Ch 12, 13, 14 optional hw

Which of the following describes what "no close substitutes" means as it relates to consumers and a pure monopoly?

A consumer must either buy the monopolized product or do without it entirely.

Which of the following are examples of geographic monopolies?

A small town served by one airline A small town with one restaurant A small town with one railroad

Which of the following describes why marginal revenue is less than price for monopolists?

Because the lower price of the extra unit of output also applies to all prior units of output

How does a monopolist change the price of its product?

By changing the quantity of the product it produces.

How can imperfect competitors influence price?

By changing the quantity they produce

With a fixed downward-sloping demand curve, how can a monopolist increase sales?

By charging a lower price

______ of essential property is a barrier to entry into an industry.

Control

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

Which are types of barriers to entry?

Economic Technological Legal

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

Economies of scale

True or false: For a pure monopolist, total revenue increases at an increasing rate.

False

True or false: Government licensing is not a barrier to entry.

False

Which of the following two terms are synonymous in a pure monopoly?

Firm and industry

______ create(s) legal barriers to entry.

Government

Which type of competitors can influence price through their own output decisions?

Imperfect

Which of the following are entry barriers created by monopolists?

Increased advertising Price reductions

When marginal revenue is negative, what is happening to total revenue?

It is diminishing.

What are the two legal barriers to entry created by the government?

Licenses Patents

How do economies of scale affect long-run average total costs for a firm?

Long-run average total costs decline over a wide range of output.

Which of the following can be a cause of extensive economies of scale?

Modern technology

Which of the following are characteristics of public utilities?

Monopolies or near monopolies Government owned or regulated

Which of the following is considered a barrier to entry protecting an inventor from its rivals?

Patents

The world's nations have agreed on a uniform patent length of how many years?

Patents Government licensing

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

Patents, economies of scale, and resource ownership secure the firm's 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.

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

________ and development leads to most patentable inventions and products. Listen to the complete question

Research

What leads to most patentable inventions and products?

Research and development

Why does an inventor need to have her or his invention protected from rivals?

Rivals will use the invention without having shared in the effort and expense of developing it.

Natural gas and electricity are both examples of which type of monopoly?

Standardized

What aspect of the market defines the crucial difference between a pure monopolist and a purely competitive seller?

The demand curve

In a pure monopoly, marginal revenue is less than price for every unit of output except which one?

The first

Why are efforts to enter such industries as commercial aircraft or household laundry equipment so rare?

The industries require economies of scale to be profitable, which is expensive and risky to establish.

Which of the following are reasons that a monopolist is considered a price maker?

The monopolist exerts control over the price. The monopolist controls the total quantity supplied.

Which of the following reasons explains why a professional sports team can be considered a monopoly?

They are the sole suppliers of specific services in a large geographic area.

Patents provide the inventor with a monopoly position for what length of time?

Twenty years

How common are examples of less pure forms of monopoly?

Very common

The exclusive right of an inventor to use, or to allow another to use, her or his invention is called:

a patent

Two legal _____ to entry are patents and licenses.

barriers

As an example of ______, the Federal Communications Commission licenses only so many radio and television stations in each geographic area.

barriers to entry

Marginal revenue is less than price at every unit of output because the monopolist

could have sold these prior units at a higher price if it had not produced and sold the extra output.

A natural monopoly occurs when the market demand curve crosses the long-run average total cost (ATC) curve where average total costs are still ______.

declining

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

declining

A pure monopolist must face a downward-sloping product _____ curve.

demand

The key difference between a pure monopolist and a purely competitive seller lies on the ______ side of the market.

demand

New firms have difficulty achieving the large size necessary to acquire economies of scale due to the ______.

difficulty of securing large amounts of financing

Price makers are firms with:

downward sloping demand curves

A firm's long-run average total costs may decline over a wide range of output due to ______ of scale

economies

Modern technology can be a cause of extensive ______.

economies of scale

The demand curve of the purely competitive seller is perfectly ______, whereas the demand curve of the monopolist is not.

elastic

The demand curve of the purely competitive seller is perfectly ______, whereas the demand curve of the monopolist is not. Listen to the complete question

elastic

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

For a pure monopolist, total revenue ______.

increases at a diminishing rate

In many large cities, the number of taxicabs allowed to operate is limited by the local government through the ______.

issuing of licenses

Government creates _____ , barriers to entry.

legal

With a fixed downward sloping demand curve, the pure monopolist can only increase sales by charging a ______ price.

lower

Monopolists use economies of scale to block the entry of new firms into an industry by ______.

lowering prices so that another firm cannot compete

Firms with downward-sloping product demand curves are called price ______

makers

The change in total revenue associated with a one-unit change in output is called ______ revenue.

marginal

In a pure monopoly, ______ is less than the price for every unit of output except the first.

marginal revenue

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

monopolists

When the market demand curve crosses the long-run average total cost curve where average total costs are declining, the firm is called a(n)

natural monopoly

A _____ -monopoly occurs when a single firm has the bulk of sales in a specific market.

near

Marginal revenue is _____ (positive/negative) when total revenue is diminishing.

negative

A _______ (one word) is the exclusive right of an inventor to use, or allow another to use, her or his invention. Listen to the complete question

patent

Monopolists use economies of scale to block the entry of new firms into an industry by reducing ______ so that other firms cannot compete.

prices

Monopolies that produce standardized products engage mainly in ______.

public relations advertising

In a purely competitive industry:

the demand curve for each individual firm is perfectly elastic, while that for the industry is downward-sloping

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

total