smartbook chapter 12

Which of the following does the monopolist not have?

A supply curve

Why might a monopolist accept a less-than-maximum per-unit profit?

Additional sales more than compensate for the lower profit per unit.

What is the term for factors that prohibit firms from entering an industry?

Barriers to entry

The government broke up Standard Oil in 1911 due to its breach of

Blank 1: antitrust or anti-trust

A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the BLANK cost curve

Blank 1: average Blank 2: total

A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the BLANK cost curve.

Blank 1: average Blank 2: total

The practice of charging different prices to different buyers for a specific product is known as price

Blank 1: discrimination

As an example of price discrimination, airlines charge higher fares to business travelers whose demand for travel is

Blank 1: inelastic Blank 2: elastic

The change in total revenue associated with a one-unit change in output is called BLANK monopoly

Blank 1: marginal

It is difficult to start up a major league sports team because existing professional teams have contracts with the best players and long-term leases on stadiums. Which barrier to entry does this illustrate?

Control of a key resource

What term is used to describe declining average total costs with added firm size?

Economies of scale

How does a monopoly generally transfer income?

From consumers to the owners of the monopoly

______ create(s) legal barriers to entry.

Government

Which of the following are characteristics of public utilities?

Government owned or regulated Monopolies or near monopolies

If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which ____

MR = MC

Which of the following are conditions necessary for price discrimination?

No resale Monopoly power Market segregation

If the objective of government is to achieve allocative efficiency, what kind of price should government establish for the monopolist?

One that is equal to its marginal cost.

Which of the following is considered a barrier to entry into an industry?

Ownership of essential property

What is the term used to refer to charging different prices to different buyers of a specific product?

Price discrimination

Which of the following are entry barriers created by monopolists?

Price reductions Increased advertising

BLANK utilities are government owned or regulated.

Public

Which of the following are potential solutions to the economic losses incurred by a regulated monopoly caused by socially optimal pricing?

Public subsidies Price discrimination

Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?

Pure monopoly

Two solutions to the economic losses caused by socially optimal pricing are providing public BLANK and condoning price discrimination.

Subsidy

Which of the following are assumptions made in the model of pure monopoly?

The firm is a single-price monopolist and charges the same price for all units of output. No unit of government regulates the firm. Patents, economies of scale, and resource ownership secure the firm's monopoly.

If a firm is found guilty of achieving a monopoly through anticompetitive actions, then which of the following may occur?

The firm may be broken into two or more competing firms. The firm may be expressly prohibited from engaging in certain business activities.

Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?

There are no new entrants to increase supply, drive down price, and eliminate profit.

How much will a profit-seeking monopolist produce if producing is preferable to shutting down?

Up to the output at which marginal revenue equals marginal cost.

When a firm produces a specific output level at a higher cost than the necessary cost for that level of output, it is called ______.

X-inefficiency

A monopolist will never choose a price-quantity combination where price reductions cause:

a decrease in total revenue

If the objective of government is to achieve BLANK efficiency, it should establish a legal price for the monopolist that is equal to its marginal cost.

ank 1: allocative

he monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient.

average total cost

A monopolist does not have a supply curve because:

b) it does not equate price with marginal cost c) there is no single, unique price associated with each level of output

Economies of scale refer to ______ average total costs with added firm size.

declining

With a natural monopoly the demand curve intersects the long-run average total cost curve where the long-run average total cost curve is still

declining

Price makers are firms with:

downward-sloping demand curves

The demand curve intersects the natural monopolist's long-run average total cost curve at a point where long-run average total costs are still falling, due to ______.

economies of scale

The monopolist wants a price-quantity combination to fall in the _____ section of its demand curve, where a lower price means _____ total revenue.

elastic; greater

rue or false: Price discrimination is not practiced very often in the US economy. True false question.

f

X-inefficiency occurs when a firm operates at a cost that is

higher

Government creates BLANK barriers to entry.

legal

When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially ______.

levies a "private tax" on consumers

Firms with downward-sloping product demand curves are called price

markers

A(n) ______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.

monopoly

Patents, economies of scale, and resource ownership are all assumptions of the pure BLANK model

monopoly

Slashing prices is an example of an entry barrier created by a(n)

monopoly

Patents, economies of scale, and resource ownership are all assumptions of the pure BLANK model

monpoly

In general, as shown in the figure, a fair return price will lead to ______ and a socially optimal price will lead to ______.

normal profit; economic loss

The strongest barriers to entry effectively block all ______.

potential competition

Market segregation must exist in order for a monopolist to ______.

price discriminate

A regulated monopoly is likely to suffer losses when ______.

price is set to marginal cost (P = MC) price is set to achieve the most efficient allocation of resources

A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___.

substitutes

Marginal revenue is the change in ______ revenue associated with a single-unit change in output.

total

The monopolist seeks maximum BLANK profit, not maximum unit profit.

total