ECO 101 - The government has used the Sherman Act

QUESTION 1

1. The government has used the Sherman Act to break up monopolies in which of the following industries?
2. A.Railroad
3. B.Oil
4. C.Aluminum
5. D.All of these industries have been affected by the Sherman Act.

QUESTION 2

In the figure above, what is the resulting deadweight loss if the perfectly competitive industry is monopolized?

A.The area P₁P₂CE

B.The area BCGF

C.The area BCF

D.The area BCE

E.The area BEF

QUESTION 3

1. Natural monopolies:
2. A.are the only monopolies that are efficient.
3. B.can capture the lowest production costs possible for the industry.
4. C.are always protected by government policy.
5. D.All of these statements are true.

12 points

QUESTION 4

1. The monopolist's outcome happens at a:
2. A.lower price than the perfectly competitive one.
3. B.higher price than the perfectly competitive one.
4. C.higher quantity than the perfectly competitive one.
5. D.None of these statements is true.

12 points

QUESTION 5

1. Compared with a perfectly competitive industry, a monopolist produces
2. A.more output at a lower price.
3. B.more output at a higher price.
4. C.less output at a higher price.
5. D.less output at a lower price.
6. E.the same output at a higher price.

12 points

QUESTION 6

1. In general, with a monopolist's outcome:
2. A.consumers lose surplus.
3. B.monopolies earn profit.
4. C.deadweight loss occurs.
5. D.All of these statements are true.

12 points

QUESTION 7

1. The government uses the antitrust laws in place:
2. A.to prevent all mergers that would create market power.
3. B.ineffectively because the laws are outdated.
4. C.increasingly over time, as market power is getting more concentrated.
5. D.None of these statements is true.

QUESTION 8

In the figure above, what is the consumer surplus at the profit-maximizing levels of output and price?

A.JNM

B.0JNV

C.HMQ

D.0HQX

E.Cannot be determined from the information given

QUESTION 9

1. One reason DeBeers has lost some of its monopoly power is:
2. A.government regulations.
3. B.competition from Canadian and Russian diamond mines.
4. C.pressure from consumers.
5. D.All of these statements are true.

QUESTION 10

1. The government should set the price for natural monopolies at their:
2. A.average total cost.
3. B.marginal cost.
4. C.average variable cost.
5. D.fixed cost.