Chapter 12 Econ exam 3
Marginal revenue curve lies below the demand curve b/c any reduction in price applies to all units sold
for an imperfectly competitve firm
the firm would not be maximizing profits
if a monopolist were to produce in the inelastic segment of its demand curve?
natural monopoly
long-run average costs decline continuously through the range of demand
less elastic than that faced by a single purely competitive firm
the demand curve faced by a pure monopolist
increase profits by increasing price
when a firm is on the inelastic segment of its demand curve, it can
ill never produce in the output range where demand is inelastic
A nondiscriminating profit maximizing monopolist
price of the 7th unit is $11
A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5, then?
charge a higher price
Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. if the monopolist is seeking maximum profits, it should
must lower price to increase sales
Assuming no change in product demand, a pure monopolist
basis for monopoly
Barriers to entering an industry?
price must be lowered to sell more output
Because the monopolist's demand curve is downsloping?
Purely monopolistic
Firm that faces a downsloping demand curve?
When a monopolist lowers price to sell more output, the lower price applies to all units sold
For a pure monopolist marginal revenue is less than price because?
Marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing
For a pure monopolist the relationship between total revenue and marginal revenue is that?
Marginal revenue will be positive but declining
If a pure monopolist is operating in a range of output where demand is elastic?
natural monopoly
Large minimum efficient scale of plant combined with limited market demand may lead to?
Barriers to entry
Pure monopolists may obtain economic profits in the long run because of ?
Pure Monopoly
Single firm producing a product for which there are no close substitutes?
total revenue is increasing
Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that?
Becomes negative when output increases beyond some particular level
The marginal revenue curve for a monopolist
less elastic than a purely competitive firm's demand curve
The nondiscriminating monopolist's demand curve?
Industry demand curve
The nondiscriminating pure monopolist's demand curve?
in the price range where marginal revenue is positive
The pure monopolist's demand curve is relatively elastic
product price and average revenue
The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist's demand curve measures
Barriers to entry
What do economies of scale, the ownership of essential raw materials, and patents have in common?
Only bank in a small town
Which of the following best approximates a pure monopoly?
it is the same as the market demand curve
Which of the following is characteristic of a pure monopolist's demand curve
X-efficiency
Which of the following is not a barrier to entry?
price exceeds marginal revenue at all outputs greater than 1
With respect to the pure monopolists demand curve it can be said that
inelastic segment of its demand curve bc it can increase total revenue and reduce total cost by increasing price
a pure monopolist should never produce in the