Question 1

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Accepted Answer

If a perfectly competitive ind

Question 2

Figure 15-12   Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.If the firm maximizes its profits,the deadweight loss to society due to this monopoly is equal to the area

Accepted Answer

A)  ABF. 
B)  ABEG. 
C)  ACE. 
D)  EFG. 
A)  ABF. 
B)  ABEG. 
C)  ACE. 
D)  EFG.

Question 3

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

Accepted Answer

A)  $1,116. 
B)  $1,488. 
C)  $1,726.40 
D)  $1,826. 
A)  $1,116. 
B)  $1,488. 
C)  $1,726.40 
D)  $1,826.

Question 4

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 firm's profit-maximizing output and what is the price charged to sell this output?

Accepted Answer

A)  P = $85; Q = 10 
B)  P = $80; Q = 11 
C)  P = $70; Q = 13 
D)  P = $65; Q = 14 
A)  P = $85; Q = 10 
B)  P = $80; Q = 11 
C)  P = $70; Q = 13 
D)  P = $65; Q = 14

Question 5

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Accepted Answer

A monopoly's marginal revenue curve lies

Question 6

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

Accepted Answer

Market power allows a firm to set its pr

Question 7

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Accepted Answer

A)  lies between 1,000 and 1,800 and the merger raises the Index by 50 points. 
B)  lies between 1,000 and 1,800 and the merger raises the Index by more than 100 points. 
C)  lies above 1,800 and the merger raises the Index by less than 50 points. 
D)  lies below 1,000 and the merger raises the Index by 100 points. 
A)  lies between 1,000 and 1,800 and the merger raises the Index by 50 points. 
B)  lies between 1,000 and 1,800 and the merger raises the Index by more than 100 points. 
C)  lies above 1,800 and the merger raises the Index by less than 50 points. 
D)  lies below 1,000 and the merger raises the Index by 100 points.

Question 8

Figure 15-4   Figure 15-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

Accepted Answer

A)  New firms will enter the market to eliminate its profits. 
B)  It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C)  As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D)  It will be regulated by the government because of its excess profits. 
A)  New firms will enter the market to eliminate its profits. 
B)  It will expand its output to take advantage of economies of scale so as to further increase its profit. 
C)  As long as there are entry barriers, this firm will continue to enjoy economic profits. 
D)  It will be regulated by the government because of its excess profits.

Question 9

The ability of a firm to charge a price greater than marginal cost is called

Accepted Answer

A)  monopoly power. 
B)  price-making power. 
C)  cost-plus pricing. 
D)  market power. 
A)  monopoly power. 
B)  price-making power. 
C)  cost-plus pricing. 
D)  market power.

Question 10

A firm that has the ability to control to some degree the price of the product it sells

Accepted Answer

A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve. 
A)  is also able to dictate the quantity purchased. 
B)  faces a demand curve that is inelastic throughout the range of market demand. 
C)  is a price maker. 
D)  faces a perfectly inelastic demand curve.

Question 11

Figure 15-15   Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.Erickson Power is a natural monopoly because

Accepted Answer

A)  it is a power company and all power companies are natural monopolies. 
B)  average total cost is still declining when it intersects demand. 
C)  of its continually declining marginal revenue curve as output rises. 
D)  its marginal cost lies entirely below its long-run average cost. 
A)  it is a power company and all power companies are natural monopolies. 
B)  average total cost is still declining when it intersects demand. 
C)  of its continually declining marginal revenue curve as output rises. 
D)  its marginal cost lies entirely below its long-run average cost.

Question 12

Figure 15-12   Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

Accepted Answer

A)  $21 
B)  $124 
C)  $186 
D)  $332 
A)  $21 
B)  $124 
C)  $186 
D)  $332

Question 13

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

The Aluminum Company of America (Alcoa)had a monopoly until the 1940s because

Accepted Answer

A)  it was a public enterprise. 
B)  it had a patent on the manufacture of aluminum. 
C)  the company had a secret technique for making aluminum from bauxite. 
D)  it had control of almost all the available supply of bauxite. 
A)  it was a public enterprise. 
B)  it had a patent on the manufacture of aluminum. 
C)  the company had a secret technique for making aluminum from bauxite. 
D)  it had control of almost all the available supply of bauxite.

Question 15

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 ATC3,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 16

BHP Billiton is a Canadian company that owns mines in Canada that

Accepted Answer

A)  produce nickel. After World War II, BHP Billiton began to compete with another Canadian firm, the International Nickel Company. This competition eventually ended International Nickel's monopoly in this market. 
B)  produces bauxite, the mineral needed to produce aluminum. BHP Billiton began to mine bauxite after World War II. This competition eventually ended the Aluminum Company of America (ALCO
A) 's monopoly in this market. 
C)  produces coal. Until World War II, BHP Billiton had a monopoly on coal in Canada. 
D)  produce diamonds. 
A)  produce nickel. After World War II, BHP Billiton began to compete with another Canadian firm, the International Nickel Company. This competition eventually ended International Nickel's monopoly in this market. 
B)  produces bauxite, the mineral needed to produce aluminum. BHP Billiton began to mine bauxite after World War II. This competition eventually ended the Aluminum Company of America (ALCO
A) 's monopoly in this market. 
C)  produces coal. Until World War II, BHP Billiton had a monopoly on coal in Canada. 
D)  produce diamonds.

Question 17

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 marginal revenue from the sale of the 12th unit?

Accepted Answer

A)  $75 
B)  $50 
C)  $20 
D)  -$5 
A)  $75 
B)  $50 
C)  $20 
D)  -$5

Question 18

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

Accepted Answer

A)  the antitrust division of the Department of State and the Securities and Exchange Commission. 
B)  the Federal Trade Commission and the Internal Revenue Service. 
C)  the Antitrust Division of the U.S. Department of Justice and the Council of Economic Advisors. 
D)  the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice. 
A)  the antitrust division of the Department of State and the Securities and Exchange Commission. 
B)  the Federal Trade Commission and the Internal Revenue Service. 
C)  the Antitrust Division of the U.S. Department of Justice and the Council of Economic Advisors. 
D)  the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.

Question 19

Long-run economic profits would most likely exist in which market structure?

Accepted Answer

A)  monopoly, monopolistic competition and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only 
A)  monopoly, monopolistic competition and oligopoly 
B)  monopoly and oligopoly 
C)  monopoly and monopolistic competition 
D)  monopoly only

Question 20

Figure 15-12   Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

Accepted Answer

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

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If the firm maximizes its profits,the deadweight loss to society due to this monopoly is equal to the area

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

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 firm's profit-maximizing output and what is the price charged to sell this output?

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

The ability of a firm to charge a price greater than marginal cost is called

A firm that has the ability to control to some degree the price of the product it sells

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.Erickson Power is a natural monopoly because

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

The Aluminum Company of America (Alcoa)had a monopoly until the 1940s because

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 ATC₃,the firm will

BHP Billiton is a Canadian company that owns mines in Canada that

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 marginal revenue from the sale of the 12th unit?

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

Long-run economic profits would most likely exist in which market structure?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

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

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus,producer surplus,and deadweight loss?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If the firm maximizes its profits,the deadweight loss to society due to this monopoly is equal to the area

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

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 firm's profit-maximizing output and what is the price charged to sell this output?

What is the difference between a monopoly's marginal revenue curve and a perfect competitor's marginal revenue curve?

Explain why market power leads to a deadweight loss.Is the total deadweight loss from market power in the United States large or small?

According to the Department of Justice merger guidelines,a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is likely to happen to this monopoly in the long run?

The ability of a firm to charge a price greater than marginal cost is called

A firm that has the ability to control to some degree the price of the product it sells

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-15.Erickson Power is a natural monopoly because

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.Assume the firm maximizes its profits.What is the amount of consumer surplus?

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

The Aluminum Company of America (Alcoa)had a monopoly until the 1940s because

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 ATC3,the firm will

BHP Billiton is a Canadian company that owns mines in Canada that

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 marginal revenue from the sale of the 12th unit?

The U.S.Congress has given two government entities the authority to police mergers.These two entities are

Long-run economic profits would most likely exist in which market structure?

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry,the market output and market price would be

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 ATC₃,the firm will