CH 10 Concept Quiz 17/18 correct

Microsoft likely has to spend billions of dollars building and developing an operating system, but once it is produced, the cost to get the software to each customer is almost zero. When Microsoft sells more units, the average total costs decrease. This means Microsoft is said to have

economies of scale

Compared to perfect competition, monopoly results in

fewer units produced and sold.

In order to sell more units, a monopolist must lower its prices. As shown in the table below, total revenue will initially __ and then __.

increase, decrease

A natural monopoly exists when a single seller experiences __ average total costs than any potential competitor

lower

Approximately what percentage of the operating system market did Microsoft control in 2003

more than 90%

Monopoly power measures the ability to set the ___ for a good.

price

In the monopolists profit maximization graph, where does a monopoly operate to maximize profits?

where MR=MC

Assume that a monopolist faces the demand schedule given below, and a constant marginal cost of $2 for each unit of output. To maximize profits, this monopolist would produce __ units of output and charge a price of __ per unit.

2 units with $5

Assume that a monopolist faces the demand schedule given in the table below and a constant marginal cost of $50 for each unit of output. To maximize profits, the monopolist would produce __ units of output at a price of __ per unit.

3,000 and $70

Which of the following is true regarding monopolies?

They engage in rent seeking.

Over the long run, a monopolist

can continue to make economic profits if it can maintain a monopoly and keep competitors from entering the market

Monopolies choose their profit maximizing

output level and price

Approximately what percentage of the operating system market did Android devices control in 2010?

15%

Approximately what percentage of the operating system market did Android devices control in 2014?

60%

Compared to perfect competition, monopolies charge

a higher price.

Suppose there was only one producer of an expensive heart medication. The source of that producer's monopoly would most likely come from

a patent to produce the drug.

Suppose that at the current level of production, the price of a monopolist's product is equal to $15 per unit. Marginal revenue is equal to $10 per unit, and marginal cost is equal to $15 per unit. This monopoly

can increase its profit by producing and selling fewer units of its product.

Which of the following is considered a natural barrier?

control of resources