Multiple Choice Quiz


1	Monopolies in the United States are most prevalent in
		A)	utilities.
		B)	agriculture.
		C)	automobiles.
		D)	computer manufacturers.


2	The reason that utilities are often thought of as being natural monopolies is that they have
		A)	high fixed costs.
		B)	diminishing marginal costs.
		C)	high demand for their services.
		D)	a) and b)


3	Natural monopolies tend to occur when there are
		A)	few barriers to entry.
		B)	high fixed costs.
		C)	increasing average costs.
		D)	increasing marginal costs.


4	In modeling a monopoly the marginal revenue curve is
		A)	upward sloping.
		B)	horizontal.
		C)	the same as demand.
		D)	downward sloping with a slope that makes it twice as steep as demand.


5	The Sherman Anti-Trust Act makes it illegal
		A)	to attempt to become a monopoly.
		B)	to attempt to drive other competitors out of business by being more efficient.
		C)	to be a monopoly.
		D)	to use monopoly power in one area to gain market power in another.


6	The Sherman Anti-Trust Act requires that the Federal Trade Commission approve
		A)	price increases.
		B)	all mergers of companies, no matter how small.
		C)	stock buy-back programs of utilities.
		D)	all mergers where the new company would have monopoly power in an industry.


7	The Contestable Markets Hypothesis suggests that
		A)	all that is necessary for prices to reach their competitive levels is for there to be one firm that is concerned about entry of potential competitors.
		B)	at least 2 firms are required for prices to be at competitive levels.
		C)	at least 20 firms are required for prices to be at competitive levels.
		D)	competitive prices are unrealistic.


8	In the case against Standard Oil the court
		A)	decided that Standard Oil wasn't a monopoly.
		B)	decided that Standard Oil was a monopoly but only ordered a small fine.
		C)	refused to hear the case.
		D)	decided that Standard Oil was a monopoly and broke the company into many separate ones.


9	In the Federal Anti-Trust case against IBM described in the text, the concern was that
		A)	IBM was just too big.
		B)	IBM was just too inefficient.
		C)	IBM would use its mainframe dominance to dominant spreadsheet software.
		D)	IBM would use its mainframe dominance to dominant the PC market.


10	In the Federal Anti-Trust case against Microsoft described in the text the concern was that
		A)	Microsoft was just too efficient.
		B)	Microsoft was using its dominance in operating systems to dominate other software areas.
		C)	Microsoft products were too cheap.
		D)	a) and c)

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