Chapter 14 and 15
Which of the following is consistent with current U.S. law on monopolies?
Gaining monopoly or market power through specified exclusionary business practices is illegal.
As the quantity sold rises, how does marginal revenue compare to price for a company with market power?
Marginal revenue falls further and further below price.
Which of the following conditions is present for all sellers in a perfectly competitive market?
all sellers are selling identical products
A characteristic of perfect competition that is not present in any other market structure is that there
are many sellers that produce identical products
How does marginal revenue compare to price for a seller with market power?
beyond the first units sold, marginal revenue is below price
Which of the following is NOT a characteristic of perfectly competitive markets?
each seller sets its own price
Patents have a positive impact of _____ and the negative impact of _____.
encouraging research; creating a monopoly
Based on the profit maximization rule for Sellers, how does a manager set price and quantity? If the company has no market power, the marginal cost _____ price. If the company has market power, the marginal cost is _____ than price.
equals; less
For a seller with market power, as the number of units sold increases, marginal revenue
falls further and further below the price
Perfectly competitive markets are rare because most
goods are not identical and most markets have dominant firms
Companies with market power face a trade-off between
having a higher profit margin and selling a larger quantity.
The degree to which a market provides socially optimal outcomes depends on the degree to which it
is closer to the competition outcome than market power outcomes.
As the quantity sold rises for a seller in imperfect competition, what happens to the difference between price and marginal revenue?
it gets larger and larger
The change in total revenue from selling one additional unit of output is the
marginal revenue
A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?
monopoly
A product market has only one seller, and that seller has a high level of market power. There are no close substitutes for the product. What type of market is this?
monopoly
A product market has many buyers and many sellers, and its largest company produces 1% of the market output. In addition, all sellers produce identical goods. What market structure is consistent with this description?
perfect competition
Which of the following is a characteristic of a perfectly competitive market?
sellers are price takers
Patents on drugs to treat AIDS were removed in South Africa. How would the market for these drugs have been different if there had never been patents on drugs?
the drugs would not have been developed
Which of the following conditions is NOT present in perfect competition?
the product price varies across the companies in the market
Which of the following is a characteristic of monopoly that is not present in other market structures?
there is only one seller
When a single business can service the entire market demand at a lower cost than several smaller businesses, the market is
a natural monopoly
Which of the following markets is an example of a perfectly competitive market?
Share's of Mcdonald's stock
Which of the following statements about market power is TRUE?
The extent of market power held by a seller can vary along a spectrum from none to a high level.
