Question 1

In a natural monopoly,throughout the range of market demand

Accepted Answer

A) marginal cost is above average total cost and pulls average total cost upward. 
B) average total cost is above marginal cost and pulls marginal cost upward. 
C) marginal cost is below average total cost and pulls average total cost downward. 
D) there are diseconomies of scale. 
A) marginal cost is above average total cost and pulls average total cost upward. 
B) average total cost is above marginal cost and pulls marginal cost upward. 
C) marginal cost is below average total cost and pulls average total cost downward. 
D) there are diseconomies of scale.

Question 2

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

Accepted Answer

A) True 
 B)False

Question 3

The first important law regulating monopolies in the United States was

Accepted Answer

A) the Grant Act,which was passed in 1890. 
B) the Clayton Act,which was passed in 1890. 
C) the Sherman Act,which was passed in 1890. 
D) the Federal Trade Commission Act,which was passed in 1914. 
A) the Grant Act,which was passed in 1890. 
B) the Clayton Act,which was passed in 1890. 
C) the Sherman Act,which was passed in 1890. 
D) the Federal Trade Commission Act,which was passed in 1914.

Question 4

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 5

The most profitable price for a monopolist is

Accepted Answer

A) the highest price a consumer is willing to pay for the monopolist's product. 
B) the price at which demand is unit elastic. 
C) a price that maximizes the quantity sold. 
D) the price for which marginal revenue equals marginal cost. 
A) the highest price a consumer is willing to pay for the monopolist's product. 
B) the price at which demand is unit elastic. 
C) a price that maximizes the quantity sold. 
D) the price for which marginal revenue equals marginal cost.

Question 6

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

Accepted Answer

A) a copyright. 
B) a network externality. 
C) a quota. 
D) a public franchise. 
A) a copyright. 
B) a network externality. 
C) a quota. 
D) a public franchise.

Question 7

To maximize profit a monopolist will produce where

Accepted Answer

A) marginal revenue is equal to marginal cost. 
B) demand for its product is unit elastic. 
C) revenue per unit is maximized. 
D) average total cost is equal to average revenue. 
A) marginal revenue is equal to marginal cost. 
B) demand for its product is unit elastic. 
C) revenue per unit is maximized. 
D) average total cost is equal to average revenue.

Question 8

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 9

Wendell can sell five motor homes per week at a price of $22,000.If he lowers the price of motor homes to $20,000 per week he will sell six motor homes.What is the marginal revenue of the sixth motor home?

Accepted Answer

A) $10,000 
B) $12,000 
C) $20,000 
D) $22,000 
A) $10,000 
B) $12,000 
C) $20,000 
D) $22,000

Question 10

In 1935,the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

Accepted Answer

A) The original trademark expired well before Hasbro bought Parker Brothers,so they never had a trademark on Monopoly. 
B) Trademarks never expire,so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011,20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955,20 years after the trademark was issued to Parker Brothers. 
A) The original trademark expired well before Hasbro bought Parker Brothers,so they never had a trademark on Monopoly. 
B) Trademarks never expire,so Hasbro continues to have a trademark on the name Monopoly. 
C) The trademark expired in 2011,20 years after Hasbro's purchase of Parker Brothers. 
D) The trademark expired in 1955,20 years after the trademark was issued to Parker Brothers.

Question 11

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 12

Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.What is the amount of consumer surplus if,instead of monopoly,the industry was organized as a perfectly competitive industry?

Accepted Answer

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

Question 13

To have a monopoly in an industry there must be

Accepted Answer

A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise,making the monopoly the exclusive legal provider of a good or service. 
A) barriers to entry so high that no other firms can enter the industry. 
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years. 
C) an inelastic demand for the industry's product. 
D) a public franchise,making the monopoly the exclusive legal provider of a good or service.

Question 14

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 15

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117,then the price of the good must be less than $117.

Accepted Answer

A) True 
 B)False

Question 16

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 cost of production?

Accepted Answer

A) $21,600 
B) $17,700 
C) $9,340 
D) $7,800 
A) $21,600 
B) $17,700 
C) $9,340 
D) $7,800

Question 17

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Article Summary
In an attempt to get approval for a $6.3 billion merger with Office Depot,Staples met with FTC regulators to discuss the possible sale of assets so the merger can proceed.The Competition Bureau of the FTC had previously indicated that it would not approve the merger as initially structured,but Staples expressed optimism that it would be able to reach a settlement with the FTC.Critics have argued that a merger of Staples and Office Depot will result in higher prices for office supplies.
-Refer to the Article Summary.A merger between two competitors such as Staples and Office Depot 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 20

Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the economically efficient output level?

Accepted Answer

A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units 
A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units

Exam 15: Monopoly and Antitrust Policy

In a natural monopoly,throughout the range of market demand

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

The first important law regulating monopolies in the United States was

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

The most profitable price for a monopolist is

When the government makes a firm the exclusive legal provider of a good or service,it grants the firm

To maximize profit a monopolist will produce where

Which one of the following about a monopoly is false?

Wendell can sell five motor homes per week at a price of $22,000.If he lowers the price of motor homes to $20,000 per week he will sell six motor homes.What is the marginal revenue of the sixth motor home?

In 1935,the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?

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

Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.What is the amount of consumer surplus if,instead of monopoly,the industry was organized as a perfectly competitive industry?

To have a monopoly in an industry there must be

Relative to a perfectly competitive market,a monopoly results in

A monopolist currently sells 18 units of a good.If marginal revenue on the last unit sold is $117,then the price of the good must be less than $117.

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 cost of production?

The National Football League has long-term leases with the stadiums in major cities.Control of these stadiums is an entry barrier to a potential new football league.

Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.What is the economically efficient output level?

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

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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