Managerial Economics 12th Edition by Mark Hirschey

Exercise 1

Monopoly Concepts. Indicate whether each of the following statements is true or false, and explain why.
A. The Justice Department generally concerns itself with significant or flagrant offenses under the Sherman Act, as well as with mergers for monopoly covered by Section 7 of the Clayton Act.
B. When a single seller is confronted in a market by many small buyers, monopsony power enables the buyers to obtain lower prices than those that would prevail in a competitive market.
C. A natural monopoly results when the profit-maximizing output level occurs at a point where long-run average costs are declining.
D. Downward-sloping industry demand curves characterize both perfectly competitive markets and monopoly markets.
E. A decrease in the price elasticity of demand would follow an increase in monopoly power.