Question 1

Which of the following best describes a monopoly?

Accepted Answer

A firm that is the only seller of a good or service for which there is not a close substitute.

Question 2

Which of the following is NOT a main reason monopolies arise?

Accepted Answer

Economies of scope

Question 3

A natural monopoly occurs when:

Accepted Answer

Economies of scale are so large that one firm can supply the entire market at a lower average total cost than can two or more firms.

Question 4

Suppose the marginal cost (MC) and marginal revenue (MR) for a monopolist are given by $$MC = 2Q$$ and $$MR = 20 - 2Q. $$What is the profit-maximizing quantity?

Accepted Answer

$$Q = 5$$

Question 5

If a monopoly sets its price where $$MC = MR$$, what happens to consumer surplus compared to perfect competition?

Accepted Answer

Consumer surplus decreases.

Question 6

Which of the following is an example of price discrimination?

Accepted Answer

A movie theater charges different prices to students, seniors, and adults for the same movie.

Question 7

For price discrimination to be possible, which of the following must be true?

Accepted Answer

The firm must have market power.

Question 8

Which equation represents the Herfindahl-Hirschman Index (HHI) for a market with three firms with market shares of 40%, 35%, and 25%?

Accepted Answer

$$HHI = 40^2$ + 35^2$ + 25^2$

Question 9

Which of the following is a government policy used to regulate monopolies?

Accepted Answer

Antitrust laws

Question 10

If a natural monopoly is regulated to charge a price equal to marginal cost, what is the likely outcome?

Accepted Answer

The firm will make a loss.

Question 11

Which of the following best explains why the USPS maintains its mailbox monopoly?

Accepted Answer

To fulfill the universal service obligation, allowing delivery to rural areas that would otherwise not be profitable.

Question 12

What is the main efficiency loss associated with monopoly?

Accepted Answer

Deadweight loss due to reduced quantity traded and higher prices.

Question 13

Which of the following is NOT a requirement for successful price discrimination?

Accepted Answer

Arbitrage must be possible.

Question 14

Suppose a monopolist can perfectly price discriminate. What happens to consumer surplus?

Accepted Answer

Consumer surplus becomes zero.

Question 15

Which of the following is a real-world example of a monopoly due to control of a key resource?

Accepted Answer

Alcoa's control of bauxite for aluminum production.

Question 16

If a monopoly faces the demand curve $$P = 30 - Q$$ and has constant marginal cost $$MC = 10$$, what is the profit-maximizing price?

Accepted Answer

$$P = 20$$

Question 17

Which of the following statements about market power is correct?

Accepted Answer

Market power allows firms to charge a price greater than marginal cost.

Question 18

What is the main purpose of antitrust laws?

Accepted Answer

To eliminate collusion and promote competition among firms.

Question 19

Which of the following is a potential benefit of market power according to Joseph Schumpeter?

Accepted Answer

It drives innovation and creates a 'gale of creative destruction' that benefits consumers.

Question 20

If a monopoly is regulated to make zero economic profit, what price will it likely charge?

Accepted Answer

A price equal to average total cost ($$ATC)$$

Ch.15 Monopoly and Antitrust Policy: Microeconomics Study Notes

스터디 가이드 - 연습 문제

학습 가이드 - 플래시카드