SOLVED

10.1  Is Any Firm Ever Really a Monopoly? 1) To enter a local cable television market, a firm needs a license from the city government. This is an example of A) a government-imposed barrier. B) occupational licensing. C) a natural monopoly. D) the government maintaining consistent standards in the broadcast industry. 2) The National Football League owns the NFL Network, a 24-hour cable channel devoted entirely to pro football. The network is available through satellite providers but several major cable companies, including Time Warner, do not offer the network. If Taylor chooses to pay a higher monthly charge by switching from cable to a satellite provider so he can watch the NFL Network and Harriet chooses not to do the same, then A) Taylor has lost some consumer surplus by paying the additional fee. B) Harriet has gained some consumer surplus by not having to pay the additional fee. C) Harriet’s demand for sports entertainment is more price elastic than Taylor’s demand. D) Taylor’s demand for sports entertainment is more price elastic than Harriet’s demand. 3) A monopoly is a seller of a product A) with many substitutes. B) without a close substitute. C) with a perfectly inelastic demand. D) without a well-defined demand curve. 4) If we use a narrow definition of monopoly, then a monopoly is defined as a firm A) that has been granted special production rights by the government. B) that can ignore the actions of all other firms because it produces a superior product compared to its rivals’ products. C) that can ignore the actions of all other firms because it produces a product for which there are no close substitutes. D) that has the largest market share in an industry. 5) Which of following is the best example of a monopoly if we use a broader definition of monopoly? A) Spuds McKenzie, a wealthy potato farmer in Idaho B) Cheap Gas, one of two gasoline stations in a large rural community C) Santos Tacos, the only taqueria in the small town of Santosville D) Zippie Rentals, a sports car rental service in the downtown Boston area 6) In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods and Lunardi’s. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi’s close at 9 pm. Which of the following statements is true? A) Safeway is a monopoly all day because it produces a service that has no close substitutes. B) Safeway has a monopoly at midnight but not during the day. C) Safeway can ignore the pricing decisions of the other two supermarkets. D) Safeway probably has a higher markup to compensate for its higher cost of production. 7) A monopoly is characterized by all of the following except A) there are only a few sellers each selling a unique product. B) entry barriers are high. C) there are no close substitutes to the firm’s product. D) the firm has market power. 8) Peet’s Coffee and Teas produces some flavorful varieties of Peet’s brand coffee. Is Peet’s a monopoly? A) Yes, there are no substitutes to Peet’s coffee. B) No, although Peet’s coffee is a unique product, there are many different brands of coffee that are very close substitutes. C) Yes, Peet’s is the only supplier of Peet’s coffee in a market where there are high barriers to entry. D) No, Peet’s is not a monopoly because there are many branches of Peet’s. 9) In 2011, Microsoft filed a complaint with the European Commission accusing Google of taking steps to monopolize the Internet search engine business. Microsoft’s primary complaint was that A) Google is the only Internet search engine available to Windows operating system users. B) the European Union contracts exclusively with Google for its Internet search engine use. C) Google has prevented competitors from gaining access to needed content and data to provide search results to consumers. D) Google owns the Internet advertising companies that pay for ads on search engine sites, and has prohibited ads from being sold to competitors. 10) A firm that has the ability to control to some degree the price of the product it sells A) is also able to dictate the quantity purchased. B) faces a demand curve that is inelastic throughout the range of market demand. C) is a price maker. D) faces a perfectly inelastic demand curve. 1