Pure Monopoly

Which of the following are forms of price discrimination?

-Charging different customers different prices -Charging each customer one price for the first unit and a lower price for subsequent units -Charging each customer the maximum price he or she is willing to pay

What allows a natural monopoly to produce efficiently?

-Extensive economies of scale -A declining long-run average total cost curve

Which of the following are conditions necessary for price discrimination?

-Market segregation -No resale -Monopoly power

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

-The firm is single-price monopolist; it 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

A monopolist does not have a supply curve because:

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

Which of the following are reasons for a monopoly's loss of economic profit?

-Upward-shifting cost curves caused by escalating resource prices -Change in tastes reducing demand

A firm positions itself in the best profit-maximizing (or loss-minimizing) level of production if that amount of output reflects the point at which the last unit's marginal revenue is equal to its marginal cost because

-each unit of output after the MR=MC amount will earn less revenue that it costs -each unit of output prior to the MR=MC rule earns more revenue for the firm than its costs

Which of the following steps are necessary to determine the profit-maximizing or loss minimizing level of output, profit-maximizing or loss minimizing price, and economic profit or loss in pure monopoly?

-employ the profit-maximizing or loss minimizing rule of MR=MC -identify the profit-maximizing or loss minimizing price and output by finding the price/output combination at MR=MC

Monopolists may create an entry barrier when confronted with a new entrant into the industry by:

-incurring advertising costs -reducing product price -raising resource prices

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

Imperfect competitors include which of the following?

-monopolists -pure monopolists -monopolistic competitors

Imperfect competitors include which of the following?

-pure monopolists -monopolistic competitors -oligopolists

What aspect of the market defines the CRUCIAL difference between a pure monopolist and a purely competitive seller?

-the demand curve

Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:

-the loss-minimizing output -the profit-maximizing output

All else equal, which is more likely to experience an economic profit in the long-run?

A pure monopolist

Which of the following is a reason for a monopoly's loss of economic profit?

Changes in tastes that reduce demand for a product

Which of the following is more likely for pure monopolists than a pure competitor?

Economic profit

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

Economies of scale

When marginal revenue is negative, what is happening to total revenue

It is diminishing

Considering the industry structures of pure (perfect) competition and pure monopoly, a firm will experience a more inelastic demand curve in which form of industry?

Pure monopoly

Imperfect competitors can influence product price by changing what?

Quantity supplied

The profit-maximizing monopolist will always want to avoid which segment of its demand curve?

The inelastic segment

How can imperfect competitors influence total supply?

They can make their own output decisions

Monopoly yields neither productive nor _____ efficiency

allocative

When marginal revenue is zero, total revenue is:

at its maximum

In a non-competitive market, price is equal to:

average revenue

A monopolist can increase its profit by

charging different prices to different buyers

Marginal revenue for the monopolist compared to that of a pure competitor

declines and is lower than product price

A natural monopoly occurs when the market demand curve crosses the long-run average total cost curve where average total costs (ATC) are still ______

declining

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

declining

When the price elasticity of demand is elastic, an increase in price will _______ total revenue

decrease

Price makers are firms with:

downward-sloping demand curves

Total _______ profit is found by multiplying per-unit profit by the profit-maximizing output

economic

Modern technology can be a cause of extensive _____

economies of scale

What is another name for deadweight loss

efficiency loss

The demand curve of the purely competitive seller is horizontal or perfectly _____ whereas the demand curve of the monopolist is not

elastic

For a pure monopolist, total revenue _____ at a diminishing rate

increases

The change in total revenue is called _______ revenue

marginal

A ______ 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

When the market demand curve crosses the long-run average total cost curve where average total costs are declining, it is called a:

natural monopoly

A monopolist must obtain a minimum of a ______ profit in the long run, or it will go out of business.

normal

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

ownership of essential property

The difference that results when product price exceeds average total cost determines:

per-unit economic profit

When marginal revenue is _____, total revenue is increasing

positive

For the pure monopolist, there is no relationship between _____ and quantity supplied and therefore no supply curve.

price

___ is equal to average revenue in non-competitive market

price

_____ is equal to average revenue in a NON-competitive market

price

Economic profit for a monopolist can be calculated by multiplying the difference between ______ and _______ total cost by quantity.

price, average

For a monopolist, marginal _______ is lower than ______ because the lower price of an extra unit of output also applies to all prior units of output

revenue, price

A pure monopolist has no _______ curve

supply

Network effects exist if the value of a product to each user increases as the total number of _____ increase

users