Chapter 24 Assignment
The better the substitutes for a monopoly firm's product, the
greater the price elasticity of demand.
A natural monopoly
has economies of scale over a very large range of output, has decreasing long run marginal costs over a very large range of output, has decreasing long run total costs over a very large range of output.(All of the above.)
The demand curve faced by the monopolist
has greater price elasticity of demand as close substitutes for the monopoly product are developed.
A monopolist is defined as
A single supplier of a good or service for which there is no close substitute.
Evaluate the following statement. A profit maximizing will never operate in a price range in which price elasticity of demand is inelastic.
True
If a public utility company is considered a monopolist, which of the following is not true?
The company's demand curve and supply curve are upward sloping.
A firm can be the sole supplier of a good and still not be considered a monopoly if
There are very close substitutes for the good.
Why is there a social cost of monopoly?
Too few sources are being used in a monopoly.
A monopoly is socially inefficient because it
charges a price greater than marginal cost.
As opposed to other types of monopoly, a natural monopoly typically owes its monopoly position to
economies of scale.
The marginal revenue curve for a perfectly competitive firm is ___ while the marginal revenue curve of the monopolist is ___.
horizontal, downward sloping
In a monopoly market structure, the firm (the monopolist)
is the whole industry.
If we were to compare the amount produced by firms in a competitive industry to the output produced by a monopoly, the monopolist will produce
on the elastic portion of the demand curve and charge a higher price.
Monopoly producers are faced with
no competitive producers of the same product.
Charging different prices for similar products that have different marginal costs is called
price differentiation.
For a monopoly,
price equals average revenue only.
As compared to a perfectly competitive industry, a monopoly industry with identical cost curves will
produce less and set a higher price.