ECON 200 Pure Monopoly

Which of the following are characteristics of a perfectly competitive market?

-Large numbers of sellers -No control over price

Which of the following are characteristics of a contestable firm?

-No real barriers to entry. -A single firm.

The pure monopoly extracts all surplus from consumers, yielding higher profits than any other pricing method when it employs which of the following?

-Perfect price discrimination -Personal pricing -First-degree price discrimination

The practice of charging different prices per unit for different quantities, or blocks, of a good or service is called

-second-degree price discrimination -block pricing

_____________________ is total revenue minus economic costs, which include both explicit and implicit costs of production.

Economic profit

Perfect price discrimination generates the best outcome for which of the following market structures?

Monopoly

Second-degree price discrimination generates the best outcome for which of the following market structures?

Monopoly

There are important exceptions in which monopolies are actualy encouraged to incentivize positive outcomes.

True

Impediments that prevent firms from entering a market or industry are known as:

barriers to entry.

The allocatively efficient-price creates a dilemma for regulators, because the average total cost associated with the ________________ quantity is higher than the price the nartural monopoly is able to charge for it.

competitive

For the profit-maximizing level of output, the price charged by a monopoly is not just different but greater than marginal

cost.

If a monopoly wants to sell more units, it must ___________ the price for every unit it sells.

decrease

Total revenue minus the implicit costs and explicit costs of production is

economic profit.

The marginal revenue is the

extra or additional revenue associated with the production of an additional unit of output.

A natural ___________ is an industry in which economies of scale are so extensive that the market is better served by a single firm.

monopoly

A pure _______________ is the only seller in a market.

monopoly

It is unlikely for a pure ________________ to be productively efficient.

monopoly

A company can break even and meet operating costs without a loss when it earns _____________ economic profit.

normal

When regulators require a monopoly to charge the _______________ profit price, the monopoly has little incentive to reduce its costs of production.

normal

The practice of selling the same good or service to different consumers at different prices is called

price discrimination.

The practice of selling the same good or service to different consumers at different prices is known as

price discrimination.

The ______________ ____________ price occurs when the price is equal to the marginal cost

regulated competitive

A monopoly should produce output until the marginal ____________ equals the marginal ____________.

revenue; cost

Profit equals the total _______________ minus the total ____________.

revenue; cost

The allocatively efficient price can create a dilemma for regualtors when

the average total cost associated with the competitive quantity is higher than the price the natural monopoly is able to charge for it

For a monopoly, the marginal revenue is below the demand curve because:

the monopoly has to lower the price on all units to sell more.

Price discrimination is best described as,

the practice of selling the same good or service to different consumers at different prices.

The practice of charging prices per unit for different quantities, or blocks, of a good or service is called.

-second-degree price discrimination -block pricing

By charging consumers the highest price they are willing and able to pay, the pure monopoly,

-yields higher profits than any other pricing method availabe to the firm. -extracts all surplus from consumers.

Total revenue equals

price times quantity.

The pure monoploy extracts all surplus from consumers, yielding higher profits than any other pricing method when it employs which of the following?

-Personal pricing -Perfect price discrimination -First-degree price discrimination

Perfect price discrimination and personal pricing are different names for

first-degree price discrimination.

Firms use price discrimination to:

increase their profits.

When a firm has a loss, the total revenue is ____________ than the total cost.

less

A business will charge a _______________ price to the group with relatively more elastic demand and a __________________ price to the group with the relatively more inelastic demand.

lower; higher

Price discrimination is only possible when a firm is a price ______________.

maker

When a pure monopoly practices first-degree price discrimination, the demand curve becomes the ______________ _____________ curve.

marginal revenue

If you live in a town or a city that has a single provider of electricity or natural gas, then that natural monopoly provider

may be subject to price regulation.

Allocative efficiency is

producing the goods and services so that their marginal benefit equals their marginal cost.

In a pure monopoly, the firm is willing to sell to anyone willing and able to pay at least the marginal cost of production. The result is that output is produced where D=MC

which is allocatively efficient.