ECN exam 2- monopoly

Which of the following is always true for monopolies

MR < P

What is the profit maximization condition for a monopolist

MR = MC

In a graph showing a straight-line market demand curve the marginal revenue curve is

a straight line that begins at the same point as the demand curve on the y-axis but with twice the slope

A firm would prefer that its product demand curve is

inelastic

The more a monopolist can raise its price above marginal cost, the more

inelastic the demand curve

Modern theories of economic growth emphasize that monopolies:

may sometimes be necessary for economic growth

When comparing a monopoly with a competitive industry

monopoly quantity will be lower, and monopoly price will be higher, than that of a competitive firm

When a pharmaceutical company discovers a new drug, patent law gives the monopoly

sole ownership of the right to sell the drug for a limited number of years

Monopoly power is best described as

the ability to earn economic profits without causing new firms to enter the market

In a monopoly market

the lure of above normal profits may give a firm an incentive to develop new products and technologies