chapter 12 micro

true

A purely competitive firm is a price taker, but a monopolist is a price maker

True

The pure monopolist produces a product for which there are no close substitutions

Economies of sale

a barrier to entry that significantly contributes to the establishment of a monopoly would be

true

a fair return price for a regulated utility would have price set to equal average total cost.

true

a monopolist may create an entry barrier by price cutting or substantially increasing the advertising of its product

true

a monopolist seeks maximum total profits, not maximum unit profits

false

a monopolist will charge the highest price it can get

price equals $72 marginal revenue equals -$18

at which combination of price and marginal revenue is the price elasticity of demand less than 1

true

in pure monopoly there are strong barriers to entry

true

price discrimination occurs when a given product is sold at more than one price and these price differences are not justified by cost differences.

prices ; cost of

price discrimination occurs whenever a product is sold at different ___ and these differences are not equal to the differences in the ____ producing the product.

false

pure monopoly guarantees economic profits

false

rent seeking expenditures that monopolists make to obtain or maintain monopoly privilege have no effect on the firms costs

will seek to maximize total profits

the analysis of monopoly indicates that the monopolists

public utilities ;

the closest example of monopoly would be government-regulated ____ that provide water, electricity, or natural gas.

Downsloping

the demand curve for the pure monopolist

true

the weaker the barriers to entry into an industry, the more competition there will be in the industry, other things equal.

highest ; per unit

two common misconceptions about pure monopoly are that it charges the ___ price as possible and seeks the maximum ____ profit.

price discrimination

1. the seller has some monopoly power 2. the seller is able to separate buyers into groups that have different elstcities of demand for the product ; 3. the original buyers cannot resale the product

characteristic of a pure monopoly

No close substitutes for the product exists and there is one seller

False

The supply curve for a monopolist is the upsloping portion of the marginal cost curve that lies above the average variable cost.

80 ; sole

There are also near monopolies such as private businesses that might account for ____ percent of a particular market, or businesses in a geographic region that are the _____ suppliers of a good or service.

true

a monopolist will avoid setting a price in the inelastic segment of the demand curve and prefer to set the price in the elastic segment.

simultaneous consumption

a products stability ability to satisfy a large number of consumers at the sane time is called

decreasing price and increasing output

at present output a monopolist determines that its marginal cost is $18 and its marginal revenue is $21. the monopolist will maximize profits or minimize losses by

substitutes ; blocked

pure monopoly is an industry in which a single firm is the sole producer of a product for which there are no close ____ and into which entry in the long run is effectively ____

down sloping ; less ; decrease

the demand schedule confronting the pure monopolist is ____. this means that marginal revenue is _____ than average revenue or price and that both marginal revenue and average revenue _____ as output increases.

fasle

the general view of economists is that pure monopoly is efficient because it has strong incentives to be technologically progressive

true

the monopolist can increase the sales of its product if it charges a lower price

Elastic one because total revenue will increase as price deadlines and output increases

the region of demand in which the monopolist will choose a price output combination will be the

does not exist

the supply curve for a pure monopolist

increase ; decrease ; horizontal ; down sloping ; elastic

when demand is price elastic, a decrease in price will ____ total revenue, but when demand is price inelastic, a decrease in price will ____ total revenue. The demand curve for the purely competitive firm is ____ but it is ____ for the monopolist. The profit maximizing monopolist will want to set price in the price ____ portion of its demand curve.

average revenue is greater than marginal cost

when the monopolist is maximizing total profits or minimizing losses

rent seeking behavior

which will tend to increase the inefficiencies of the monopoly producer

higher price and produce less output

with identical costs of production, a monopolist will charge a