CH 8 Smart Books

Which of the following are reasons for a monopoly's loss of economic profit?

Change in tastes reducing demand; upward-shifting cost curves caused. by escalating resource prices

What is the difference in demand between a purely competitive seller and a monopolist?

Demand for the purely competitive seller is perfectly elastic, and demand for the monopolist is not

What is true of total revenue when marginal revenue is positive?

It is increasing

Who among the following are considered to be imperfect competitors?

Monopolistic competitors, pure monopolists, oligopolists

___ power achieved through patents may be self- sustaining because the profit from one patent can finance the research require to develop new patentable products.

Monopoly

___ effects exist if the value of a product to each user increases as the total number of users increase

Network

Total ___ is found by multiplying per-unit profit by the profit- maximizing output

economic profit

A firm's long-run average total costs may decline over a wide range of output due to ___ of scale

economies

Computer operating software, commercial aircraft, and basic steel are examples of industries in which ___ limit the Tony of new firms.

economies of scale

What is another name for deadweight loss?

efficiency loss

Barriers to ___ reduce the likelihood or prohibit firms from entering an industry

entry

Marginal revenue for the purely competitive seller is constant and ___ price, whereases for the pure monopolist it is not constant and reflects necessity of ___ the price to sell more output.

equal to; lowering

Which of the following are characteristics of public utilities?

government owned or regulated; monopolies or near monopolies

For a pure monopolist, total revenue ___.

increases at a diminishing rate

The economic profit per unit is the amount that the product price ___ the average total cost at the profit max output.

is greater than

For a monopolist, marginal revenue is

is less than the price

Government creates ___ barriers to entry

legal

With a fixed downward-sloping demand curve, the pure monopolist can only increase sales by charging a ___ price

lower

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

Entry is completely blocked to competitors in the case of a pure ______

monopoly

Patents, economies of scale, and resource ownership are all assumptions of the pure ___ model

monopoly

When the market demand curve crosses the long-run average total cost curve where average total costs are declining, it is called a/n

natural monopoly

A ___- monopoly occurs when a single firm has the bulk of sales in a specific market

near

Marginal revenue is ___ when total revenue is diminishing

negative

Which of the following is considered a barrier to entry into an industry?

ownership of essential property

Imperfect competitors, by changing market supply, can influence product ___

price

Monopolist use economies of scale to block the entry of new firms into an industry by reducing___ so that other firms cannot compete

prices

Which of the following is an example of geographic monopoly?

A small town with one airport, restaurant, or railroad

Economies of scale refer to ___ average total costs with aded firm size

declining

Which of the following are reasons monopoly is not widespread in the US

Barriers to entry are seldom completely successful; patents eventually expire.

How does a monopolist change the price of its product?

By changing the quantity of the product it produces

What is the shape of the product demand curve for a pure monopolist?

Downward sloping

What term is used to describe declining average total costs with added firm size?

Economies of scale

Which of the following steps are necessary to determine the profit- maximizing level of output, profit- maximizing price, and economic profit in pure monopoly?

Employ the profit- maximizing rule of MR=MC; Identify the profit- maximizing price and output by finding the price/ output combination at MR=MC

Which of the following two terms are synonymous in a pure monopoly?

Firm and industry

Which of the following are assumptions make in the model of pure monopoly?

Patents, economies of scale and resource ownership secure the firm's monopoly; no unit of government regulates the firm; the firm is a single-price monopolist and charges the same price for all units of output.

What are the two legal barriers to entry created by the government?

Patents; Licenses

Monopolist may create an entry barrier when confronted with a new entrant into the industry by:

Raising resource prices; reducing product price; incurring ad costs

___ and development leads to most patentable inventions and products

Research

Which of the following are main characteristics of a pure monopoly?

Single seller; blocked entry; price maker; no close substitutes

Which of the following lead to decline in the long-run average total costs?

Spreading of product development costs; network effects; greater use of specialized inputs

What aspect of the market defines the crucial difference between a pure monopolist and a purely competitive seller?

The demand curve

In a pure monopoly, marginal revenue is less than the price for every unit of output expect which one?

The first

Which of the following re reasons that a monopolist is considered a price maker?

The monopolist controls the total quantity supplied; the monopolist exerts control over the price

Which of the following are reasons that a monopolist is considered a price maker?

The monopolist controls the total quantity supplied; the monopolist exerts control over the price.

Why is a pure monopolist able to maintain an economic profit int he long run?

There are no new entrants to increase supply, drive down price, and eliminate profit.

Patents provide the inventor with a monopoly position for what length of time?

Twenty years

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

Monopoly yields neither productive nor _________ efficiency.

allocative

What does the characteristics of a monopoly called "blocked entry" refer to?

barriers that keep potential competitors from entering the industry

Economic, technological, legal, pricing and advertising strategies are all types of ___

barriers to entry

Efficiency loss occurs when the sum of___ and ___ is less than the maximum

consumer surplus; producer surplus

Simultaneous ____________ is a product's ability to satisfy a large number of consumers at the same time.

consumption

Patents and patent laws aim to protect the inventor from __________.

rivals

A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___

substitutes

Comparing total revenue and total cost at each possible level of production and choosing the output with the greatest possible difference is another way to determine:

the profit- maximizing output

A monopolist will never choose a price-quantity combination that causes a decrease in ___ revenue.

total