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
