ECON 211 FINAL
12. For a monopolist, marginal revenue is
less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.
9. Which of the following is a characteristic of a natural monopoly?
Average total cost declines over large regions of output.
Game theory is important for understanding which market type?
Oligopolistic but not perfectly competitive
Which of the following is a characteristic of a monopoly?
barriers to entry
8. The fundamental source of monopoly power is
barriers to entry.
15. A monopolistically competitive market has characteristics that are similar to
both a monopoly and a competitive firm.
17. For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in
both the short run and the long run.
18. Which of the following is not a key feature of monopolistic competition?
c. Positive economic profits for firms in the long run
11. Monopolies use their market power to
charge a price that is higher than marginal cost.
An agreement among firms in a market about quantities to produce or prices to charge is called
collusion
10. When a firm operates under conditions of monopoly, its price is
constrained by demand.
In an oligopoly, each firm knows that its profits
depend on both how much output it produces and how much output its rival firms produce.
An agreement between two duopolists to function as a monopolist usually breaks down because
each duopolist wants a larger share of the market in order to capture more profit.
14. A monopoly is an inefficient way to produce a product because
it produces a smaller level of output than would be produced in a competitive market.
13. A reduction in a monopolist's fixed costs would
not affect the profit-maximizing price or quantity.
16. When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost
there is a deadweight loss to society.