Econ chapter 13
voss calculator company has a monopoly on the sale of graphing calculators. if it sells two of these calculators its total revenue is $600, and if it sells three calculators its total revenue is $750. the marginal revenue of the third calculator sold is
$150
when a monopolist sells two units of output its total revenue is $600. when a monopolist sells three units of output its total revenue is $630. when the monopolists sells three units of output, the price per unit is
$210
hi phi sound unlimited has a monopoly over the installation of surrounded systems. if hi phi unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 16 sounds systems is $33,000, what is the marginal revenue of the sixteenth sound sound system
$3000
XYZ computer company has a monopoly on the sale of a specialized color printer. if it sells two of these printers its total revenue is $1000, and if it sells three color printers it total revenue is $1600. the marginal revenue of the third color printer sold is
$600
when a monopolist sells two units of output its total revenue is $150. when a monopolist sells three units of output its total revenue is $210. when the monopolists sells three units of output, the price per unit is
$70
stereo sound unlimited has a monopoly over the installation of surrounded sound systems. if stereo sound unlimited's total revue from installing 10 sound systems is $20,000 and its total revue from installing 11 sound systems is $18000, what is the marginal revenue of the eleventh sound system?
-$2000
a monopolist suffers a loss if its ____ schedule is everywhere above its _____ schedule
ATC; MC
the two different administrative bodies responsible for initiating actions on behalf of the US government against individuals or companies violating antitrust laws are called the
Antitrust Division of the Justice Department and the Federal Trade Commission
congressed established the _____ to investigate "...the organization, business conduct, practices, and management" of companies that engage in interstate commerce
Federal Trade Commission
when the addition to a monopolist's total profit is negative from selling another unit, then it follows that
MR<MC
the criterion introduced by the supreme court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman Act is called the
Rule of Reason
a monopolist is NOT guaranteed positive economic profits solely because it is a monopoly since there may be no output for which
TR>TC
a monopolist's supply of a good is
a dependent on the monopolist's demand curve and its marginal cost curve
the cable industry is best characterized as _____
a natural monopoly
a barrier to entry that grants exclusive use of an invented product or process to the inventor is called _____
a patent
in an imperfectly competitive industry
a single firm has some control over the price of its output
a monopoly is an industry with
a single firm in which the entry of new firms is blocked
an oligopoly is an industry market structure with
a small number of firms each large enough to impact the market price of its output
which of the following is LEAST likely to be considered a firm in an imperfectly competitive industry
a wheat farmer in Kansas
for a perfectly competitive firm, the marginal revenue curve has _____ point(s) in common with the firm's demand curve
all
a monopolist who has a horizontal ATC schedule and perfectly price discriminates
appropriates all consumer surplus as profit
a monopolist who has a horizontal ATC schedule and charges the same monopoly price to all buyers
appropriates less consumer surplus as profit then a perfect price discriminator does
imperfect competition and maket power
are major sources of inefficiency
which of the following is NOT an example of price discrimination
back to school sales
a _____ prevents new firms from entering and competing in a monopolistic industry
barrier to entry
although patents are a ____, they also provide _____
barrier to entry an incentive for invention and innovation
due to the network externalities in the game console market, we would expect this market to
be highly concentrated
_____ are NOT a barrier to entry
consent decrees
Ameritech has a monopoly over local telephone service. if Ameritech is producing where marginal revenue is less than marginal cost, the firm
could increase profits by reducing output
in 1914, the US Congress
created the Federal Trade Commission
assuming demand is linear, the shape of a monopolist's total revenue schedule is a
curve from the origin with decreasing slope
when a monopolist sells two units of output its total revenue is $600. when a monopolist sells three units of output its total revenue is $630. in order to sell three units of output instead of only two, the monopolist must
decrease its price by $90 per unit
the demand curve facing a monopolistic firm is _____
downward-sloping
a monopolist is currently maximizing profits. in addition, if P>ATC>MC, the the monopolist
earns positive economic profits
which type of barrier to entry allowed the electric company to maintain a monopoly over the production of electricity
economies of scale
for a monopoly to be a natal monopoly
economies of scale must be realized at a scales that is CLOSE to the TOTAL DEMAND in the market
hi phi sound unlimited has monopoly over the installation of surrounded sound systems. hi phi unlimited's total revenue from installing 15 sound systems is $30,000 and its goal revenue from installing 16 sound systems is $33,000. the marginal revenue received from selling the 16th sound system is
equal to the price of the 16th sound system
suppose we know that a monopolist is maximizing its profits. which of the following is a correct inference? the monopolist has
equated marginal revenue and marginal cost
from society's point of view, a monopolist produced too little because price
exceeds marginal cost
which of the following best explains why cable television consist of local monopolies
fixed costs are high, but the marginal cost of serving additional customers is low
the notion that the government becomes the tool of the rent seeker and makes the allocation of resources even less efficient than before is known as ____ and is described in_____
government failure, public choice theory
monopolies, oligopolies, and monopolistic competitive industries all
have market power
firms with market power must decide all of the following except
how much to supply in each input market
a monopolist will not produce
in the inelastic portion of its demand curve, where marginal revenue is negative
because of a patent, alcoa is the only manufacturer of soda cans with a stay-put tab. alcoa can earn a profit on the sale of soda canes with stay-put tabs
in the long run because entry into the industry by new firms is blocked until the patent expires
the demand for food will likely be price _____ while the demand for Brand X Burger will likely be price ______
inelastic, elastic
the antitrust division of the justice department
initiates action against those who violate antitrust laws and decided to prosecute
for a monopolist, price
is greater than marginal revenue
the XYZ computer company has a monopoly over the production of a specialized color printer. the XYZ computer company will find it profitable to reduce output as ling as marginal revenue
is less than marginal cost
the XYZ computer company has a monopoly over the production of a specialized color printer. the XYZ computer company will find it profitable to increase the production of specialized color printers as long as marginal cost
is less than marginal revenue
a monopolist
is protected from competition by barriers to entry
government failure
leads to a less efficient allocation of resources
relative to a competitively organized industry, a monopoly is more likely to produce
less output charges higher price earns economic profits
relative a a competitively organized industry, firms acting collusively are more likely to produce
less output charge higher prices earn and economic profit
the rare bird company has a monopoly in the sale of macaws in Iowa. when the rare bird company sells three macaws its marginal revenue is $30. when the rare bird company sells four macaws it marginal revenue will be
less than $30
a firm must be able to _____ competition if it is to exercise control over the price of its product
limit
for a non-discriminating monopolistic to sell one more unit, it must _______
lower the price of the last as well as all previous units produced
the Sherman Antitrust Act of 1890
made illegal every conspiracy in restraint of trade or commerce among the several states
monopolistic competition is an industry market structure with
many firms each able to differentiate their product
a profit maximizing monopolist will produce the level of output where
marginal revenue equals marginal cost
in the long run, a monopoly
may earn positive economic profits due to entry barriers
an important distinction between perfect competition and monopoly is that in
monopoly the firm faces the market demand curve
relative to a monopolized industry, a competitively organized industry is more likely to produce
more output charges lower prices earns only a normal profit
the demand for ben and jerry's ice cream will likely be ____ the demand for dessert
more price elastic than
when _____ substitutes exist, a firm in an imperfectly competitive industry has _____ power to raise price
more, less
the _____ broadly a market is defined; the more difficult it becomes to find ______
more, substitutes
an industry that realizes such large economies of scale introducing its product that single-firm production of that good or service is most efficient is called a(n) _____ monopoly
natural
it would be inefficient to break up a _____ monopoly
natural
when a firm's LRAC curve is still declining when it intersects the market demand curve, we call the the firm a(n)
natural monopolist
for a monopolist, if total revenue increases as output decreases, then the marginal revenue is
negative
_____ present(s) a barrier to entry in the DVD player market
network externalities
a monopolist sets both price and quantity simultaneously, and the amount of output that it supplies depends
on both its marginal cost curve and the demand curve that it faces
monopolists differ from perfectly competitive firms
on the demand side of the profit equation alone
for monopoly, the marginal revenue curve has ____ point(s) in common with the firm's linear demand curve
one
a non-discriminating monopolist's price equals its marginal revenue only when
output is zero
DeBeers' diamond monopoly results from
ownership of a scare factor of production
in 1890 the Unite States Congress
passed the Sherman Antitrust Act
slow the flow of benefits from research and development to consumers
patents
a rule enunciated by the courts declaring a particular action or outcome to be an intrinsic violation antitrust law is called
per se rule
which of the following statements regarding perfect price discrimination is FALSE
perfect price discrimination yields the same market price and output result as perfect competition
in the short run, when a monopolist incurs a loss it will
produce as long as total revenue is sufficient to cover variable costs
the exclusive gift company has a monopoly over the sale of gold hula hoops. this company is currently pricing and producing where marginal revenue is equal to marginal cost. it is selling 50 gold hula hoops at a price of $5000 each. total costs for the company are $300,000 of which fixed costs are $100,000. you are hired as an economic consultant to this company. you should advise this monopolist to
produce in the short run but exit the industry in the long run if conditions do not change
the classic example of natural monopolies over the years have been
public utilities
market power refers to a firm's ability to
raise price without losing all sales of its product
AARP lobbies aggressively for the interests of retired persons. for example, AARP has been instrumental in obtaining medical benefits for senior citizens. such behavior on the part of AARP is called ______
rent-seeking behavior
there is a bill pending before the Kansas state legislature that would prohibit private companies from selling health insurance and would make the state the single payer of health care bills. private health insurance companies that have made above normal profits have spent large sums of money trying to prevent this bill from being passed into law. this is an example of
rent-seeking behavior
imperfect competition
results in less efficient market outcomes
in imperfectly competitive markets,
some competition may exist in the markets
a coffee manufacturer raised the price of its coffee by 10%, and the quantity demanded of its coffee falls by only 12%. the firm has
some market power
the biggest problem with the Sherman Antitrust Act of 1890 was that it was unclear what
specific acts were to be considered "restraints of trade"
_____ is (are) protected by barriers to entry, specifically ______
state lotteries; government rules
which of the following made tying contracts illegal and banned price discrimination with the intent to monopolize
the Clayton Act
which of the following declares monopoly and trade restraints illegal
the Sherman Act
if a monopolist earns positive economic profits in the long run,
the monopolist will not change its behavior
for a monopolist to sell more units of output
the price must be reduced
in monopoly, the market demand curve is
the same as the demand curve facing the firm
why do price discriminating firms often offer lower prices to children and elderly?
they have a lower willingness to pay than other consumers
when the demand curve is a downward sloping straight line, the quantity at which the demand curve intersects the horizontal (quantity) axis is _____ the quantity at which the marginal revenue curve intersects the horizontal (quantity) axis
twice
when the demand curve is a downward sloping straight line, the slope of the marginal revenue curve is
twice a steep as the demand curve
a non-discriminating monopolist maximizes total revenue when its marginal revenue is ______
zero
