eco
A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level.
true
The three main sources of barriers to entry are monopoly resources, government regulation, and the firm's production process.
true
For a monopoly, the socially efficient level of output occurs where
price equals marginal cost.
Based upon the information shown, what are total costs for Bearclaws, given that it maximizes profits?
$700.
Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day. Refer to Scenario 15-2. What is Vincent's profit on a typical day?
$820
The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?
. A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.
It is difficult in a natural monopoly market for the firm to achieve both efficiency and zero economic profit simultaneously, even with regulation.
True
When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect
True
How much output will the monopolist produce in order to maximize profit ?
W
The collection of statutes aimed at curbing monopoly power is called
antitrust law.
The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as
arbitrage.
Price discrimination
can maximize profits if the seller can prevent the resale of goods between customers.
A monopolist produces where P = MC = MR.
false
Refer to Figure 15-2. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to
increase if the output is between Q 3 and Q 4
Price discrimination adds to social welfare in the form of
increased total surplus.
A firm cannot price discriminate if
it operates in a competitive market
Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has
less market power than it would otherwise have.
A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time
true
By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating
true
Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $2,000.
true