Question 1

Explain why the monopolist has no supply curve?

Accepted Answer

A supply curve that shows the relationsh

Question 2

The demand curve for the monopoly's product is

Accepted Answer

A) the market demand for the product. 
B) more elastic than the market demand for the product. 
C) more inelastic than the market demand for the product. 
D) undefined. 
A) the market demand for the product. 
B) more elastic than the market demand for the product. 
C) more inelastic than the market demand for the product. 
D) undefined.

Question 3

A patent or copyright is a barrier to entry based on

Accepted Answer

A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities. 
A) ownership of a key necessary raw material. 
B) large economies of scale as output increases. 
C) government action to protect a producer. 
D) widespread network externalities.

Question 4

Figure 10-9   Figure 10-9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-9.The firm would maximize profit by producing

Accepted Answer

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

Question 5

Figure 10-3   Figure 10-3 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Accepted Answer

A) $21,600 
B) $20,400 
C) $19,740 
D) $7,800 
A) $21,600 
B) $20,400 
C) $19,740 
D) $7,800

Question 6

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

A) after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B) firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C) the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D) after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug. 
A) after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat. 
B) firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. 
C) the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. 
D) after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.

Question 7

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A merger between two competitors may 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 10

Economic efficiency requires that a natural monopoly's price be

Accepted Answer

A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit. 
A) equal to average total cost where it intersects the demand curve. 
B) equal to marginal cost where it intersects the demand curve. 
C) equal to average variable cost where it intersects the demand curve. 
D) equal to the lowest price the firm can charge and still make a normal profit.

Question 11

A market economy benefits from market power

Accepted Answer

A) if the majority of the population are entrepreneurs. 
B) if firms with market power do research and development with the profits earned. 
C) if market power gets so bad the government creates public enterprises. 
D) under no circumstances. 
A) if the majority of the population are entrepreneurs. 
B) if firms with market power do research and development with the profits earned. 
C) if market power gets so bad the government creates public enterprises. 
D) under no circumstances.

Question 12

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 13

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A) Yes,there are no substitutes to Peet's coffee. 
B) No,although Peet's coffee is a unique product,there are many different brands of coffee that are very close substitutes. 
C) Yes,Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No,Peet's is not a monopoly because there are many branches of Peet's. 
A) Yes,there are no substitutes to Peet's coffee. 
B) No,although Peet's coffee is a unique product,there are many different brands of coffee that are very close substitutes. 
C) Yes,Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. 
D) No,Peet's is not a monopoly because there are many branches of Peet's.

Question 14

The government estimated that by allowing the merger between AT&T and T-Mobile to go through,the Herfindahl Hirschman Index for the national market would increase from about 2,400 to about 3,100.According to the merger standards of the Department of Justice and the FTC,these index numbers indicate that the market is ________ concentrated,and the merger ________ be challenged.

Accepted Answer

A) moderately;may 
B) moderately;will 
C) highly;may 
D) highly;will 
A) moderately;may 
B) moderately;will 
C) highly;may 
D) highly;will

Question 15

A natural monopoly is characterized by large fixed costs relative to variable costs.

Accepted Answer

A) True 
 B)False

Question 16

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 the deadweight loss generated by Shakti when it produces the monopoly output?

Accepted Answer

A) $124 
B) $42 
C) $36 
D) $12 
A) $124 
B) $42 
C) $36 
D) $12

Question 17

A monopoly is characterized by all of the following except

Accepted Answer

A) there are only a few sellers each selling a unique product. 
B) entry barriers are high. 
C) there are no close substitutes to the firm's product. 
D) the firm has market power. 
A) there are only a few sellers each selling a unique product. 
B) entry barriers are high. 
C) there are no close substitutes to the firm's product. 
D) the firm has market power.

Question 18

An example of a monopoly based on control of a key resource is

Accepted Answer

A) Major League Baseball. 
B) the Paul Ecke Ranch monopoly on poinsettias. 
C) Microsoft's Windows operating system. 
D) the U.S.Food and Drug Administration. 
A) Major League Baseball. 
B) the Paul Ecke Ranch monopoly on poinsettias. 
C) Microsoft's Windows operating system. 
D) the U.S.Food and Drug Administration.

Question 19

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 20

Figure 10-5   Figure 10-5 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-5.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

Explain why the monopolist has no supply curve?

The demand curve for the monopoly's product is

A patent or copyright is a barrier to entry based on

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.The firm would maximize profit by producing

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

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

A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Economic efficiency requires that a natural monopoly's price be

A market economy benefits from market power

For a natural monopoly to exist,

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

A natural monopoly is characterized by large fixed costs relative to variable costs.

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 the deadweight loss generated by Shakti when it produces the monopoly output?

A monopoly is characterized by all of the following except

An example of a monopoly based on control of a key resource is

Which one of the following about a monopoly is false?

Figure 10-5 Figure 10-5 shows the demand and cost curves for a monopolist. -Refer to Figure 10-5.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

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

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Exam 10: Monopoly and Antitrust Policy

Explain why the monopolist has no supply curve?

The demand curve for the monopoly's product is

A patent or copyright is a barrier to entry based on

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.The firm would maximize profit by producing

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

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

A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Economic efficiency requires that a natural monopoly's price be

A market economy benefits from market power

For a natural monopoly to exist,

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

A natural monopoly is characterized by large fixed costs relative to variable costs.

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 the deadweight loss generated by Shakti when it produces the monopoly output?

A monopoly is characterized by all of the following except

An example of a monopoly based on control of a key resource is

Which one of the following about a monopoly is false?

Figure 10-5 Figure 10-5 shows the demand and cost curves for a monopolist. -Refer to Figure 10-5.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

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