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Exam 15: Monopoly and Antitrust Policy

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Question 141

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Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly.Which of the following statements comparing the conditions in the industry under both market structures is true?

A) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good.
B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good.
C) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good.
D) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good.

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Question 142

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

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

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Question 143

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a.What is the defining characteristic of a natural monopoly? b.Should the government break up a natural monopoly into two or more firms to make the industry more competitive? c.Suppose the government wants to ensure that some of the benefits of declining average total cost are passed on to consumers.To achieve this goal,it requires that the natural monopoly set its price equal to marginal cost.Is this a feasible goal? Explain. d.What is an alternative to marginal cost pricing that ensures that consumers reap some of the benefits of declining average total cost?

Governments grant patents to encourage

Merger guidelines developed by the U.S.Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration.This index measures concentration in an industry by

After having a monopoly in the diamond market for many years,by 2000 the De Beers company faced competition from other companies.To maintain its market share,De Beers

A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.

"Being the only seller in the market,the monopolist can choose any price and quantity it desires." Evaluate this statement: is it true or false? Explain your answer.

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Table 15-4 Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows the demand and the total cost schedule for the firm. -Refer to Table 15-4.What is Shakti's profit-maximizing output?

What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?