Question 1

In the United States,government policies with respect to monopolies and collusion are embodied in

Accepted Answer

A) the U.S.Constitution. 
B) common law,which the United States adopted from English law. 
C) the Supreme Court. 
D) antitrust laws. 
A) the U.S.Constitution. 
B) common law,which the United States adopted from English law. 
C) the Supreme Court. 
D) antitrust laws.

Question 2

Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Accepted Answer

A) Q0 units;P0 
B) Q2 units;P2 
C) Q1 units;P4 
D) Q3 units;P3 
A) Q0 units;P0 
B) Q2 units;P2 
C) Q1 units;P4 
D) Q3 units;P3

Question 3

Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.At the profit-maximizing quantity,what is the difference between the monopoly's price and the marginal cost of production?

Accepted Answer

A) $8 
B) $11.50 
C) $21 
D) There is no difference. 
A) $8 
B) $11.50 
C) $21 
D) There is no difference.

Question 4

What type of protection does U.S.law grant the creator of a book,film,or piece of music?

Accepted Answer

A) A public franchise,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
B) A copyright,which grants exclusive rights to the creator for 20 years after the work is created. 
C) A patent,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
D) A copyright,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
A) A public franchise,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
B) A copyright,which grants exclusive rights to the creator for 20 years after the work is created. 
C) A patent,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death. 
D) A copyright,which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death.

Question 5

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 6

The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Unlike a perfect competitor,a monopolist faces the market demand curve.

Accepted Answer

A) True 
 B)False

Question 9

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 10

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Accepted Answer

A) True 
 B)False

Question 11

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.The dean of the college argues: "I think the course should be priced to maximize the profit the college earns,so these funds can be used to pay some other expenses." Which price should the dean favor?

Accepted Answer

A) $0 
B) $40 
C) $88 
D) $150 
A) $0 
B) $40 
C) $88 
D) $150

Question 12

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.The faculty member who designed the course argues: "I think the course should be priced so that the maximum number of students enroll." Which price should this faculty member favor?

Accepted Answer

A) $0 
B) $40 
C) $88 
D) $150 
A) $0 
B) $40 
C) $88 
D) $150

Question 13

Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.The firm's profit-maximizing price is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 14

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 15

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 16

A monopoly is a seller of a product

Accepted Answer

A) with many substitutes. 
B) without a close substitute. 
C) with a perfectly inelastic demand. 
D) without a well-defined demand curve. 
A) with many substitutes. 
B) without a close substitute. 
C) with a perfectly inelastic demand. 
D) without a well-defined demand curve.

Question 17

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

Accepted Answer

A) The monopoly's price is higher by $9.50. 
B) The monopoly's price is higher by $13. 
C) The monopoly's price is higher by $3.50. 
D) The monopoly's price is higher by $21. 
A) The monopoly's price is higher by $9.50. 
B) The monopoly's price is higher by $13. 
C) The monopoly's price is higher by $3.50. 
D) The monopoly's price is higher by $21.

Question 18

For a natural monopoly to exist

Accepted Answer

A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier. 
A) a firm must continually buy up its rivals. 
B) a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level. 
C) a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand. 
D) a firm must have a government-imposed barrier.

Question 19

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 20

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

Accepted Answer

A) True 
 B)False

Exam 15: Monopoly and Antitrust Policy

In the United States,government policies with respect to monopolies and collusion are embodied in

Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Figure 15-9 shows the demand and cost curves for a monopolist. -Refer to Figure 15-9.At the profit-maximizing quantity,what is the difference between the monopoly's price and the marginal cost of production?

What type of protection does U.S.law grant the creator of a book,film,or piece of music?

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

The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

The Clayton Act is an antitrust law that was passed to

Unlike a perfect competitor,a monopolist faces the market demand curve.

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

A monopolist's demand curve is the same as the marginal revenue curve for the product.

Figure 15-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 15-2.The firm's profit-maximizing price is

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

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

A monopoly is a seller of a product

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

For a natural monopoly to exist

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?

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43,then the average profit is $7.

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

Filters

Figure 15-16 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-16.In the absence of any government regulation,the profit-maximizing owners of this firm will produce units and charge a price of .