Question 1

Antitrust activities can cause inefficiencies by:

Accepted Answer

A)  breaking up a natural monopoly.
B)  creating many small firms that cannot capture available economies of scale.
C)  Both of these statements are true.
D)  Neither of these statements is true.E) A) and B)
F) A) and C)

Question 2

DeBeers was able to profit the most from the diamond market by selling:

Accepted Answer

A)  a lot of diamonds at low prices.
B)  few diamonds at high prices.
C)  a lot of diamonds at high prices.
D)  a few diamonds at low prices.E) None of the above
F) B) and C)

Question 3

An essential characteristic of a monopoly is:

Accepted Answer

A)  the good must have no close substitutes.
B)  there can only be a few sellers in the market.
C)  only one buyer must exist.
D)  many buyers must exist.E) A) and B)
F) All of the above

Question 4

This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown,if Q2 units are being produced,this monopolist:

Accepted Answer

A)  is earning negative profits.
B)  should cut back production to increase profits.
C)  is maximizing revenue.
D)  is maximizing profits.E) B) and D)
F) C) and D)

Question 5

Some argue the best response to monopolies is no response at all because:

Accepted Answer

A)  the creation of regulation may be too difficult.
B)  political mishandling may make the situation even worse.
C)  the regulation of monopolies may not be able to be managed effectively.
D)  All of these statements are true.E) All of the above
F) A) and C)

Question 6

The government has used the Sherman Act to break up monopolies in which of the following industries?

Accepted Answer

A)  Railroad
B)  Oil
C)  Aluminum
D)  All of these industries have been affected by the Sherman Act.E) All of the above
F) A) and D)

Question 7

For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:

Accepted Answer

A)  the outcome is efficient.
B)  total surplus is increased.
C)  consumer surplus is always increased.
D)  None of these statements is true.E) B) and C)
F) None of the above

Question 8

For a monopoly,when the price effect outweighs the quantity effect of increased production:

Accepted Answer

A)  total revenues will increase.
B)  the demand must be price inelastic.
C)  marginal revenue must be increasing.
D)  All of these statements are true.E) A) and D)
F) A) and C)

Question 9

When government owns a natural monopoly,it:

Accepted Answer

A)  still creates deadweight loss.
B)  sets price above marginal cost.
C)  recognizes setting price equal to marginal cost would cause the enterprise to incur losses.
D)  All of these statements are true.E) A) and B)
F) C) and D)

Question 10

One barrier to entry into a monopolist market is:

Accepted Answer

A)  the ownership of a key resource or input.
B)  too many competitors already in the market.
C)  high input costs.
D)  few buyers.E) A) and B)
F) All of the above

Question 11

One of the reasons why monopolies exist is:

Accepted Answer

A)  there are barriers to entry into the market.
B)  there is easy entry and exit into and out of the market.
C)  the goods sold are highly inaccessible to buyers.
D)  geographical differences.E) B) and C)
F) A) and C)

Question 12

Most U.S.firms face:

Accepted Answer

A)  perfect competition.
B)  some degree of competition.
C)  market power resting in a few large firms in every industry.
D)  no competition at all.E) B) and C)
F) A) and C)

Question 13

For a monopoly,when marginal revenue is zero:

Accepted Answer

A)  profits are maximized.
B)  total revenue is maximized.
C)  marginal revenue is minimized.
D)  marginal costs are minimized.E) B) and D)
F) C) and D)

Question 14

The government uses the antitrust laws in place:

Accepted Answer

A)  to prevent all mergers that would create market power.
B)  ineffectively because the laws are outdated.
C)  increasingly over time,as market power is getting more concentrated.
D)  None of these statements is true.E) All of the above
F) None of the above

Question 15

If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay:

Accepted Answer

A)  it can remain in operation by covering its losses with revenue from taxes.
B)  it must shut down and leave the industry in the long run.
C)  it should expand operations until demand is satisfied.
D)  it will seek out more efficiencies.E) A) and B)
F) A) and C)

Question 16

This table represents the revenues faced by a monopolist. th unit. B) increases,then decreases as output increases. C) increases as output increases. D) decreases,then increases after the 6th unit." class="answers-bank-image d-inline" rel="preload" >
Using the information in the table shown,the marginal revenue:

Accepted Answer

A)  is negative after the 6th unit.
B)  increases,then decreases as output increases.
C)  increases as output increases.
D)  decreases,then increases after the 6th unit.E) B) and C)
F) C) and D)

Question 17

The monopolist chooses to produce:

Accepted Answer

A)  where marginal cost equals marginal revenue.
B)  at a lower quantity than the perfectly competitive firm.
C)  at an inefficient outcome.
D)  All of these statements are true.E) B) and D)
F) B) and C)

Question 18

Perfect price discrimination:

Accepted Answer

A)  allows each customer to pay exactly what they are willing and able to pay.
B)  maximizes consumer surplus.
C)  is not efficient.
D)  minimizes producer surplus.E) C) and D)
F) B) and C)

Question 19

The loss of the profit motive by a publicly owned natural monopoly could:

Accepted Answer

A)  reduce the motivation to improve efficiency.
B)  increase the motivation to improve efficiency.
C)  increase the incentive to provide better service.
D)  increase the incentive to lower costs.E) A) and C)
F) None of the above

Question 20

With a monopolist's outcome,producer surplus is:

Accepted Answer

A)  higher than that of a competitive market.
B)  lower than that of a competitive market.
C)  the same as that of a competitive market.
D)  Any of these is possible.E) C) and D)
F) B) and C)

Exam 14: Monopoly

For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:

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One of the reasons why monopolies exist is:

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Perfect price discrimination:

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DeBeers was able to profit the most from the diamond market by selling:

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The monopolist chooses to produce:

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If an inefficient public monopoly cannot provide a service at a price that sufficient numbers of people are willing to pay:

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The government has used the Sherman Act to break up monopolies in which of the following industries?

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An essential characteristic of a monopoly is:

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Antitrust activities can cause inefficiencies by:

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Some argue the best response to monopolies is no response at all because:

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This table represents the revenues faced by a monopolist. Using the information in the table shown,the marginal revenue:

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Most U.S.firms face:

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One barrier to entry into a monopolist market is:

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When government owns a natural monopoly,it:

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For a monopoly,when marginal revenue is zero:

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The loss of the profit motive by a publicly owned natural monopoly could:

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For a monopoly,when the price effect outweighs the quantity effect of increased production:

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With a monopolist's outcome,producer surplus is:

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This graph shows the cost and revenue curves faced by a monopoly. According to the graph shown,if Q2 units are being produced,this monopolist:

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The government uses the antitrust laws in place:

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