micro ch 16 homework
legal monopoly
legal prohibitions against competition, such as regulated monopolies and intellectual property protection. ex- public franchise, gov't license, patent or copyright.
A monopoly arises when there are ______.
no close substitutes and a barrier to entry
Which of the following firms is most likely to be a monopoly? A. local fast-food restaurant B. local distributor of electricity C. shoe store D. computer store
B. local distributor of electricity
A monopoly that can perfectly price discriminate has a marginal revenue curve that is steeper than the demand curve for the good that the monopoly produces.
False
Price discrimination is possible when a firm is able to ______.
identify and separate different types of buyers, and sell a product that cannot be resold.
A profit-maximizing monopoly never produces output in the _______ range of its _______ curve.
inelastic; demand
A firm that experiences economies of scale even when it produces the quantity that meets the entire market demand is an example of a natural monopoly.
True
If a monopoly can perfectly price discriminate, it produces no deadweight loss and is more efficient than a single-price monopoly.
True
When natural or legal forces work to protect a firm from potential competitors, the market is said to have _______.
a barrier to entry
single-price monopoly
a firm that must sell each unit of its output for the same price to all its customers
natural monopoly
a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
A legal monopoly is a market in which _____ by the granting of a public franchise, government license, patent, or copyright.
competition and entry are restricted
Perfect price discrimination is the price discrimination that extracts the entire _____ surplus by charging the _____ price that _____ are willing to _____ for each unit.
consumer; lowest; consumers; pay
A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. This is an example of ______
either a natural monopoly or legal monopoly that can price discriminate
A monopoly can price discriminate only if ______.
it sells goods and services that cannot be resold.
A monopoly can price discriminate between two groups of consumers if _______ across the two groups.
the average willingness to pay differs
A natural monopoly is a monopoly that arises because one firm can meet the entire market demand at a lower average _____ cost than two or more firms could.
total
Is the US postal service a legal monopoly?
yes
