Chapter 14 and 15

Which of the following is consistent with current U.S. law on monopolies?

Gaining monopoly or market power through specified exclusionary business practices is illegal.

As the quantity sold rises, how does marginal revenue compare to price for a company with market power?

Marginal revenue falls further and further below price.

Which of the following conditions is present for all sellers in a perfectly competitive market?

all sellers are selling identical products

A characteristic of perfect competition that is not present in any other market structure is that there

are many sellers that produce identical products

How does marginal revenue compare to price for a seller with market power?

beyond the first units sold, marginal revenue is below price

Which of the following is NOT a characteristic of perfectly competitive markets?

each seller sets its own price

Patents have a positive impact of _____ and the negative impact of _____.

encouraging research; creating a monopoly

Based on the profit maximization rule for Sellers, how does a manager set price and quantity? If the company has no market power, the marginal cost _____ price. If the company has market power, the marginal cost is _____ than price.

equals; less

For a seller with market power, as the number of units sold increases, marginal revenue

falls further and further below the price

Perfectly competitive markets are rare because most

goods are not identical and most markets have dominant firms

Companies with market power face a trade-off between

having a higher profit margin and selling a larger quantity.

The degree to which a market provides socially optimal outcomes depends on the degree to which it

is closer to the competition outcome than market power outcomes.

As the quantity sold rises for a seller in imperfect competition, what happens to the difference between price and marginal revenue?

it gets larger and larger

The change in total revenue from selling one additional unit of output is the

marginal revenue

A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?

monopoly

A product market has only one seller, and that seller has a high level of market power. There are no close substitutes for the product. What type of market is this?

monopoly

A product market has many buyers and many sellers, and its largest company produces 1% of the market output. In addition, all sellers produce identical goods. What market structure is consistent with this description?

perfect competition

Which of the following is a characteristic of a perfectly competitive market?

sellers are price takers

Patents on drugs to treat AIDS were removed in South Africa. How would the market for these drugs have been different if there had never been patents on drugs?

the drugs would not have been developed

Which of the following conditions is NOT present in perfect competition?

the product price varies across the companies in the market

Which of the following is a characteristic of monopoly that is not present in other market structures?

there is only one seller

When a single business can service the entire market demand at a lower cost than several smaller businesses, the market is

a natural monopoly

Which of the following markets is an example of a perfectly competitive market?

Share's of Mcdonald's stock

Which of the following statements about market power is TRUE?

The extent of market power held by a seller can vary along a spectrum from none to a high level.