micro ch 16 homework

legal monopoly

legal prohibitions against competition, such as regulated monopolies and intellectual property protection. ex- public franchise, gov't license, patent or copyright.

A monopoly arises when there are​ ______.

no close substitutes and a barrier to entry

Which of the following firms is most likely to be a​ monopoly? A. local​ fast-food restaurant B. local distributor of electricity C. shoe store D. computer store

B. local distributor of electricity

A monopoly that can perfectly price discriminate has a marginal revenue curve that is steeper than the demand curve for the good that the monopoly produces.

False

Price discrimination is possible when a firm is able to​ ______.

identify and separate different types of buyers, and sell a product that cannot be resold.

A​ profit-maximizing monopoly never produces output in the​ _______ range of its​ _______ curve.

inelastic; demand

A firm that experiences economies of scale even when it produces the quantity that meets the entire market demand is an example of a natural monopoly.

True

If a monopoly can perfectly price​ discriminate, it produces no deadweight loss and is more efficient than a​ single-price monopoly.

True

When natural or legal forces work to protect a firm from potential​ competitors, the market is said to have​ _______.

a barrier to entry

single-price monopoly

a firm that must sell each unit of its output for the same price to all its customers

natural monopoly

a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

A legal monopoly is a market in which​ _____ by the granting of a public​ franchise, government​ license, patent, or copyright.

competition and entry are restricted

Perfect price discrimination is the price discrimination that extracts the entire​ _____ surplus by charging the​ _____ price that​ _____ are willing to​ _____ for each unit.

consumer; lowest; consumers; pay

A single​ firm, protected by a barrier to​ entry, produces a personal service that has no close substitutes. This is an example of​ ______

either a natural monopoly or legal monopoly that can price discriminate

A monopoly can price discriminate only if​ ______.

it sells goods and services that cannot be resold.

A monopoly can price discriminate between two groups of consumers if​ _______ across the two groups.

the average willingness to pay differs

A natural monopoly is a monopoly that arises because one firm can meet the entire market demand at a lower average​ _____ cost than two or more firms could.

total

Is the US postal service a legal monopoly?

yes