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Exam 15: Monopoly

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Question 231

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

A) Morgan Act.
B) Sherman Act.
C) Clayton Act.
D) 14th Amendment.

E) All of the above
F) None of the above

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Question 232

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Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production.

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

E) None of the above
F) B) and C)

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Question 233

Multiple Choice

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Table 15-3 Consider the following demand and cost information for a monopoly. -Refer to Table 15-3. To maximize profit, the monopolist sets price at

Which of the following is an example of a barrier to entry? (i) A key resource is owned by a single firm. (ii) The costs of production make a single producer more efficient than a large number of producers. (iii) The government has given the existing monopolist the exclusive right to produce the good.

In a natural monopoly,

Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?

Figure 15-25 -Refer to Figure 15-25. If a regulator requires this firm to charge a socially optimal price, which letter represents the amount of output it will produce?

One method used to control the ability of firms to capture monopoly profit in the United States is through

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 earn profits of

When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a

Table 15-7 Sally owns the only shoe store in town. She has the following cost and revenue information. -Refer to Table 15-7. What is the marginal revenue from selling the 2nd pair of shoes?

One problem with regulating a monopolist on the basis of cost is that

The market demand curve for a monopolist is typically

For a monopolist, when the price effect is greater than the output effect, marginal revenue is

Scenario 15-5 An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc. -Refer to Scenario 15-5. How much profit will the airline earn if it engages in price discrimination?

Government intervention always reduces monopoly deadweight loss.

Which of the following statements is not correct?

The task of economic regulation is to

Figure 15-18 -Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals

A monopolist faces the following demand curve: The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?