Pure Monopoly - Exam 3

when regulators require a monopoly to charge the normal profit what 2 things happen?

1. monopoly has zero economic profit 2. monopoly has little incentive to reduce its costs of production

monopolies are allocatively efficient (T/F)?

false

economies of scale is not a barrier to entry (T/F)?

false, it is a barrier

perfect price discrimination and personal pricing are different names for

first-degree price discrimination

If a monopoly is able to perfectly price discriminate, then consumer surplus is...

0

if a monopoly perfectly price discriminates, how much deadweight loss will they incur?

0

To be able to price discriminate, a firm must do 3 things?

1. segment market 2. sell product that can't be resold 3. be a price maker

Perfect price discrimination results in

allocative efficiency

when a pure monopoly practices first-degree price discrimination....

demand curve becomes the marginal revenue curve

the demand faced by a pure monopoly is _________ sloping

downward

a monopoly generally makes what kind of profits in the long run

economic profits

monopolies are price _______

makers

monopolies experience deadweight loss (T/F)?

true

monopolies have barriers to entry (T/F)?

true

any impediments that prevent firms from entering a market

barriers to entry

If a monopoly is able to price discriminate, then both its profits and output tend to _________

increase

if a market has no impediments to entry, is it a monopoly?

no

can wheat be considered a monopoly?

no, many different producers of wheat

marginal revenue is the extra revenue associated with the production of an additional unit of...

output

firm charges different prices for the same good to different consumers though there is no difference in the cost to supply it to consumers

price discrimination

efficient level of output allocation is where on the graph?

where MC = D