Microeconomics Test 4
if a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3) then marginal revenue of selling th eighth unit is equal to
$-4
Which of the following are necessary characteristics of a monopoly? (i)the firm is the sole seller of its product (ii) the firms product does not have close substitutes (iii) the firm generates a large economic profit (iv) the firm is located in a small geographic area
(i) and (ii)
which of the following statements is correct for a monopolist? (i) the firm maximizes profits by equating marginal revenue with marginal cost (ii) the firm maximizes profits by equating with marginal cost (iii) demand equals marginal revenue (iv) average revenue equals price
(i) and (iv)
monopolistically competitive markets differ from perfectly competitive markets due to (i) the number of sellers (ii) the barriers to entry (iii) the product differentiation among the sellers
(iii)
when a monopolist decreases the price of its good consumers
buy more
the prisoner's dilemma provides the insights into the
difficulty of maintaining cooperation
monopoly firms have what kind of slopes?
downward sloping demand curves, and they can sell only a limited quantity of output at each price
True or false: monopolists typically produce larger quantities of output than competitive firms
false
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
when a natural monopoly exists it is
never cost effective for two or more private firms to produce the product
when oligopoly firms collude
they are behaving as a cartel
monopolies use their market power to
charge a price that is higher than marginal cost
a similarity between monopoly and monopolistic competition is that in both market structures
sellers are price makers rather than price takers
when oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market we have
a nash equilibrium
patent and copyright laws encourage
creative activity
one way in which monopolistic competition differs from oligopoly is that
in oligopoly markets there are only a few sellers
sizable economic profits can persist over time under monopoly if the monopolist
is protected by barriers to entry
a monopolistically competitie industry is characterized by
many firms selling products that are similar but not identical
if a profit maximizing monopolist faces a downward sloping market demand curve its
marginal revenue is less than the price of the product