Question 1

A merger between firms at different stages of production of a good

Accepted Answer

A)  is a vertical merger.
B)  was made illegal by the Sherman Act.
C)  was made legal by the Clayton Act.
D)  is a horizontal merger.E) A) and C)
F) None of the above

Question 2

Figure 15-4
  
Figure 15-4 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-4.What is the amount of the monopoly's profit?

Accepted Answer

A)  $2,700
B)  $4,200
C)  $10,400
D)  $12,600E) None of the above
F) A) and C)

Question 3

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) A) and B)
F) A) and C)

Question 4

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 5

For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.

Accepted Answer

A) True 
 B)False

Question 6

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

Accepted Answer

A) True 
 B)False

Question 7

Table 15-1
  
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
-Refer to Table 15-1.When producing the profit-maximizing output, what is the amount of the firm's profit?

Accepted Answer

A)  $335
B)  $350
C)  $880
D)  $910E) A) and B)
F) A) and C)

Question 8

To maximize profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and charges a price given by the demand curve at that output level.

Accepted Answer

A) True 
 B)False

Question 9

"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.

Accepted Answer

The statement is false.The monopolist ca...

Question 10

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

Accepted Answer

A)  For the first time horizontal mergers were allowed - with government approval - and vertical mergers were allowed without need for approval from the government.
B)  For the first time concentration ratios were used to evaluate the degree of competition in the industries of firms that proposed mergers.
C)  The Division began to systematically consider the economic consequences of proposed mergers.
D)  Proposed mergers no longer needed the approval of the Federal Trade Commission or the court system.E) A) and D)
F) B) and C) C

Question 11

Table 15-1
  
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1.
-Refer to Table 15-1.What is the firm's profit-maximizing output and what is the price charged to sell this output?

Accepted Answer

A)  P = $85; Q = 10
B)  P = $80; Q = 11
C)  P = $70; Q = 13
D)  P = $65; Q = 14E) B) and C)
F) A) and B) C

Question 12

What type of protection does U.S.law grant the creator of a book, film, or piece of music?

Accepted Answer

A)  A public franchise, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death.
B)  A copyright, which grants exclusive rights to the creator for 20 years after the work is created.
C)  A patent, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death.
D)  A copyright, which grants the exclusive right to use the creation during the creator's lifetime and to his or her heirs for 70 years after the creator's death.E) A) and B)
F) None of the above

Question 13

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 TurnerE) All of the above
F) A) and B)

Question 14

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) None of the above
F) C) and D)

Question 15

The lawsuit the Justice Department brought against Apple regarding the pricing of e-books for its iPad is an example of attempts by the government

Accepted Answer

A)  to prevent vertical mergers which would significantly reduce competition.
B)  to prevent horizontal mergers which would significantly reduce competition.
C)  to regulate a natural monopoly by establishing government-regulated prices.
D)  to keep firms from artificially restricting competition to raise prices.E) All of the above
F) A) and B) D

Question 16

Provide two examples of a government barrier to entry.

Accepted Answer

1.A patent or copyright which gives an i...

Question 17

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7.

Accepted Answer

A) True 
 B)False

Question 18

Figure 15-10
 
-Refer to Figure 15-10.What is the area that represents producer surplus under a monopoly?

Accepted Answer

A)  the triangle 0P₂E
B)  the triangle 0P₃H
C)  the trapezium 0P₁FH
D)  the rectangle P₁P₃HFE) C) and D)
F) All of the above

Question 19

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 the amount of Shakti's profit?

Accepted Answer

A)  $68
B)  $72
C)  $124
D)  $192E) All of the above
F) C) and D)

Question 20

According to the Department of Justice merger guidelines, a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Accepted Answer

A)  lies between 1,000 and 1,800 and the merger raises the Index by 50 points.
B)  lies between 1,000 and 1,800 and the merger raises the Index by more than 100 points.
C)  lies above 1,800 and the merger raises the Index by less than 50 points.
D)  lies below 1,000 and the merger raises the Index by 100 points.E) B) and C)
F) None of the above

Exam 15: Monopoly and Antitrust Policy

A merger between firms at different stages of production of a good

Correct AnswerverifiedShow Answer

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4.What is the amount of the monopoly's profit?

Correct AnswerverifiedShow Answer

A market economy benefits from market power

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

For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small.

Correct AnswerverifiedShow Answer

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

Correct AnswerverifiedShow Answer

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.When producing the profit-maximizing output, what is the amount of the firm's profit?

Correct AnswerverifiedShow Answer

To maximize profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and charges a price given by the demand curve at that output level.

Correct AnswerverifiedShow Answer

"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.

Correct AnswerverifiedThe statement is false.The monopolist ca...View AnswerShow Answer

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

Correct AnswerverifiedC

Table 15-1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 15-1. -Refer to Table 15-1.What is the firm's profit-maximizing output and what is the price charged to sell this output?

Correct AnswerverifiedC

What type of protection does U.S.law grant the creator of a book, film, or piece of music?

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

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

The lawsuit the Justice Department brought against Apple regarding the pricing of e-books for its iPad is an example of attempts by the government

Correct AnswerverifiedD

Provide two examples of a government barrier to entry.

Correct Answerverified1.A patent or copyright which gives an i...View AnswerShow Answer

If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7.

Correct AnswerverifiedShow Answer

Figure 15-10 -Refer to Figure 15-10.What is the area that represents producer surplus under a monopoly?

Correct AnswerverifiedShow Answer

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 the amount of Shakti's profit?

Correct AnswerverifiedShow Answer

According to the Department of Justice merger guidelines, a proposed merger between two firms may be challenged if the post-merger Herfindahl-Hirschman Index

Correct AnswerverifiedShow Answer

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Because consumers in your town could buy...
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The statement is false.The monopolist ca...
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C

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D

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1.A patent or copyright which gives an i...
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