Question 1

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

Accepted Answer

While Peet's Coffee may be a unique and flavorful product, there are many other brands of coffee that are very close substitutes. Therefore, Peet's does not have a monopoly in the coffee market.

Question 2

To enter a local cable television market, a firm needs a license from the CRTC.This is an example of
A)a government-imposed barrier.
B)monopoly due to control of a resource.
C)a natural monopoly.
D)the government maintaining consistent standards in the broadcast industry.

Accepted Answer

A license from the CRTC is a government-imposed barrier that restricts entry into the cable television market. Without the license, a firm cannot legally operate in the market, creating a barrier to entry.

Question 3

Which of the following is the best example of a monopoly if we use a broader definition of monopoly?
A)Spuds McKenzie, a wealthy potato farmer in Prince Edward Island
B)Cheap Gas, one of two gasoline stations in a large rural community
C)Sushi NOW!, the only Japanese restaurant in the small town of Rouleau
D)Zippie Rentals, a sports car rental service in the downtown Calgary area

Accepted Answer

A broader definition of monopoly includes any situation in which a single firm dominates a market and has significant market power. While options A, B, and D may have some degree of market power in their respective industries or locations, they do not meet the criteria of being a monopoly. In contrast, Sushi NOW! is the only Japanese restaurant in a small town, giving it complete market power over Japanese cuisine in that area.

Question 4

If we use a narrow definition of monopoly, then a monopoly is defined as a firm
A)that has been granted special production rights by the government.
B)that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products.
C)that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.
D)that has the largest market share in an industry.

Accepted Answer

A narrow definition of monopoly refers to a situation where a single firm dominates the market by producing a product that has no close substitutes. This means that consumers have no choice but to buy from the monopolist, giving the firm the power to set prices above the competitive level. This is the only choice that fits the narrow definition of monopoly. Options A and D are incorrect as they do not require a product for which there are no close substitutes, while option B mentions a superior product compared to rivals, not necessarily the absence of close substitutes.

Question 5

Compared to a monopolistic competitor, a monopolist faces
A)a more elastic demand curve.
B)a more inelastic demand curve.
C)a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices.
D)a demand curve that has a price elasticity coefficient of zero.

Accepted Answer

A monopolist faces a less elastic demand curve than a monopolistic competitor because the monopolist is the only supplier in the market, so consumers have no other options. This gives the monopolist more pricing power and allows them to charge higher prices without losing many customers.

Question 6

Joe Santos owns the only pizza parlor in a small town that is also home to a McDonald's, a Taco Bell and a Kentucky Fried Chicken.Using a broad definition of a monopoly, Joe has a monopoly.

Accepted Answer

A monopoly is when one seller or group of sellers controls the market for a certain product or service in a specific geographic region. In this case, Joe Santos is the only seller of pizza in the town, making him a monopoly in the pizza market. The presence of other fast food chains does not affect his monopoly in the pizza market.

Question 7

A monopoly differs from monopolistic competition in that
A)a monopoly has market power while a firm in monopolistic competition does not have any market power.
B)a monopoly can never make a loss but a firm in monopolistic competition can.
C)in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
D)a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

Accepted Answer

The answer of A monopoly differs from monopolistic competition in...

Question 8

In 2011, Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business.Microsoft's primary complaint was that
A)Google is the only Internet search engine available to Windows operating system users.
B)the European Union contracts exclusively with Google for its Internet search engine use.
C)Google has prevented competitors from gaining access to needed content and data to provide search results to consumers.
D)Google owns the Internet advertising companies that pay for ads on search engine sites, and has prohibited ads from being sold to competitors.

Accepted Answer

Microsoft's complaint against Google was primarily focused on the claim that Google had limited access to content and data necessary for competitors to provide search results to consumers, thereby attempting to monopolize the Internet search engine market. This was seen as anti-competitive behavior by Microsoft, which was also attempting to establish itself as a major player in the search engine industry.

Question 9

Consider the following characteristics:
a)a market structure with barriers to entry
b)demand curves that are easily identified
c)firm cannot make zero profits in the long run
d)firm can reap long run profits
Which of the characteristics in the list above is shared by an oligopolist and a monopolist?
A)a, b and d
B)a, c, and d
C)a and d
D)a, b, c and d

Accepted Answer

Both oligopolists and monopolists have barriers to entry (a) and can reap long run profits (d) due to limited competition.

Question 10

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Accepted Answer

The market demand curve facing a monopolist is less elastic than the market demand curve facing a monopolistic competitor. This is because a monopolist has complete control over the market and can set the price without worrying about competition, while a monopolistic competitor still faces some competition and must consider the elasticity of demand when setting prices.

Question 11

A monopoly is characterized by all of the following except
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.

Accepted Answer

A monopoly is characterized by having only one seller in the market, not a few sellers.

Question 12

A firm that has the ability to control to some degree the price of the product it sells
A)is also able to dictate the quantity purchased.
B)faces a demand curve that is inelastic throughout the range of market demand.
C)is a price maker.
D)faces a perfectly inelastic demand curve.

Accepted Answer

A firm that has the ability to control the price of its product is known as a price maker. However, this does not necessarily mean that the firm can dictate the quantity purchased or faces a perfectly inelastic demand curve. The demand curve may still be elastic to some degree, depending on the availability of substitutes and the sensitivity of consumers to price changes.

Question 13

A monopolist faces
A)a perfectly elastic demand curve.
B)a perfectly inelastic demand curve.
C)a horizontal demand curve.
D)a downward-sloping demand curve.

Accepted Answer

A monopolist faces a downward-sloping demand curve, meaning that as the price of the product increases, the quantity demanded decreases. This is because the monopolist is the only producer of the product and has the power to set prices at a level where demand is lower but still profitable for the firm.

Question 14

A monopoly is a seller of a product
A)with many substitutes.
B) without a close substitute.
C)with a perfectly inelastic demand.
D)without a well-defined demand curve.

Accepted Answer

A monopoly is a single seller of a good or service that has no close substitutes, meaning that consumers have no alternative products that they can purchase instead. This lack of substitutes gives the monopoly market power to charge higher prices and earn greater profits than would be possible in a competitive market.

Question 15

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?
A)Each must lower its price to sell more output.
B)Each sets a price for its product that will maximize its revenue.
C)Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.
D)Each maximizes profits by producing a quantity for which price equals marginal cost.

Accepted Answer

The answer of Which of the following is a characteristic...

Question 16

A monopoly is defined as a firm that has the largest market share in an industry.

Accepted Answer

A monopoly is defined as a firm that is the sole seller of a product or service in a market, with no close substitutes. While having a large market share is a characteristic of a monopoly, it isn't the sole defining characteristic.

Question 17

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Accepted Answer

The answer of What is a monopoly? Can a firm...

Question 18

Tickets to Toronto Maple Leafs games regularly sell out, despite a relatively high price.The Pheonix Coyotes have struggled financially for years.What is an economic reason why the National Hockey League would prevent the Coyotes from moving to the greater Toronto area?
A)The commisioner of the league is from the southern US.
B)The Toronto City Council refuses to grant permission.
C)The National Hockey League understands that a new team in Toronto could reduce the Maple Leaf's profits.
D)A second team in Toronto would be too confusing for fans.

Accepted Answer

The National Hockey League understands that allowing a new team in the greater Toronto area could potentially reduce the profits of the Maple Leafs by creating competition for ticket sales and merchandise. Therefore, they may prevent the Coyotes from moving to that area in order to protect the profitability of one of their most successful teams.

Question 19

To maintain a monopoly, a firm must have
A)a perfectly inelastic demand.
B)an insurmountable barrier to entry.
C)marginal revenue equal to demand.
D)few competitors.

Accepted Answer

An insurmountable barrier to entry is necessary for a firm to maintain a monopoly because it prevents new competitors from entering the market and challenging the monopoly's dominance. Perfectly inelastic demand and marginal revenue equal to demand can potentially increase a firm's profits, but they are not necessary conditions for maintaining a monopoly. Having few competitors may contribute to a firm's market power, but it is not a sufficient condition for maintaining a monopoly.

Question 20

In Hamilton, Ontario there are three very popular supermarkets: Superstore, Fortinos, and Sobeys.While Sobey's remains open twenty-four hours a day, Superstore and Fortinos close at 11 pm.Which of the following statements is true?
A)Sobeys is a monopoly all day because it produces a service that has no close substitutes.
B)Sobeys has a monopoly at midnight but not during the day.
C)Sobeys can ignore the pricing decisions of the other two supermarkets.
D)Sobeys probably has a higher markup to compensate for its higher cost of production.

Accepted Answer

Sobeys has a monopoly at midnight because it remains open 24 hours, while the other two supermarkets close at 11 pm. However, during the day, customers have other options at Superstore and Fortinos, meaning Sobeys does not have a complete monopoly. Options A and C are incorrect because Sobeys does not produce a service with no close substitutes, and it cannot ignore the pricing decisions of its competitors. Option D is also incorrect because there is no information in the question to suggest that one supermarket has a higher cost of production than the others.

Quiz 13: Monopoly and Antitrust Policy

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

To enter a local cable television market, a firm needs a license from the CRTC.This is an example of

Which of the following is the best example of a monopoly if we use a broader definition of monopoly?

If we use a narrow definition of monopoly, then a monopoly is defined as a firm

Compared to a monopolistic competitor, a monopolist faces

Joe Santos owns the only pizza parlor in a small town that is also home to a McDonald's, a Taco Bell and a Kentucky Fried Chicken.Using a broad definition of a monopoly, Joe has a monopoly.

A monopoly differs from monopolistic competition in that

In 2011, Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business.Microsoft's primary complaint was that

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

A monopoly is characterized by all of the following except

A firm that has the ability to control to some degree the price of the product it sells

A monopolist faces

A monopoly is a seller of a product

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

A monopoly is defined as a firm that has the largest market share in an industry.

What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?

Tickets to Toronto Maple Leafs games regularly sell out, despite a relatively high price.The Pheonix Coyotes have struggled financially for years.What is an economic reason why the National Hockey League would prevent the Coyotes from moving to the greater Toronto area?

To maintain a monopoly, a firm must have

In Hamilton, Ontario there are three very popular supermarkets: Superstore, Fortinos, and Sobeys.While Sobey's remains open twenty-four hours a day, Superstore and Fortinos close at 11 pm.Which of the following statements is true?