Question 1

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Accepted Answer

A)   Arnold Harberger
B)   Joseph Schumpeter
C)   Sergey Brin
D)   Donald Turner

Question 2

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 3

A monopoly differs from monopolistic competition in that

Accepted Answer

A)   a monopoly has market power while a firm in monopolistic competition does not have any market power.
B)   a monopoly can never make a loss but a firm in monopolistic competition can.
C)   in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
D)   a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

Question 4

Figure 10-2
  Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.The firm's profit-maximizing price is

Accepted Answer

A)   P₁.
B)   P₂.
C)   P₃.
D)   P₄.

Question 5

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.

Question 6

Figure 10-9
  Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.What is the difference between the monopoly output and the perfectly competitive output?

Accepted Answer

A)   140 units
B)   240 units
C)   340 units
D)   560 units

Question 7

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.

Question 8

If you own the only bookstore in a small town,do you have a monopoly?

Accepted Answer

Because consumers in your town could buy...

Question 9

A patent

Accepted Answer

A)   grants the creator of a book, film, or piece of music the exclusive right to use the creation for 20 years.
B)   grants the creator of a book, film, or piece of music the exclusive right to use the creation during the creator's lifetime.
C)   gives a firm the exclusive right to a new product for 20 years from the date the patent application is filed with the government.
D)   gives a firm the exclusive right to a new product during the product inventor's lifetime.

Question 10

Figure 10-10
 
-Refer to Figure 10-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Accepted Answer

A)   area FHE.
B)   area FGE.
C)   area P₁P₂EF.
D)   area P₁P₂GF.

Question 11

Figure 10-17
  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 10-17.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

Question 12

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Accepted Answer

A) True 
 B)False

Question 13

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Accepted Answer

Patents are designed to encourage creati...

Question 14

Figure 10-2
  Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.If the firm's average total cost curve is ATC₃,the firm will

Accepted Answer

A)   suffer a loss.
B)   break even.
C)   make a profit.
D)   face competition.

Question 15

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Accepted Answer

A)   the greater the difference between marginal cost and price.
B)   the smaller the difference between marginal cost and average total cost.
C)   the smaller the difference between marginal cost and price.
D)   the greater the difference between marginal cost and average revenue.

Question 16

For decades,the NCAA restricted the number of college football and basketball games that could be televised,and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984,the Supreme Court decided the case

Accepted Answer

A)   for the NCAA, citing the fact that belonging to the NCAA was voluntary.
B)   against the NCAA, citing that the NCAA did not control what television networks put on the air.
C)   against the NCAA, citing anticompetitive practice.
D)   against the NCAA, citing explicit collusion among the larger colleges.

Question 17

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Accepted Answer

A)   that has been granted special production rights by the government.
B)   that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products.
C)   that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.
D)   that has the largest market share in an industry.

Question 18

A profit-maximizing monopoly produces a lower output level than would be produced if the
industry was perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Figure 10-9
  Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.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.

Exam 10: Monopoly and Antitrust Policy

For decades,the NCAA restricted the number of college football and basketball games that could be televised,and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984,the Supreme Court decided the case

Correct Answer
verified

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

Correct Answer
verified

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.The firm's profit-maximizing price is

Correct Answer
verified

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Correct Answer
verified

A patent

Correct Answer
verified

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Correct Answer
verified
Patents are designed to encourage creati...
View Answer

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Correct Answer
verified

Correct Answer
verified

Economic efficiency in a free market occurs when

Correct Answer
verified

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.If the firm's average total cost curve is ATC₃,the firm will

Correct Answer
verified

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

Correct Answer
verified

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the difference between the monopoly output and the perfectly competitive output?

Correct Answer
verified

A profit-maximizing monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Correct Answer
verified

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

Correct Answer
verified
Average revenue is equal to price for an...
View Answer

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the difference between the monopoly's price and perfectly competitive industry's price?

Correct Answer
verified

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Correct Answer
verified

A monopoly differs from monopolistic competition in that

Correct Answer
verified

If you own the only bookstore in a small town,do you have a monopoly?

Correct Answer
verified
Because consumers in your town could buy...
View Answer

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Correct Answer
verified

Figure 10-10 -Refer to Figure 10-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Correct Answer
verified

Exam 10: Monopoly and Antitrust Policy

For decades,the NCAA restricted the number of college football and basketball games that could be televised,and in 1982 the University of Georgia and the University of Oklahoma sued the NCAA under the federal antitrust laws.In 1984,the Supreme Court decided the case

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.The firm's profit-maximizing price is

Correct AnswerverifiedShow Answer

The possibility that the economy may benefit from having market power,rather than being very competitive,is closely identified with which famous economist?

Correct AnswerverifiedShow Answer

A patent

Correct AnswerverifiedShow Answer

U.S.antitrust laws are designed to prohibit monopolization and encourage competition.Why,then,does the government erect barriers to entry and create monopoly power by granting firms patents?

Correct AnswerverifiedPatents are designed to encourage creati...View AnswerShow Answer

In evaluating the degree of economic efficiency in a market,we can state that the size of the deadweight loss in a market will be smaller

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic efficiency in a free market occurs when

Correct AnswerverifiedShow Answer

Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 10-2.If the firm's average total cost curve is ATC₃,the firm will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the difference between the monopoly output and the perfectly competitive output?

Correct AnswerverifiedShow Answer

A profit-maximizing monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAverage revenue is equal to price for an...View AnswerShow Answer

Figure 10-9 Figure 10-9 shows the demand and cost curves for a monopolist. -Refer to Figure 10-9.What is the difference between the monopoly's price and perfectly competitive industry's price?

Correct AnswerverifiedShow Answer

If we use a narrow definition of monopoly,then a monopoly is defined as a firm

Correct AnswerverifiedShow Answer

A monopoly differs from monopolistic competition in that

Correct AnswerverifiedShow Answer

If you own the only bookstore in a small town,do you have a monopoly?

Correct AnswerverifiedBecause consumers in your town could buy...View AnswerShow Answer

A snack shop inside a hotel in a busy city has a monopoly on food sales if it is the only food vendor in the hotel that is open 24 hours a day.

Correct AnswerverifiedShow Answer

Figure 10-10 -Refer to Figure 10-10.Compared to a perfectly competitive market,consumer surplus is lower in a monopoly by an amount equal to the

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Patents are designed to encourage creati...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Average revenue is equal to price for an...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Because consumers in your town could buy...
View Answer

Correct Answer
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Correct Answer
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