Question 1

Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows:
A.Firm A: 30%
B.Firm B: 20%
C.Firms C, D, and E: 10% each
D.Firms F, G, H, and J: 5% each
What is the value of the Herfindahl-Hirschman Index?

Accepted Answer

A)  1,425
B)  1,600
C)  1,700
D)  2,600

Question 2

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 3

Why does a monopoly cause a deadweight loss?

Accepted Answer

A)  because it stops producing output at a point where price is above marginal cost
B)  because it appropriates a portion of consumer surplus for itself
C)  because it increases producer surplus at the expense of consumer surplus
D)  because it does not produce some output for which demand exceeds supply

Question 4

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

Accepted Answer

A)  marginal revenue of the sixth performance is $288,000.
B)  marginal revenue of the sixth performance is $38,000.
C)  cost of staging the sixth performance is probably higher than the cost of staging the previous five.
D)  company will be making a loss on the sixth performance because its ticket sales will be less than the average revenue received from the previous five.

Question 5

Figure 15-9
  
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.

Question 6

Identify two ways by which the government controls monopolies?

Accepted Answer

The government control monopol...

Question 7

A merger between the Ford Motor Company and General Motors would be an example of a

Accepted Answer

A)  vertical merger.
B)  horizontal merger.
C)  conglomerate merger.
D)  trust.

Question 8

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Accepted Answer

A)  to maximize profit the firm should increase output.
B)  to maximize profit the firm should decrease output.
C)  to maximize profit the firm should continue to produce the output it is producing.
D)  Not enough information is given to say what the firm should do to maximize profit.

Question 9

Figure 15-12
  
Figure 15-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry, the market output and market price would be

Accepted Answer

A)  output = 62; price = $24.
B)  output = 83; price = $22.
C)  output = 62; price = $18.
D)  output = 104; price = $20.80.

Question 10

A merger between U.S.Steel and General Motors would be an example of a

Accepted Answer

A)  vertical merger.
B)  horizontal merger.
C)  conglomerate merger.
D)  conspiracy in restraint of trade.

Question 11

What is a public franchise? Are all public franchises natural monopolies?

Accepted Answer

A public franchise is a firm which the g...

Question 12

The term "trust" in antitrust refers to a board of trustees that has collusive control over different companies.

Accepted Answer

A) True 
 B)False

Question 13

Figure 15-12
  
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.

Question 14

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.An economics professor argues: "I think the course should be priced so as to achieve economic efficiency." Which price should this faculty member favor?

Accepted Answer

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

Question 15

The only firms that do not have market power are

Accepted Answer

A)  firms in industries with low barriers to entry.
B)  firms that do not advertise their products.
C)  firms in perfectly competitive markets.
D)  firms that sell identical products.

Question 16

If a restaurant was a natural monopoly, its

Accepted Answer

A)  marginal cost curve would still be declining when it crossed the demand curve.
B)  average total cost curve would still be declining when it crossed the demand curve.
C)  marginal revenue curve would be the same as its demand curve.
D)  marginal revenue curve would be horizontal.

Question 17

Figure 15-13
 
-Refer to Figure 15-13.From the monopoly graph above, identify the area representing the deadweight loss.Would the deadweight loss be larger if the demand curve was more elastic or less elastic?

Accepted Answer

The deadweight loss = area C + D.The les...

Question 18

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

Question 19

Table 15-3
  
Assume Table 15-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia.
-Refer to Table 15-3.If Comcast maximizes its profits how much profit will it earn?

Accepted Answer

A)  $84
B)  $40
C)  $4
D)  Comcast will break even.

Question 20

The United States Post Office

Accepted Answer

A)  faces no competition for its mail services.
B)  has a monopoly in the provision of first-class mail service.
C)  can safely ignore the prices for mail services charged by its rivals such as FedEx and UPS.
D)  is an example of a monopoly that results from the ownership of a key resource: first class mail service.

Exam 15: Monopoly and Antitrust Policy

The United States Post Office

Correct Answer
verified

Figure 15-12 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

Correct Answer
verified

The term "trust" in antitrust refers to a board of trustees that has collusive control over different companies.

Correct Answer
verified

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

Correct Answer
verified

Figure 15-9 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?

Correct Answer
verified

The only firms that do not have market power are

Correct Answer
verified

A merger between U.S.Steel and General Motors would be an example of a

Correct Answer
verified

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry, the market output and market price would be

Correct Answer
verified

What is a public franchise? Are all public franchises natural monopolies?

Correct Answer
verified
A public franchise is a firm which the g...
View Answer

A merger between the Ford Motor Company and General Motors would be an example of a

Correct Answer
verified

Identify two ways by which the government controls monopolies?

Correct Answer
verified
The government control monopol...
View Answer

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Correct Answer
verified

Correct Answer
verified

Table 15-3 Assume Table 15-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia. -Refer to Table 15-3.If Comcast maximizes its profits how much profit will it earn?

Correct Answer
verified

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

Correct Answer
verified

Figure 15-13 -Refer to Figure 15-13.From the monopoly graph above, identify the area representing the deadweight loss.Would the deadweight loss be larger if the demand curve was more elastic or less elastic?

Correct Answer
verified
The deadweight loss = area C + D.The les...
View Answer

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Correct Answer
verified

Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows: A.Firm A: 30% B.Firm B: 20% C.Firms C, D, and E: 10% each D.Firms F, G, H, and J: 5% each What is the value of the Herfindahl-Hirschman Index?

Correct Answer
verified

Why does a monopoly cause a deadweight loss?

Correct Answer
verified

If a restaurant was a natural monopoly, its

Correct Answer
verified

Exam 15: Monopoly and Antitrust Policy

The United States Post Office

Correct AnswerverifiedShow Answer

Figure 15-12 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

Correct AnswerverifiedShow Answer

The term "trust" in antitrust refers to a board of trustees that has collusive control over different companies.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 15-9 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?

Correct AnswerverifiedShow Answer

The only firms that do not have market power are

Correct AnswerverifiedShow Answer

A merger between U.S.Steel and General Motors would be an example of a

Correct AnswerverifiedShow Answer

Figure 15-12 Figure 15-12 shows the cost and demand curves for a monopolist. -Refer to Figure 15-12.If this industry was organized as a perfectly competitive industry, the market output and market price would be

Correct AnswerverifiedShow Answer

What is a public franchise? Are all public franchises natural monopolies?

Correct AnswerverifiedA public franchise is a firm which the g...View AnswerShow Answer

A merger between the Ford Motor Company and General Motors would be an example of a

Correct AnswerverifiedShow Answer

Identify two ways by which the government controls monopolies?

Correct AnswerverifiedThe government control monopol...View AnswerShow Answer

Economic efficiency requires that a natural monopoly's price be set corresponding to the quantity where marginal revenue equals marginal cost.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 15-3 Assume Table 15-3 gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia. -Refer to Table 15-3.If Comcast maximizes its profits how much profit will it earn?

Correct AnswerverifiedShow Answer

If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the

Correct AnswerverifiedShow Answer

Figure 15-13 -Refer to Figure 15-13.From the monopoly graph above, identify the area representing the deadweight loss.Would the deadweight loss be larger if the demand curve was more elastic or less elastic?

Correct AnswerverifiedThe deadweight loss = area C + D.The les...View AnswerShow Answer

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Correct AnswerverifiedShow Answer

Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows: A.Firm A: 30% B.Firm B: 20% C.Firms C, D, and E: 10% each D.Firms F, G, H, and J: 5% each What is the value of the Herfindahl-Hirschman Index?

Correct AnswerverifiedShow Answer

Why does a monopoly cause a deadweight loss?

Correct AnswerverifiedShow Answer

If a restaurant was a natural monopoly, its

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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A public franchise is a firm which the g...
View Answer

Correct Answer
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Correct Answer
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The government control monopol...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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The deadweight loss = area C + D.The les...
View Answer

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Correct Answer
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