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Exam 14: Monopoly

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Question 291

Multiple Choice

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Antitrust laws

A) prevent firms from maximizing profits.
B) allow the government to prevent mergers, even ones that would benefit consumers.
C) require the government to measure both the benefits and costs of a potential merger.
D) All of the above are correct.

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

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Question 292

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Which of the following is not an example of a barrier to entry?

A) Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.
B) A pharmaceutical company obtains a patent for a specific high blood pressure medication.
C) A musician obtains a copyright for her original song.
D) An entrepreneur opens a popular new restaurant.

E) B) and C)
F) All of the above

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Question 293

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Which of the following statements is correct?

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

The task of economic regulation is to

For a monopolist,

Which of the following would be most likely to have monopoly power?

Figure 15-4 -Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to

Patent and copyright laws are major sources of

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 characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms.

Scenario 15-8 Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it. -Refer to Scenario 15-8. If Mega Media Cable TV is unable to price discriminate, what price will it choose to maximize its profit, and what is the amount of the profit?

The laws governing patents and copyrights

Figure 15-3 -Refer to Figure 15-3. Which panel could represent the demand curve facing a soybean farmer?

Movie theatres charge different prices to different groups of people based on the differing marginal costs that exist from group to group.

A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.

Table 15-4 A monopolist faces the following demand curve: -Refer to Table 15-4. In order to maximize profits, the monopolist should produce

Perfect price discrimination describes a situation in which the monopolist

Figure 15-17 -Refer to Figure 15-17. Which of the following areas represents the consumer surplus from this profit-maximizing monopolist?

Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies?