Question 1

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow.  Figure 13.10
-Refer to Figure 13.10. If Armstrong Cable is forced to sell the efficient level output, it will

Accepted Answer

A)  incur a loss of $7,250. 
B)  incur a loss of $1,250. 
C)  earn a zero profit. 
D)  earn a profit of $4,000.

Question 2

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow.  Figure 13.3
-Refer to Figure 13.3. The marginal revenue of the eighth pound of burritos is

Accepted Answer

A)  $3. 
B)  $5. 
C)  $12. 
D)  $96.

Question 3

If a monopolist earns positive economic profits in the long run,

Accepted Answer

A)  new firms will enter the market. 
B)  the monopolist expands production. 
C)  the industry supply curve shifts to the right. 
D)  the monopolist will not change its behavior.

Question 4

The Sherman Antitrust Act of 1890

Accepted Answer

A)  made illegal every conspiracy in restraint of trade or commerce among the several states. 
B)  made tying contracts illegal. 
C)  limited mergers that would substantially lessen competition or tend to create a monopoly. 
D)  banned price discrimination.

Question 5

________ established the Federal Trade Commission to investigate "…the organization, business conduct, practices, and management" of companies that engage in interstate commerce.

Accepted Answer

A)  Congress 
B)  The Supreme Court 
C)  The Federal Reserve 
D)  The Treasury Department

Question 6

A chocolate manufacturer raises the price of its chocolate by 12%, and the quantity demanded of its chocolate falls by only 5%. This firm has

Accepted Answer

A)  no monopoly power in the output market. 
B)  some market power. 
C)  some output power. 
D)  not been able to prevent its competitors from competing with it on price.

Question 7

The individual firm's demand curve facing a monopoly is

Accepted Answer

A)  also the market demand curve. 
B)  the summation of all perfectly competitive firms' demand curves. 
C)  nonexistent. 
D)  the marginal cost curve above minimum average variable cost.

Question 8

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow.  Figure 13.9
-Refer to Figure 13.9. If Ohio Edison is forced to produce the efficient level of electricity (instead of the monopoly level), ________ equals area BEC.

Accepted Answer

A)  the net social gain 
B)  producer surplus 
C)  consumer surplus 
D)  welfare loss

Question 9

Refer to the information provided in Figure 13.1 below to answer the question that follows.  Figure 13.1
-Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 10

A monopolist's supply of a good is

Accepted Answer

A)  dependent on the monopolist's demand curve and its marginal cost curve. 
B)  given by the portion of the monopolist's marginal cost curve that lies above the average variable cost curve. 
C)  independent of the monopolist's demand curve. 
D)  given by the portion of the monopolist's average variable cost curve that lies above the marginal cost curve.

Question 11

The social cost associated with the distortion in consumption from a monopoly price is called

Accepted Answer

A)  producer surplus. 
B)  rent-seeking behavior. 
C)  the excess burden of a monopoly. 
D)  a network externality.

Question 12

Public choice theory states that government officials act in the public interest rather than their own self-interest when setting policies and regulations.

Accepted Answer

A) True 
 B)False

Question 13

A monopolist will not change its current behavior

Accepted Answer

A)  even if total revenue does not cover variable costs. 
B)  unless it earns positive economic profits in the long run. 
C)  unless demand is greater than marginal revenue. 
D)  if it earns positive economic profits in the long run.

Question 14

The Rare Bird Company has a monopoly in the sale of macaws in Iowa. When the Rare Bird Company sells three macaws, its marginal revenue is $30. When the Rare Bird Company sells four macaws, its marginal revenue will be

Accepted Answer

A)  less than $30. 
B)  greater than $30. 
C)  equal to $30. 
D)  greater than $30 if demand is elastic and less than $30 if demand is inelastic.

Question 15

The demand for Tyson chicken is more elastic than the demand for meat.

Accepted Answer

A) True 
 B)False

Question 16

Ceteris paribus, for a monopoly to sell more output, it must lower its price.

Accepted Answer

A) True 
 B)False

Question 17

A barrier to entry that grants exclusive use of an invented product or process to the inventor is called

Accepted Answer

A)  a government franchise. 
B)  a patent. 
C)  economies of scale. 
D)  the ownership of a scarce resource.

Question 18

A barrier to entry prevents ________ a monopolistic industry.

Accepted Answer

A)  new firms from entering and competing in 
B)  economic losses in 
C)  government regulation of 
D)  firms from exiting

Question 19

Ownership of a scarce factor of production is the barrier to entry which primarily accounts for the monopoly of

Accepted Answer

A)  utility companies. 
B)  state lotteries. 
C)  social sites like Facebook. 
D)  the DeBeers' diamond syndicate.

Question 20

A monopolist sets both price and quantity simultaneously, and the amount of output that it supplies depends

Accepted Answer

A)  only on the marginal cost curve. 
B)  only on the demand curve. 
C)  on both its marginal cost curve and the demand curve that it faces. 
D)  on both its average cost curve and the demand curve that it faces.

Exam 13: Monopoly and Antitrust Policy

Refer to the information provided in Figure 13.10 below to answer the question(s) that follow. Figure 13.10 -Refer to Figure 13.10. If Armstrong Cable is forced to sell the efficient level output, it will

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow. Figure 13.3 -Refer to Figure 13.3. The marginal revenue of the eighth pound of burritos is

If a monopolist earns positive economic profits in the long run,

The Sherman Antitrust Act of 1890

________ established the Federal Trade Commission to investigate "…the organization, business conduct, practices, and management" of companies that engage in interstate commerce.

A chocolate manufacturer raises the price of its chocolate by 12%, and the quantity demanded of its chocolate falls by only 5%. This firm has

The individual firm's demand curve facing a monopoly is

Refer to the information provided in Figure 13.9 below to answer the question(s) that follow. Figure 13.9 -Refer to Figure 13.9. If Ohio Edison is forced to produce the efficient level of electricity (instead of the monopoly level) , ________ equals area BEC.

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1 -Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by

A monopolist's supply of a good is

The social cost associated with the distortion in consumption from a monopoly price is called

Public choice theory states that government officials act in the public interest rather than their own self-interest when setting policies and regulations.

A monopolist will not change its current behavior

The Rare Bird Company has a monopoly in the sale of macaws in Iowa. When the Rare Bird Company sells three macaws, its marginal revenue is $30. When the Rare Bird Company sells four macaws, its marginal revenue will be

The demand for Tyson chicken is more elastic than the demand for meat.

Ceteris paribus, for a monopoly to sell more output, it must lower its price.

A barrier to entry that grants exclusive use of an invented product or process to the inventor is called

A barrier to entry prevents ________ a monopolistic industry.

Ownership of a scarce factor of production is the barrier to entry which primarily accounts for the monopoly of

A monopolist sets both price and quantity simultaneously, and the amount of output that it supplies depends