Pure Monopoly (Pg. 283-298)

Marginal revenue is the:

Extra or additional revenue associated with the production of an additional unit of output.

There are important expectations in which monopolies are actually encouraged to incentivize positive outcomes.

True

Which of the following are characteristics of a perfectly competitive market?

-Large number of sellers -No control over price

Which of the following are characteristics of a contestable firm?

-No real barriers to entry -A single firm

A monopoly will charge consumers the price that they're willing and able to pay for the amount of output available, which is shown along the ___ cruve.

A monopoly will charge consumers the price that they're willing and able to pay for the amount of output available, which is shown along the demand cruve.

A person who invented the ability to time travel will likely operate as a, ___ because there would be no substitutes and entering that market would be difficult for anyone else.

A person who invented the ability to time travel will likely operate as a, monopoly because there would be no substitutes and entering that market would be difficult for anyone else.

And a pure ___ has the overall demand to itself, because it is the only seller in a market.

And a pure monopoly has the overall demand to itself, because it is the only seller in a market

If selling another unit of output increases revenue, demand is ___.

If selling another unit of output increases revenue, demand is elastic.

If selling another unit of output increases revenue, marginal revenue is ___.

If selling another unit of output increases revenue, marginal revenue is positive.

If the marginal revenue associated with selling one more unit of output is positive, the demand is:

Elastic, because this would increase total revenue.

As the market price decreases, all else held constant, a profit maximizing firm will ___ its production.

As the market price decreases, all else held constant, a profit maximizing firm will lower its production

Monopolies do not achieve ___ efficiency, because they do not produce in such a way that their price equals marginal cost.

Monopolies do not achieve allocative efficiency, because they do not produce in such a way that their price equals marginal cost.

Total revenue equals:

Price times quantity.

The efficiency loss resulting from a monopolistic market is called a ___ loss.

The efficiency loss resulting from a monopolistic market is called a deadweight loss

The level of profit that occurs when total revenue is equal to total cost is known as ___ profit.

The level of profit that occurs when total revenue is equal to total cost is known as normal profit.

Productive efficiency is:

Using the fewest resources possible to produce a good or a service.

When a firm has a loss, the total ___ is less than the total ___.

When a firm has a loss, the total revenue is less than the total cost

Monopoly is a market structure characterized by:

-The firm having significant price control. -A good or service for which there are no close substitutes. -A market with barriers to entry. -A single seller.

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.