Deck 13: Monopoly and Antitrust Policy

Question 1

When ________ substitutes exist, a firm in an imperfectly competitive industry has ________ power to raise price.

A) more; more
B) more; less
C) fewer; less
D) no; infinite

Answer 1

more; less

Question 2

A monopoly is an industry with

A) a single firm in which the entry of new firms is blocked.
B) a small number of firms each large enough to impact the market price of its output.
C) many firms each able to differentiate their product.
D) many firms each too small to impact the market price of its output.

Answer 2

a single firm in which the entry of new firms is blocked.

Question 3

In a monopolistic industry, there is(are) ________ firm(s) and ________.

A) many; free entry of new firms
B) many; entry of new firms is blocked
C) a single; free entry of new firms
D) a single; entry of new firms is blocked

Answer 3

a single; entry of new firms is blocked

Question 4

The demand for Ben & Jerry's ice cream will likely be ________ the demand for dessert.

A) more price elastic than
B) less price elastic than
C) equally price elastic as
D) indeterminate from the given information

Question 5

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. The demand curve facing an electric company is most likely represented by

A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.

Question 6

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by

A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.

Question 7

Which of the following is least likely to be considered a firm in an imperfectly competitive industry?

A) a Burger King in Pittsburgh, PA
B) Ohio Bell Telephone Company
C) a wheat farmer in Kansas
D) the only locally owned and operated bank in Severn, MD

Question 8

Imperfect competition

A) means there is no competition in the market.
B) results in less efficient market outcomes.
C) should always be regulated by the government
D) is a major cause of externalities in the market.

Question 9

Monopolies, oligopolies, and monopolistic competitive industries all

A) earn positive profits in the long run.
B) have market power.
C) are completely unconstrained in their pricing.
D) raise price and quantity over what would occur in perfect competition in order to maximize their profits.

Question 10

The demand for food will likely be price ________ while the demand for Brand X Burger will likely be price ________.

A) elastic; elastic
B) elastic; inelastic
C) inelastic; elastic
D) inelastic; inelastic

Question 11

A firm must be able to ________ competition if it is to exercise control over the price of its product.

A) maximize
B) increase
C) not change
D) limit

Question 12

An oligopoly is an industry market structure with

A) a single firm in which the entry of new firms is blocked.
B) a small number of firms each large enough to impact the market price of its output.
C) many firms each able to differentiate their product.
D) many firms each too small to impact the market price.

Question 13

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by

A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.

Question 14

A coffee manufacturer raises the price of its coffee by 10%, and the quantity demanded of its coffee falls by only 12%. This firm has

A) no control over the market price since the quantity demanded fell by a larger percentage than the percentage price increase.
B) some market power.
C) some output power.
D) not been able to prevent its competitors from competing with it on price.

Question 15

Monopolistic competition is an industry market structure with

A) a single firm in which the entry of new firms is blocked.
B) a small number of firms each large enough to impact the market price of its output.
C) many firms each able to differentiate their product.
D) many firms each too small to impact the market price of its output.

Question 16

In imperfectly competitive markets

A) there is no competition in the markets.
B) some competition may exist in the markets.
C) some competition may exist but only on price and not in other ways.
D) some competition may exist but only in other ways and not on price.

Question 17

Market power refers to a firm's ability to

A) raise price without losing all sales of its product.
B) charge any price it likes.
C) sell any amount of output it desires at the market-determined price.
D) monopolize a market completely.

Question 18

The ________ broadly a market is defined, the more difficult it becomes to find ________.

A) more; substitutes
B) more; complements
C) less; substitutes
D) less; goods independent of each other

Question 19

Imperfect competition and market power

A) are major sources of inefficiency.
B) result in higher output than in perfect competition.
C) are always the result of product differentiation.
D) result from diseconomies of scale.

Question 20

In an imperfectly competitive industry

A) a single firm has no control over the price of its output.
B) a single firm has some control over the price of its output.
C) a single firm will be able to sell all of its output at whatever price it wants to charge.
D) the government will always regulate the output price.

Question 21

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. Of the following choices, Panel A best represents the demand curve for

A) an individual producer of soybeans.
B) Dell computers.
C) insulin.
D) all of the above

Question 22

Firms with market power must decide all of the following except

A) how much to supply in each input market.
B) how much to produce.
C) how to produce it.
D) what price to charge for their output.

Question 23

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. Of the following choices, Panel B best represents the demand curve for

A) an individual producer of soybeans.
B) a utility company.
C) insulin.
D) Samsung televisions.

Question 24

________ is an industry market structure with a small number of firms each large enough to impact the market price of its output.

A) A monopoly
B) An oligopoly
C) Monopolistic competition
D) Perfect competition

Question 25

The demand for shoes will likely be price ________ while the demand for Sketchers Go Walk walking shoes will likely be price ________.

A) elastic; elastic
B) elastic; inelastic
C) inelastic; elastic
D) inelastic; inelastic

Question 26

All of the following industry types have market power except

A) monopolistic competition.
B) perfect competition.
C) monopoly.
D) oligopoly.

Question 27

________ is an industry market structure with many firms each able to differentiate their products.

A) A monopoly
B) An oligopoly
C) Monopolistic competition
D) Perfect competition

Question 28

In order to exercise control over the price of its product, a firm must be able to ________ competition.

A) maximize
B) increase
C) not change
D) limit

Question 29

________ refers to a firm's ability to raise price without losing all demand for its product.

A) Market power
B) Price taking
C) Price discriminating
D) Price gouging

Question 30

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. Of the following choices, Panel A best represents the demand curve for

A) an individual producer of soybeans.
B) a utility company.
C) insulin.
D) none of the above

Question 31

We consider ________ least likely to be a firm in an imperfectly competitive industry.

A) a Starbucks in Houston, Texas
B) Con Edison utility company
C) a corn farmer in Ohio
D) the only locally owned and operated television station in Portland, Oregon

Question 32

When ________ substitutes exist, a monopolist has ________ power to raise price.

A) more; more
B) more; no
C) fewer; no
D) fewer; more

Question 33

Firms in imperfectly competitive markets are

A) more efficient than firms in perfectly competitive industries.
B) price makers.
C) price takers.
D) completely inefficient.

Question 34

In ________ industries, a single firm has some control over the price of its output.

A) perfectly competitive
B) imperfectly competitive
C) all
D) only government-regulated

Question 35

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. The demand curve for insulin is most likely represented by

A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.

Question 36

The ________ broadly we define a market, the less difficult it becomes to find ________.

A) more; substitutes
B) more; complements
C) less; substitutes
D) more; goods independent of each other

Question 37

Refer to the information provided in Figure 13.1 below to answer the question that follows. Figure 13.1
Refer to Figure 13.1. Of the following choices, Panel C best represents the demand curve for

A) an individual producer of soybeans.
B) a utility company.
C) insulin.
D) the Apple iPhone.

Question 38

________ is an industry with a single firm in which the entry of new firms is blocked.

A) A monopoly
B) Monopolistic competition
C) An oligopoly
D) Perfect competition

Question 39

Which of the following is a major source of inefficiency?

A) market power
B) perfect competition
C) price taking
D) all of the above

Question 40

A chocolate manufacturer raises the price of its chocolate by 12%, and the quantity demanded of its chocolate falls by only 5%. This firm has

A) no monopoly power in the output market.
B) some market power.
C) some output power.
D) not been able to prevent its competitors from competing with it on price.

Question 41

In imperfect competition, competition may take place in more levels than in perfect competition.

Question 42

We call a market where there is only one producer of a good or service a monopoly.

Question 43

In a monopoly, the market demand curve is

A) the same as the demand curve facing the firm.
B) the summation of all the individual firm's cost curves.
C) nonexistent.
D) the marginal cost curve above minimum average variable cost.

Question 44

The demand for Chiquita bananas is more inelastic than the demand for fruit.

Question 45

A firm with market power will be able to sell all of their output at any price they desire.

Question 46

The demand for Tyson chicken is more elastic than the demand for meat.

Question 47

Firms in imperfectly competitive industries are price takers.

Question 48

A monopoly is an industry with a single firm which produces

A) a standardized product.
B) a product for which there are a few close substitutes.
C) a product for which there are many close substitutes.
D) a product for which there are no close substitutes.

Question 49

For products with close substitutes, the demand curve slopes down.

Question 50

For a monopolist to sell more units of output

A) the price must be increased.
B) the price must be reduced.
C) demand must become more elastic.
D) the other competing firms must sell fewer units.

Question 51

An important distinction between perfect competition and monopoly is that in

A) perfect competition, there is no distinction between the firm and the industry.
B) perfect competition, the firm is the industry.
C) monopoly, the firm faces the market demand curve.
D) monopoly, the firm produces less than the total quantity supplied.

Question 52

There are a few firms selling differentiated products in a monopolistically competitive industry.

Question 53

Since Chevrolet is the only producer of the Corvette, it is a monopolistic firm.

Question 54

Monopolists differ from perfectly competitive firms

A) on the cost and demand sides of the profit equation.
B) on the cost side of the profit equation alone.
C) on the demand side of the profit equation alone.
D) on neither the cost nor demand sides of the profit equation.

Question 55

A firm has market power if it can raise the price of its product and still sell product to customers.

Question 56

The demand for Egg McMuffins will likely be ________ the demand for breakfast foods.

A) more price elastic than
B) less price elastic than
C) equally price elastic as
D) indeterminate from the given information

Question 57

A market where there is only one buyer for a good or service is called a monopoly.

Question 58

XYZ Computer Company has a monopoly on the sale of a specialized color printer. If it sells two of these printers its total revenue is $1,000, and if it sells three color printers its total revenue is $1,400. The marginal revenue of the third color printer sold is

A) $200.
B) $300.
C) $400.
D) $1,300.

Question 59

The ________ substitutes there are for a product, the ________ the demand for that product is likely to be.

A) fewer; less elastic
B) fewer; less inelastic
C) more; less elastic
D) more; more inelastic

Question 60

Imperfect competition results in inefficiency but greater equity than pure competition.

Question 61

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. This firm's marginal revenue will be positive at

A) prices above $5.
B) prices below $5.
C) all prices.
D) prices between $4 and $8.

Question 62

Refer to the information provided in Figure 13.3 below to answer the question(s) that follow. Figure 13.3
Refer to Figure 13.3. The marginal revenue of the eighth pound of burritos is

A) $3.
B) $5.
C) $12.
D) $96.

Question 63

Voss Calculator Company has a monopoly on the sale of graphing calculators. If it sells two of these calculators its total revenue is $600, and if it sells three calculators its total revenue is $750. The marginal revenue of the third calculator sold is

A) $50.
B) $75.
C) $150.
D) $250.

Question 64

Stereo Sound Unlimited has a monopoly over the installation of surround sound systems. If Stereo Sound Unlimited's total revenue from installing 10 sound systems is $20,000 and its total revenue from installing 11 sound systems is $18,000, what is the marginal revenue of the eleventh sound system?

A) -$2,000
B) -$1,000
C) $2,000
D) $3,800

Question 65

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The firm's ________ will be maximized at a price of $5.

A) profit
B) marginal revenue
C) total revenue
D) marginal cost

Question 66

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The marginal revenue of the fourth pound of cheese is

A) $1.
B) $3.
C) $6.
D) $24.

Question 67

When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. In order to sell three units of output instead of only two, the monopolist must

A) increase its price by $30 per unit.
B) decrease its price by $90 per unit.
C) make no change in price and increase output by one unit.
D) decrease its price by $30 per unit.

Question 68

For a perfectly competitive firm, the marginal revenue curve has ________ point(s) in common with the firm's demand curve.

A) one
B) no
C) all
D) indeterminate from the given information

Question 69

When a monopolist sells two units of output its total revenue is $150. When a monopolist sells three units of output its total revenue, is $210. When the monopolist sells three units of output, the price per unit is

A) $50.
B) $60.
C) $70.
D) $75.

Question 70

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The marginal revenue of the fifth pound of cheese is

A) $1.
B) $3.
C) $6.
D) $24.

Question 71

For a monopoly, the marginal revenue curve has ________ point(s) in common with the firm's linear demand curve.

A) one
B) no
C) all
D) indeterminate from the given information

Question 72

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. This firm's marginal revenue will be negative at

A) prices above $5.
B) prices below $5.
C) all prices.
D) prices between $4 and $8.

Question 73

When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. When the monopolist sells three units of output, the price per unit is

A) $210.
B) $230.
C) $300.
D) $630.

Question 74

Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. If Hi Phi Unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 18 sound systems is $33,000, what is the marginal revenue of the eighteenth sound system?

A) -$3,000
B) $1,000
C) $1,500
D) $3,000

Question 75

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The firm's marginal revenue will be negative at

A) $9.
B) $3.
C) all prices.
D) prices between $4 and $8.

Question 76

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The marginal revenue of the sixth pound of cheese is

A) -$4.
B) -$1.
C) $1.
D) $4.

Question 77

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. This firm's marginal revenue will be positive at

A) $9.
B) $3.
C) all prices.
D) prices between $4 and $8.

Question 78

Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. Hi Phi Unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 18 sound systems is $33,000. The marginal revenue received from selling the 18th sound system is

A) equal to the price of the 16th sound system.
B) greater than the price of the 16th sound system.
C) less than the price of the 16th sound system.
D) Indeterminate from the given information.

Question 79

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. This firm's total revenue will be maximized at a price of

A) $8.
B) $6.
C) $5.
D) $4.

Question 80

Refer to the information provided in Figure 13.2 below to answer the question(s) that follow. Figure 13.2
Refer to Figure 13.2. The marginal revenue of the third pound of cheese is

A) -$5.
B) $5.
C) $7.
D) $21.