepted Answer

A)  630 units 
B)  800 units 
C)  850 units 
D)  880 units 
A)  630 units 
B)  800 units 
C)  850 units 
D)  880 units

Question 17

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Accepted Answer

A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximize its revenue. 
C)  Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximizes profits by producing a quantity for which price equals marginal cost. 
A)  Each must lower its price to sell more output. 
B)  Each sets a price for its product that will maximize its revenue. 
C)  Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. 
D)  Each maximizes profits by producing a quantity for which price equals marginal cost.

Question 18

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 ATC1,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 19

A natural monopoly is characterized by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

Question 20

For which of the following firms is patent protection of vital importance?

Accepted Answer

A)  furniture producers 
B)  software firms 
C)  pharmaceutical firms 
D)  auto makers 
A)  furniture producers 
B)  software firms 
C)  pharmaceutical firms 
D)  auto makers

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

If a firm is a natural monopoly,competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Figure 15-10 -Refer to Figure 15-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

An example of a monopoly based on control of a key resource is

Market power in the United States causes a huge loss of economic efficiency.

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

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

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Which one of the following about a monopoly is false?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

The lawsuit the Justice Department brought against Apple regarding the pricing of e-books for its iPad is an example of attempts by the government

The Sherman Act prohibited

The Clayton Act is an antitrust law that was passed to

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

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 profit-maximizing/loss-minimizing output level?

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

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 ATC₁,the firm will

A natural monopoly is characterized by large fixed costs relative to variable costs.

For which of the following firms is patent protection of vital importance?

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

The reason that the Fisherman's Friend restaurant in Stonington,Maine had a monopoly on selling seafood dinners in that town is most likely due to

If a firm is a natural monopoly,competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit.How are prices usually set in natural monopoly markets in the United States?

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Figure 15-10 -Refer to Figure 15-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

An example of a monopoly based on control of a key resource is

Market power in the United States causes a huge loss of economic efficiency.

Merger guidelines developed by the Antitrust Division of the U.S.Department of Justice use four-firm concentration ratios as measures of concentration.

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

Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry?

Which one of the following about a monopoly is false?

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.The firm would maximize profit by producing

The lawsuit the Justice Department brought against Apple regarding the pricing of e-books for its iPad is an example of attempts by the government

The Sherman Act prohibited

The Clayton Act is an antitrust law that was passed to

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

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 profit-maximizing/loss-minimizing output level?

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

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 ATC1,the firm will

A natural monopoly is characterized by large fixed costs relative to variable costs.

For which of the following firms is patent protection of vital importance?

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 ATC₁,the firm will