Question 1

In order for antitrust laws to raise social welfare, the government must

Accepted Answer

A)  disallow synergy benefits from accruing to monopolists.
B)  disallow any mergers from taking place.
C)  be able to determine which mergers are desirable and which are not.
D)  always attempt to keep markets in their most competitive form.E) C) and D)
F) None of the above

Question 2

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Accepted Answer

A)  $60
B)  $70
C)  $100
D)  $120E) None of the above
F) All of the above

Question 3

A monopolist faces a

Accepted Answer

A)  horizontal demand curve.
B)  vertical demand curve.
C)  downward-sloping demand curve.
D)  U-shaped demand curve.E) All of the above
F) C) and D)

Question 4

Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is (are)  correct?
(i) She will be able to set the price of high-speed Internet service at whatever level she wishes.
(ii) The customers will be forced to purchase high-speed Internet service at whatever price she wants to set.
(iii) She will be able to achieve any profit level that she desires.

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (iii)  only
D)  (i) , (ii) , and (iii) E) B) and C)
F) A) and B)

Question 5

Which of the following is not an example of price discrimination by a firm?

Accepted Answer

A)  children's meals at a restaurant
B)  a natural gas company charging customers a higher rate in the winter than in the summer
C)  a senior citizens' discount
D)  coupons in the Sunday newspaperE) All of the above
F) A) and C)

Question 6

A monopolist produces where P = MC = MR.

Accepted Answer

A) True 
 B)False

Question 7

Figure 15-18 
-Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Accepted Answer

A)  $1,000.
B)  $2,000.
C)  $3,000.
D)  $4,000.E) A) and B)
F) A) and C)

Question 8

When a firm operates under conditions of monopoly, its price is

Accepted Answer

A)  not constrained.
B)  constrained by marginal cost.
C)  constrained by demand.
D)  constrained only by its social agenda.E) C) and D)
F) B) and D)

Question 9

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Accepted Answer

A) True 
 B)False

Question 10

Drug companies are allowed to be monopolists in the drugs they discover in order to

Accepted Answer

A)  increase the availability of expensive but useful medications.
B)  increase the overall welfare of society through better health because drug companies continually produce better medications.
C)  encourage research.
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 11

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Accepted Answer

A)  less incentive to advertise than it would otherwise have.
B)  less market power than it would otherwise have.
C)  more control over the price of diamonds than it would otherwise have.
D)  higher profits than it would otherwise have.E) B) and C)
F) All of the above

Question 12

For a monopoly firm,

Accepted Answer

A)  price always equals marginal revenue.
B)  price always exceeds average revenue.
C)  any price-quantity combination will maximize profits.
D)  None of the above is correct.E) A) and B)
F) B) and D)

Question 13

Figure 15-16 
-Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Accepted Answer

A)  the triangle with vertical lines that is bordered by ACT
B)  the triangle with vertical lines and light grey shading that is bordered by ABH
C)  the triangle with vertical lines and dark grey shading that is bordered by HIT
D)  the triangle with dark grey shading that is bordered by HKTE) C) and D)
F) A) and C)

Question 14

In reality, perfect price discrimination is

Accepted Answer

A)  used by about 75 percent of all monopolies.
B)  used by about 50 percent of all monopolies.
C)  seldom used by monopolies because it leads to lower profits.
D)  rarely possible.E) None of the above
F) All of the above

Question 15

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Accepted Answer

A)  Morgan Act.
B)  Sherman Act.
C)  Clayton Act.
D)  14th Amendment.E) A) and B)
F) None of the above

Question 16

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Accepted Answer

A) True 
 B)False

Question 17

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Accepted Answer

A)  resource monopolies.
B)  natural monopolies.
C)  government-created monopolies.
D)  breaking up monopolies into smaller firms.E) A) and C)
F) A) and B)

Question 18

Which of the following statements is not correct?

Accepted Answer

A)  Two examples of early antitrust laws are the Sherman and Clayton Antitrust Acts.
B)  Antitrust laws automatically prevent mergers between companies that produce similar products.
C)  Antitrust laws give the government power to increase competition.
D)  Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.E) A) and D)
F) B) and C)

Question 19

A competitive firm

Accepted Answer

A)  and a monopolist are price takers.
B)  and a monopolist are price makers.
C)  is a price taker, whereas a monopolist is a price maker.
D)  is a price maker, whereas a monopolist is a price taker.E) C) and D)
F) None of the above

Question 20

Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will charge a price of

Accepted Answer

A)  $50.
B)  $40.
C)  $20.
D)  $10.E) A) and D)
F) B) and D)

Exam 15: Monopoly

A competitive firm

Correct Answer
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For a monopoly firm,

Correct Answer
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Figure 15-16 -Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Correct Answer
verified

In reality, perfect price discrimination is

Correct Answer
verified

Correct Answer
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Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Correct Answer
verified

A monopolist faces a

Correct Answer
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In order for antitrust laws to raise social welfare, the government must

Correct Answer
verified

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct Answer
verified

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Correct Answer
verified

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Correct Answer
verified

Which of the following is not an example of price discrimination by a firm?

Correct Answer
verified

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Correct Answer
verified

The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Correct Answer
verified

A monopolist produces where P = MC = MR.

Correct Answer
verified

Correct Answer
verified

Drug companies are allowed to be monopolists in the drugs they discover in order to

Correct Answer
verified

When a firm operates under conditions of monopoly, its price is

Correct Answer
verified

Exam 15: Monopoly

A competitive firm

Correct AnswerverifiedShow Answer

For a monopoly firm,

Correct AnswerverifiedShow Answer

Figure 15-16 -Refer to Figure 15-16. Which triangle represents the monopoly deadweight loss?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" was the

Correct AnswerverifiedShow Answer

In reality, perfect price discrimination is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 15-18 -Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to

Correct AnswerverifiedShow Answer

A monopolist faces a

Correct AnswerverifiedShow Answer

In order for antitrust laws to raise social welfare, the government must

Correct AnswerverifiedShow Answer

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity of output for the monopolist.

Correct AnswerverifiedShow Answer

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit?

Correct AnswerverifiedShow Answer

Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

Correct AnswerverifiedShow Answer

Which of the following is not an example of price discrimination by a firm?

Correct AnswerverifiedShow Answer

Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has

Correct AnswerverifiedShow Answer

​The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

Correct AnswerverifiedShow Answer

A monopolist produces where P = MC = MR.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Drug companies are allowed to be monopolists in the drugs they discover in order to

Correct AnswerverifiedShow Answer

When a firm operates under conditions of monopoly, its price is

Correct AnswerverifiedShow 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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The best option to control the behavior of a natural monopoly is to use public ownership of the monopoly.

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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