Econ 201 Assign

What can be considered barriers to entry? (2)

Ownership of necessary input Requiring a government license

A single-price monopoly...

Must lower the price for all customers if it wants to increase its sales.

If a monopoly can perfectly price discriminate, then its marginal revenue curve will be what?

The same as the demand curve.

Who price discriminates by charging higher prices to business travelers?

Airline companies

A "buy one get one for half price" promotion is an example of what?

Price discriminating among units of a good

A______Monopoly sells different units of its good or service for_______

Price discriminating; different prices Single price; the same price

If a firm successfully price discriminates, what does it increase?

Economic Profit

The key idea behind price discrimination is to convert consumer surplus into what?

Economic Profit

What does competition between rent seekers result in?

Firms earning normal profits.

What is the difference between a perfectly competitive industry and a monopoly?

In the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit.

Under earnings-sharing regulation, if a firm's profits______above a certain level, they must be shared with the firm's______.

Rise; customers

If a perfectly competitive industry is taken over any a single firm that operates as a single-price monopoly, the price will________and the quantity will_______.

Rise; decrease

What does price cap regulation involve?

Setting a maximum price the monopoly may charge

A firm that is a natural monopoly can do what?

Supply the entire market at a lower average total cost than two or more firms.

Rent seeking is defined as what?

The act of obtaining special treatment by the government to create an economic profit.

What is marginal revenue equal to?

The change in total revenue brought about by a one-unit increase in quantity sold.

Why does the U.S Postal Service have a monopoly over first-class mail service?

The government has granted this agency a public franchise.

When is a legal barrier is created for a firm?

When a public franchise, government license, patent or copyright is granted.

A monopoly produces a product______and there____barriers to entry into the market.

With no substitutes; are

The deadweight loss with perfect price discrimination is what?

Zero.