Exam 15: Monopoly and Antitrust Policy

Price per Unit Quantity Demanded (units) Total Cost of Production (dollars) \ 85 10 \ 530 80 11 540 75 12 550 70 13 560 65 14 575 60 15 595 55 16 625 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?

Beginning in 1965,the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

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

Which of the following is true for a monopolist?

If a restaurant was a natural monopoly,its

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

Price per Dose Quantity Demanded (dose) Total Cost of Production (dollars) \ 80 0 \ 80 72 1 82 64 2 88 56 3 100 48 4 124 40 5 164 32 6 208 24 7 268 16 8 340 Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 15-4 shows the demand and the total cost schedule for the firm. -Refer to Table 15-4.What is Shakti's profit-maximizing output?

A firm that is the only seller of a good or service that does not have a close substitute is called

What is a network externality?

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 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Economic efficiency in a free market occurs when

Figure 15-17 Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world,whether they are actually enrolled in your college or not.The demand and cost situation for the MOOC is shown in the figure. -Refer to Figure 15-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." How much profit (or loss)will the college make on the course if it charges this price?

Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost \ 17 3 \ 51 ---- \ 56 ---- 16 4 64 \ 13 63 \ 7 15 5 75 11 71 8 14 6 84 9 80 9 13 7 91 7 90 10 12 8 96 5 101 11 Assume Table 15-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast,a cable television monopoly in Philadelphia. -Refer to Table 15-3.If Comcast maximizes its profits how much profit will it earn?

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

Price per Unit Quantity Demanded (units) Total Cost of Production (dollars) \ 85 10 \ 530 80 11 540 75 12 550 70 13 560 65 14 575 60 15 595 55 16 625 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?

Although some economists believe network externalities are important barriers to entry,other economists disagree because

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand

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/loss per unit?