Monopoly
The hiring of resources and the use of technology in a competitive market is reflected in a monopolist's
Cost data
Which of theses words in parentheses (perfect, imperfect) correctly completes the following sentence: Pure monopoly as a market structure is a type of competition.
Imperfect
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially levies a "private tax" on consumers. The owners of the monopoly benefit from these transactions at the expense of the consumer. This is an example of a monopoly contributing to
Income inequality
Which of the following represents a market structure of imperfect competition?
Pure monopoly
A firm's long-run average total costs may decline over a wide range of output due to _____ of scale.
economies
What term is used to describe declining average total costs with added firm size?
economies of scale
Which of the following two terms are synonymous in a pure monopoly?
firm/industry
A price ___ will use its power over product quantity and price whenever it is advantageous to do so.
maker
A price _____ will use its power over product quantity and price whenever it is advantageous to do so.
maker
Firms with downward-sloping product demand curves are called price _____.
makers
The change in total revenue is called _____ revenue.
marginal
Barriers to (entry/exit) reduce the likelihood or prohibit firms from entering an industry.
Entry
True or false: Government licensing is not a barrier to entry.
F
True or false: Network effects exist if the value of a product to each user decreases as the total number of users increases.
F
Which of the following are characteristics of public utilities?
Government owned or regulated Monopolies or near monopolies
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 statement concerning monopolists and a product's price is true?
A monopolist can change its product's price by changing the quantity supplied of the product.
A monopolist will not seek the highest price possible because
A monopolist seeks maximum profit not maximum price
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which _______.
B. MR=MC
How does a monopolist change the price of its product?
By changing the quantity of the product it produces.
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 is considered a barrier to entry into an industry?
Ownership of essential property
Which of the following are the main characteristics of a pure monopoly?
Presence of a single seller Control over the price Unavailability of close substitutes for its products Blocked entry for other firms
Which of the following are entry barriers created by monopolists?
Price reductions Increased advertising
A monopolist will use its power over ______ whenever it is advantageous to the monopoly to do so.
Product output and price
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
A monopolist will never choose a price-quantity combination where price reductions cause:
a decrease in total revenue
Which of the following are assumptions made in the model of pure monopoly?
a) Patents, economies of scale, and resource ownership secure the firm's monopoly c) The firm is a single-price monopolist; it changes the same price for all units of output e) No unit of government regulates the firm
Why do costs differ between a purely competitive firm and a pure monopoly?
a) The very long-run perspective allows for technological advance. b) Economies of scale e) A factor called "X-inefficiency." f) The need for monopoly-preserving expenditures.
"Single seller" refers to:
a) a sole producer of a specific good or service
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the _____ _____ cost curve.
average total
The monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient.
average total cost
Two legal ___ to entry are patents and licenses
barriers
What is the term for factors that prohibit firms from entering an industry?
barriers to entry
Which term describes a sole producer of a specific good or service?
c) Single seller
Patents provide the inventor with a monopoly position for what length of time?
c) Twenty years
Which of the following describes what "no close substitutes" means as it relates to consumers and a pure monopoly?
d) A consumer must either buy the monopolized product or do without it entirely.
Which of the following combine, in differing degrees, characteristics of pure competition and pure monopoly?
d. monopolistic competition and oligopoly
Economies of scale refer to ______ average total costs with added firm size.
declining
Price makers are firms with:
downward sloping demand curves
______ create(s) legal barriers to entry.
government
The firm and ______ are synonymous in pure monopoly.
industry
Government creates _____ barriers to entry.
legal
What are the two legal barriers to entry created by the government?
licenses and patents
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
Barriers to entry contribute to _____ status.
monopoly
Patents, economies of scale, and resource ownership are all assumptions of the pure _____ model.
monopoly
Slashing prices is an example of an entry barrier created by a(n) _____.
monopoly
The main characteristics of a pure are a single seller, no close substitutes, a price maker, blocked entry, and non-price competition.
monopoly
Which characteristic of pure monopoly requires a consumer to buy the monopolized product or do without it entirely?
no close substitutes
Monopolistic competition and _____ combine, in differing degrees, characteristics of pure competition and pure monopoly.
oligopoly
A (one word) is the exclusive right of an inventor to use, or allow another to use, her or his invention.
patent
The exclusive right of an inventor to use, or to allow another to use, her or his invention is called:
patent
Which of the following is considered a barrier to entry protecting an inventor from its rivals?
patents
For the pure monopolist, there is no relationship between _____ and quantity supplied and therefore no supply curve.
price
_____ utilities are government owned or regulated
public
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
What leads to most patentable inventions and products?
research and development
Patents and patent laws aim to protect the inventor from __________.
rivals
What is the term used to refer to a product's ability to satisfy a large number of consumers at the same time?
simultaneous consumption
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ______.
substitutes
Which curve does a monopolist not have because there is no unique relationship between price and quantity supplied?
supply curve
A natural monopoly's economies of scale refers to one firm's ability to achieve the lowest long-run average total cost, also known as
the minimum efficient scale at a high level of output.
______ of essential property is a barrier to entry into an industry.
to control
A monopolist will never choose a price-quantity combination that causes a decrease in _____ revenue
total
Marginal revenue is the change in
total revenue