ECO/365 Pure Monopoly

All firms maximize ________ by producing the quantity of output at which the marginal revenue is equal to the marginal cost.

profit

___________ equals the total revenue minus the total cost.

profit

Which of the following are characteristics of a contestable firm?

-No real barriers to entry -A single firm

Joe owns the only ice cream shop on a private beach in Florida; people at the beach who want to enjoy an ice cream cone have to buy from him.

$4.00-100-400-4 3.50-200-700-3 3.00-300-900-2 2.50-400-1000-1 2.00-500-1000-0 1.50-600-900- -1 1.00-700-700- -2

An argument can be made that the economic profits generated by pure monoploies have two positive impacts on dynamic growth:

-Potential economic profits give firms and entrepreneurs incentives to develop new production processes and products. -When a monolopy earns an economic profit, it has the financial capital to develop more innovations.

Which of the following are characteristics of a perfectly competitive market?

-large number of sellers -no control over price

Monopoly is a market structure characterized by:

-the firm having significant price control. -a good or service for which there are no close subsitutes -a single seller -a market with barriers to entry

Impediments that prevent firms from entering a market or industry are known as:

barriers to entry

Which of the following is NOT a characteristic of monolopy?

continuous economic profits

The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium is the _________ loss

deadweight

If a monopoly wants to sell more units, it must _________ the price for every unit it sells.

decrease

If the marginal revenue associated with selling one more unit of output is positive, the demand is:

elastic, because this would increase total revenue

For the profit-maximizing level of output, the price charged by a monolopy is not just different but ______________than marginal revenue.

greater

The extra or additional revenue associated with the production of an additional unit of output is the ________ revenue.

marginal

a pure ________is the only seller in a market

monopoly

Due to the market inefficiencies created by__________, one of the roles of government is to limit their market power or even to eliminate them entirely.

monopolies

A ________ produces less output than a competitive firm, and therefore, is liekly to hire less labor.

monopoly

It is unlikely for a pure ______ to be productively efficient.

monopoly

The level of profit that occurs when total revenue is equal to total cost is known as ________ profit.

normal

Total revenue equals

price times quantity

Allocative efficiency is:

producing the goods and services so that their marginal benefit equals their marginal cost.

For a monolopy, the marginal revenue is below the demand curve because:

the monopoly has to lower the price on all units to sell more

Productive efficiency is:

using the fewst resources possible to produce a good or a service.

A company can break even and meet operating costs without a loss when it earns _______ economic profit

zero