praktikum IX

CHAPTER 12

MONOPOLY AND ANTRITRUST LAW

Matching Questions

1. The ability to raise price without losing all of the quantity demanded

2. An industry with a single firm in which the entry of new firm is blocked

3. An industry in which there is a small number firm, each large enough to have an impact on the market price of its output

4. All firm including monopolies, raise output as long as marginal revenue is….. than marginal cost.

5. Extended the language of the federal trade commission act to include “deceptive” as well as “unfair” methods of competition

6. Federal regulatory group created by congress in 1887 to oversee and correct abuses in the railroad industry.

7. Airlines routinely charge those who stayed over Saturday night as much lower fare than those who didn’t is the example of

8. Action taking by households or firms to preserve positive profits

9. Characteristic of monopoly’s product is

10. The profit maximizing level of output for monopoly is the one at which marginal revenue is …… than marginal cost.

A. Equals

B. Unique and no close substitute

C. Rent-seeking behavior

D. Monopoly

E. price discrimination

F. oligopoly

G. market power

H. greater

I. wheeler-lee act

J. interstate commerce commission

True - False

1. Monopolies firm face horizontal demand curve

2. A monopoly’s marginal revenue curve bisects the quantity axis between the origin and the point where the demand curve hits the quantity axis

3. Any positive difference between marginal revenue and marginal cost can be thought of as marginal profit.

4. We have to own scarce factors if we want to enter monopoly industry

5. Pricing in monopoly can be seen from supply and demand curve

6. Monopolies maximize their profit in a condition when MR>MC

7. Monopolies use price discrimination to raise their profit

8. If total revenue is under variable cost, firm should operate in the short run to reduce its losses

9. Trust is an arrangement in which shareholders of independent firms agree to give up their stock in exchange for trust certificates that entitle them to a share of the trust common

10. Rule of reason is a rule enunciated by the courts declaring a particular action or outcome to be a per se violation of antitrust law whether the result is reasonable or not.

Multiple Choices

1. A market or industry in which individual firms have some control over the price of their output is……

a. Imperfectly competitive

b. Perfectly competitive

c. franchise

d. market power

2. How much firm in monopoly

a. a lot of firms

b. few small firms

c. single firms

d. few big firms

3. A barrier to entry that grants exclusive use of the product or process to the inventor is

a. government franchise

b. patent

c. economic of scale

d. ownership of scarce factor of production

4. There is an absence of a …… curve in monopoly.

a. Demand

b. Supply

c. Marginal revenue

d. Marginal cost

5. The act of working with other producers in an effort to limit competition and increase joint profit is

a. Cartel

b. Monopoly

c. Oligopoly

d. Collusion

6. Things that occur when a firm charges the maximum price that buyers are willing to pay for each unit is..

a. Perfect price discrimination

b. Imperfect price discrimination

c. Cartel

d. Collusion

7. The profit maximizing level of output for a monopolist is the once at which

a. MC = AC

b. MR > AC

c. MR = MC

d. P > AVC

8. Social cost of monopoly is called by

a. Patent

b. Dead weight loss

c. Producer loss

d. Barrier to entry

9. Pure monopoly firm produces a product for which there are

a. No close substitutes

b. Close substitutes

c. No close complementary

d. Close complementary

10. A monopoly by virtue of government

a. Government power

b. Government failure

c. Government franchise

d. Antitrust law

Essay

1. Explain four kinds of barriers to entry.

2. What is the characteristic of monopoly?

3. What is the difference between perfect competition and monopoly’s demand curve?

4. What is price discrimination and give the example?

5. Explain two act of antitrust law

6. What happened in monopoly if it faces total revenue under total cost but still above variable cost, does It has a profit?? If yes, what kind of profit

7. Is there any difference between firm or industry demand curve in monopoly? Explain!

8. What is natural monopoly

9. Is there any social cost in monopoly? Explain

10. What is the step of the enforcement on antitrust law?