Question 1

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Accepted Answer

A) Spuds McKenzie,a wealthy potato farmer in Idaho 
B) Cheap Gas,one of two gasoline stations in a large rural community 
C) Santos Tacos,the only taqueria in the small town of Santosville 
D) Zippie Rentals,a sports car rental service in the downtown Boston area 
A) Spuds McKenzie,a wealthy potato farmer in Idaho 
B) Cheap Gas,one of two gasoline stations in a large rural community 
C) Santos Tacos,the only taqueria in the small town of Santosville 
D) Zippie Rentals,a sports car rental service in the downtown Boston area

Question 2

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

Accepted Answer

A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft,the wealthy corn farmer is probably a monopolist 
A) because Microsoft is large enough to hire the best people in the field 
B) because Microsoft could potentially lose sales if it sets prices indiscriminately 
C) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects 
D) because unlike Microsoft,the wealthy corn farmer is probably a monopolist

Question 3

A possible advantage of a horizontal merger for the economy is that

Accepted Answer

A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue. 
A) the merging firms could avoid losses. 
B) the merged firm might reap economies of scale which could translate into lower prices. 
C) the degree of competition in the industry will be intensified. 
D) the government stands to collect more corporate income tax revenue.

Question 4

Economic efficiency in a free market occurs when

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) price is as low as possible. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) price is as low as possible.

Question 5

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 6

Figure 10-1   Figure 10-1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-1.To maximize profit,the firm will produce

Accepted Answer

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

Question 7

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

Accepted Answer

A) True 
 B)False

Question 8

Figure 10-3   Figure 10-3 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-3.What is the price charged for the profit-maximizing output level?

Accepted Answer

A) $13 
B) $21 
C) $27 
D) $34 
A) $13 
B) $21 
C) $27 
D) $34

Question 9

Figure 10-7   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 10-7 shows the cable television market in Upstate New York.
-Refer to Figure 10-7.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 10

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Accepted Answer

A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve. 
A) control of a key raw material. 
B) network externalities. 
C) economies of scale. 
D) perfectly inelastic demand curve.

Question 11

Figure 10-9   Figure 10-9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-9.Why won't regulators require that Erickson Power produce the economically efficient output level?

Accepted Answer

A) because there is insufficient demand at that output level 
B) because at the economically efficient output level,the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C) because Erickson Power will earn zero profit 
D) because Erickson Power will sustain persistent losses and will not continue in business in the long run. 
A) because there is insufficient demand at that output level 
B) because at the economically efficient output level,the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit 
C) because Erickson Power will earn zero profit 
D) because Erickson Power will sustain persistent losses and will not continue in business in the long run.

Question 12

Figure 10-2   Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.What happens to the monopolist represented in the diagram in the long run?

Accepted Answer

A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same,it will exit the market. 
C) The government will subsidize the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers. 
A) It will raise its price at least until it breaks even. 
B) If the cost and demand curves remain the same,it will exit the market. 
C) The government will subsidize the monopoly to enable it to break even. 
D) It will be forced out of business by more efficient producers.

Question 13

Table 10-2
   Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm.
-Refer to Table 10-2.What is the amount of Shakti's profit?

Accepted Answer

A) $68 
B) $72 
C) $124 
D) $192 
A) $68 
B) $72 
C) $124 
D) $192

Question 14

Figure 10-2   Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Accepted Answer

A) $38 
B) $54 
C) $68 
D) $75 
A) $38 
B) $54 
C) $68 
D) $75

Question 15

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

Question 16

Suppose an industry is made up of 25 firms,all with equal market share.The four-firm concentration ratio of this industry is

Accepted Answer

A) 16%. 
B) 20%. 
C) 25%. 
D) It cannot be determined from the information given. 
A) 16%. 
B) 20%. 
C) 25%. 
D) It cannot be determined from the information given.

Question 17

A United States government patent lasts

Accepted Answer

A) forever. 
B) 50 years. 
C) 20 years. 
D) 7 years. 
A) forever. 
B) 50 years. 
C) 20 years. 
D) 7 years.

Question 18

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Accepted Answer

A monopolist sells a smaller q

Question 19

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Accepted Answer

Average revenue is equal to price for an

Question 20

Firms do not have market power in which of the following market structures?

Accepted Answer

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

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

A possible advantage of a horizontal merger for the economy is that

Economic efficiency in a free market occurs when

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.

Figure 10-1 Figure 10-1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-1.To maximize profit,the firm will produce

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the price charged for the profit-maximizing output level?

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.Why won't regulators require that Erickson Power produce the economically efficient output level?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.What happens to the monopolist represented in the diagram in the long run?

Table 10-2 Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm. -Refer to Table 10-2.What is the amount of Shakti's profit?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

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

Suppose an industry is made up of 25 firms,all with equal market share.The four-firm concentration ratio of this industry is

A United States government patent lasts

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Firms do not have market power in which of the following market structures?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 10: Monopoly and Antitrust Policy

Which of following is the best example of a monopoly if we use a broader definition of monopoly?

Microsoft hires marketing and sales specialists to decide what prices it should set for its products,whereas a wealthy corn farmer in Iowa,who sells his output in the world commodity market,does not.Why is this so?

A possible advantage of a horizontal merger for the economy is that

Economic efficiency in a free market occurs when

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.

Figure 10-1 Figure 10-1 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-1.To maximize profit,the firm will produce

Holding everything else constant,government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly defined.

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the price charged for the profit-maximizing output level?

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.Why won't regulators require that Erickson Power produce the economically efficient output level?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.What happens to the monopolist represented in the diagram in the long run?

Table 10-2 Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm. -Refer to Table 10-2.What is the amount of Shakti's profit?

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

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

Suppose an industry is made up of 25 firms,all with equal market share.The four-firm concentration ratio of this industry is

A United States government patent lasts

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?

Firms do not have market power in which of the following market structures?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters