microecon ch 12

Which of the following does the monopolist not have?

A supply curve

Which of the following are entry barriers created by monopolists?

Increased advertising Price reductions

If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which _______.

MR = MC

Which of the following are characteristics of public utilities?

Monopolies or near monopolies Government owned or regulated

Which of the following are conditions necessary for price discrimination?

No resale Market segregation Monopoly power

Which of the following is considered a barrier to entry into an industry?

Ownership of essential property

What is the term used to refer to charging different prices to different buyers of a specific product?

Price discrimination

Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?

Pure monopoly

Which of the following are assumptions made in the model of pure monopoly?

The firm is a single-price monopolist and charges the same price for all units of output. No unit of government regulates the firm. Patents, economies of scale, and resource ownership secure the firm's monopoly.

If a firm is found guilty of achieving a monopoly through anticompetitive actions, then which of the following may occur?

The firm may be expressly prohibited from engaging in certain business activities. The firm may be broken into two or more competing firms.

Economies of scale refer to ______ average total costs with added firm size.

declining

Price _________ , or charging different prices to different consumers, is widely practiced in the US economy.

discrimination

The practice of charging different prices to different buyers for a specific product is known as price __________

discrimination

Price makers are firms with:

downward-sloping demand curves

The monopolist wants a price-quantity combination to fall in the _____ section of its demand curve, where a lower price means _____ total revenue.

elastic; greater

________ create(s) legal barriers to entry.

government

X-inefficiency occurs when a firm operates at a cost that is __________ (higher/lower) than the lowest cost for a particular level of output.

higher

When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially ______.

levies a "private tax" on consumers

Firms with downward-sloping product demand curves are called price ________

makers

The change in total revenue associated with a one-unit change in output is called ______ revenue.

marginal

The change in total revenue associated with a one-unit change in output is called _________ revenue.

marginal

Slashing prices is an example of an entry barrier created by a(n)

monopolist

A(n) ______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.

monopoly

Patents, economies of scale, and resource ownership are all assumptions of the pure ______ model.

monopoly

The strongest barriers to entry effectively block all ______.

potential competition

Market segregation must exist in order for a monopolist to ______.

price discriminate

Baseball ticket sellers charge a different price for adults and children. Ballpark concession stands charge the same prices for products sold to any customer. The baseball ticket sellers are providing a successful example of

price discrimination.

________ utilities are government owned or regulated.

public

A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___.

substitutes

Marginal revenue is the change in ______ revenue associated with a single-unit change in output.

total

The monopolist seeks maximum _________ profit, not maximum unit profit.

total

Why might a monopolist accept a less-than-maximum per-unit profit?

Additional sales more than compensate for the lower profit per unit.

What is the term for factors that prohibit firms from entering an industry?

Barriers to entry

______ of essential property is a barrier to entry into an industry.

Control

What term is used to describe declining average total costs with added firm size?

Economies of scale

How does a monopoly generally transfer income?

From consumers to the owners of the monopoly

Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?

There are no new entrants to increase supply, drive down price, and eliminate profit.

How much will a profit-seeking monopolist produce if producing is preferable to shutting down?

Up to the output at which marginal revenue equals marginal cost

When a firm produces a specific output level at a higher cost than the necessary cost for that level of output, it is called ______.

X-inefficiency

A monopolist will never choose a price-quantity combination where price reductions cause:

a decrease in total revenue

A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the ________ _________ cost curve

average total

The monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient.

average total cost

Government creates ______ barriers to entry.

legal

A firm can be expressly prohibited from engaging in certain business activities or can be broken into two or more competing firms when it

is found guilty of monopoly abuse.

A monopolist does not have a supply curve because:

it does not equate price with marginal cost there is no single, unique price associated with each level of output