Pure Monopoly

When regulators require a monopoly to charge the normal profit price: A. the monopoly has zero economic profit B. the monopoly has little incentive to reduce its costs of production C. the monopoly is guaranteed an economic profit D. the monopoly will shut down

A, B

Which of the following are characteristics of a perfectly competitive market? A.Large number of sellers B.Differentiated products C.No controls over price D.barriers to entry into the market

A, C

The pure monopoly extracts all surplus from consumers, yielding higher profits than any other pricing method when it employs which of the following? A. Perfect price discrimination B. Perfectly competitive pricing C. Personal pricing D. Open Tier Price discrimination E.First degree Price discrimination

A, C, E

By charging consumers the highest price they are willing and able to pay, the pure monopoly, A. yields higher profits than any other pricing method available to the firm. B. yields lower profits than any other pricing method available to the firm C. extracts no surplus from consumers D. extracts all surplus from consumers

A, D

Which of the following are characteristics of a contestable firm? A. No real barriers to entry B. A single firm C. No control over product prices D. Homogeneous products across firms

A,B

The difference between the maximum price consumers are willing and able to pay for a good or service and the price they actually pay is _____ surplus.

consumer

Total Revenue minus the implicit costs and explicit costs of production is _________ profit.

economic

The regulated competitive price is allocatively _______.

efficient

A perfectly competitive market is characterized by a large number of sellers producing and taking the market price as given, with easy _______ and _______into the market.

entry, exit

Profit maximization implies that monopoly firms should expand production up to the point where the marginal revenue _______ the marginal cost.

equals

The demand curve faced by a perfectly competitive firm is _____________.

horizontal

A business will charge a ________ price to the group with the relatively more elastic demand and a _______ price to the group with a relatively more inelastic demand.

lower, higher

A pure monopoly is a price ______ engaging in non-price competition.

maker

When a pure monopoly practices first degree price discrimination, the demand curve becomes the ________ _________ curve.

marginal revenue

A pure ______ is the only seller in the market.

monopoly

To affect the quantity demanded by consumers, as the only supplier in the market, a __________ must change the ______ of its products, which also affects the Total revenue and marginal revenue.

monopoly, price

A ___profit simply indicates that the firm is doing just as well as it would have if it had chosen to use its resources to produce a different product or to compete in a different industry.

normal

An argument can be made that the economic profits generated by pure monopolies have two positive impacts on dynamic growth:

potential economic profits give firms and entrepreneurs incentives to develop new production processes and products; When a monopoly earns an economic profit, it has the financial capital to develop more innovations.

The practice of selling the same good or service to different consumers at different prices is called

price discrimination

Total Revenue equals:

price times quantity

If you live in a town or city that has a single provider of electricity or natural gas, that natural monopoly provider is most likely a ________ monopoly.

regulated

the price that occurs when the demand and the marginal cost curves cross is called the ______ __________ ___________.

regulated competitive price

For a monopoly, the marginal revenue is below the demand curve because:

the monopoly has to lower the price on all units to sell more.

Productive efficiency is:

using the fewest resources possible to produce a good or service

_______ markets maximize the availability of goods and services and the consumers' ability to buy them

Competitive

There are important exceptions in which monopolies are actually encouraged to incentivize positive outcomes. T or F

True

When D=MC, it means that the pure monopoly is __________ ____________.

allocatively efficient

Second degree price discrimination generates the best outcome for which of the following market structures? A. Oligopoly B. Perfect Competition C. Monopoly D. Monopolistic Competition

B.

__________ = TR - TC

Profit