Question 1

The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because

Accepted Answer

A)  it was a public enterprise.
B)  it had a patent on the manufacture of aluminum.
C)  the company had a secret technique for making aluminum from bauxite.
D)  it had control of almost all the available supply of bauxite.E) A) and B)
F) All of the above

Question 2

A market economy benefits from market power

Accepted Answer

A)  if the majority of the population are entrepreneurs.
B)  if firms with market power do research and development with the profits earned.
C)  if market power gets so bad the government creates public enterprises.
D)  under no circumstances.E) B) and D)
F) A) and B)

Question 3

The government estimated that by allowing the merger between AT&T and T-Mobile to go through,the Herfindahl Hirschman Index for the national market would increase from about 2,400 to about 3,100.According to the merger standards of the Department of Justice and the FTC,these index numbers indicate that the market is ________ concentrated,and the merger ________ be challenged.

Accepted Answer

A)  moderately;may
B)  moderately;will
C)  highly;may
D)  highly;willE) C) and D)
F) A) and B)

Question 4

A patent or copyright is a barrier to entry based on

Accepted Answer

A)  ownership of a key necessary raw material.
B)  large economies of scale as output increases.
C)  government action to protect a producer.
D)  widespread network externalities.E) A) and B)
F) B) and C)

Question 5

Table 10-2
  Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm.
-Refer to Table 10-2.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

Accepted Answer

A)  $124
B)  $42
C)  $36
D)  $12E) A) and B)
F) All of the above

Question 6

An example of a monopoly based on control of a key resource is

Accepted Answer

A)  Major League Baseball.
B)  the Paul Ecke Ranch monopoly on poinsettias.
C)  Microsoft's Windows operating system.
D)  the U.S.Food and Drug Administration.E) A) and D)
F) B) and C)

Question 7

Figure 10-5  Figure 10-5 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-5.What is the economically efficient output level?

Accepted Answer

A)  600 units
B)  800 units
C)  940 units
D)  1160 unitsE) B) and C)
F) A) and D)

Question 8

A monopoly is characterized by all of the following except

Accepted Answer

A)  there are only a few sellers each selling a unique product.
B)  entry barriers are high.
C)  there are no close substitutes to the firm's product.
D)  the firm has market power.E) A) and B)
F) B) and C)

Question 9

The demand curve for the monopoly's product is

Accepted Answer

A)  the market demand for the product.
B)  more elastic than the market demand for the product.
C)  more inelastic than the market demand for the product.
D)  undefined.E) C) and D)
F) None of the above

Question 10

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Explain why the monopolist has no supply curve?

Accepted Answer

A supply curve that shows the relationsh...

Question 13

For a natural monopoly to exist,

Accepted Answer

A)  a firm must continually buy up its rivals.
B)  a firm's long-run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level.
C)  a firm's long-run average cost curve must exhibit economies of scale throughout the relevant range of market demand.
D)  a firm must have a government-imposed barrier.E) A) and D)
F) A) and C)

Question 14

A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Accepted Answer

A)  increases in revenue for the merged company
B)  an increase in the HHI to over 1,800
C)  decreases in marginal revenue for the merged company
D)  increases in economic efficiencyE) B) and D)
F) B) and C)

Question 15

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Accepted Answer

A)  Yes,there are no substitutes to Peet's coffee.
B)  No,although Peet's coffee is a unique product,there are many different brands of coffee that are very close substitutes.
C)  Yes,Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry.
D)  No,Peet's is not a monopoly because there are many branches of Peet's.E) C) and D)
F) None of the above

Question 16

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

A)  after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat.
B)  firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses.
C)  the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls.
D)  after 20 years patent protection is ended and other firms can produce less expensive generic versions of the drug.E) B) and D)
F) All of the above

Question 17

Figure 10-9 1 units. B) Q2 units. C) Q3 units. D) Q4 units." class="answers-bank-image d-inline" rel="preload" > Figure 10-9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-9.The firm would maximize profit by producing

Accepted Answer

A)  Q1 units.
B)  Q2 units.
C)  Q3 units.
D)  Q4 units.E) A) and B)
F) B) and D)

Question 18

Economic efficiency requires that a natural monopoly's price be

Accepted Answer

A)  equal to average total cost where it intersects the demand curve.
B)  equal to marginal cost where it intersects the demand curve.
C)  equal to average variable cost where it intersects the demand curve.
D)  equal to the lowest price the firm can charge and still make a normal profit.E) C) and D)
F) None of the above

Question 19

Which one of the following about a monopoly is false?

Accepted Answer

A)  A monopoly could make profits in the long run.
B)  A monopoly could break even in the long run.
C)  A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.
D)  A monopoly status could be temporary.E) C) and D)
F) None of the above

Question 20

Figure 10-3  Figure 10-3 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Accepted Answer

A)  $21,600
B)  $20,400
C)  $19,740
D)  $7,800E) B) and C)
F) A) and D)

Exam 10: Monopoly and Antitrust Policy

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.The firm would maximize profit by producing

Correct Answer
verified

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Correct Answer
verified

Explain why the monopolist has no supply curve?

Correct Answer
verified
A supply curve that shows the relationsh...
View Answer

A monopoly is characterized by all of the following except

Correct Answer
verified

Economic efficiency requires that a natural monopoly's price be

Correct Answer
verified

A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Correct Answer
verified

The demand curve for the monopoly's product is

Correct Answer
verified

Table 10-2 Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm. -Refer to Table 10-2.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

Correct Answer
verified

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

Correct Answer
verified

The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because

Correct Answer
verified

Which one of the following about a monopoly is false?

Correct Answer
verified

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Correct Answer
verified

Figure 10-5 Figure 10-5 shows the demand and cost curves for a monopolist. -Refer to Figure 10-5.What is the economically efficient output level?

Correct Answer
verified

Correct Answer
verified

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

Correct Answer
verified

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Correct Answer
verified

For a natural monopoly to exist,

Correct Answer
verified

A patent or copyright is a barrier to entry based on

Correct Answer
verified

A market economy benefits from market power

Correct Answer
verified

An example of a monopoly based on control of a key resource is

Correct Answer
verified

Exam 10: Monopoly and Antitrust Policy

Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 10-9.The firm would maximize profit by producing

Correct AnswerverifiedShow Answer

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee.Is Peet's a monopoly?

Correct AnswerverifiedShow Answer

Explain why the monopolist has no supply curve?

Correct AnswerverifiedA supply curve that shows the relationsh...View AnswerShow Answer

A monopoly is characterized by all of the following except

Correct AnswerverifiedShow Answer

Economic efficiency requires that a natural monopoly's price be

Correct AnswerverifiedShow Answer

A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Correct AnswerverifiedShow Answer

The demand curve for the monopoly's product is

Correct AnswerverifiedShow Answer

Table 10-2 Shakti Inc.has been granted a patent for its Arnica toothache balm.Table 10-2 shows the demand and the total cost schedule for the firm. -Refer to Table 10-2.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because

Correct AnswerverifiedShow Answer

Which one of the following about a monopoly is false?

Correct AnswerverifiedShow Answer

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Correct AnswerverifiedShow Answer

Figure 10-5 Figure 10-5 shows the demand and cost curves for a monopolist. -Refer to Figure 10-5.What is the economically efficient output level?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a per-unit tax on output sold is imposed on a monopoly's product,the monopolist will increase its market price by the full amount of the tax.

Correct AnswerverifiedShow Answer

Figure 10-3 Figure 10-3 shows the demand and cost curves for a monopolist. -Refer to Figure 10-3.What is the amount of the monopoly's total revenue?

Correct AnswerverifiedShow Answer

For a natural monopoly to exist,

Correct AnswerverifiedShow Answer

A patent or copyright is a barrier to entry based on

Correct AnswerverifiedShow Answer

A market economy benefits from market power

Correct AnswerverifiedShow Answer

An example of a monopoly based on control of a key resource is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A supply curve that shows the relationsh...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified