Chapter 24 Assignment

The better the substitutes for a monopoly firm's product, the

greater the price elasticity of demand.

A natural monopoly

has economies of scale over a very large range of output, has decreasing long run marginal costs over a very large range of output, has decreasing long run total costs over a very large range of output.(All of the above.)

The demand curve faced by the monopolist

has greater price elasticity of demand as close substitutes for the monopoly product are developed.

A monopolist is defined as

A single supplier of a good or service for which there is no close substitute.

Evaluate the following statement. A profit maximizing will never operate in a price range in which price elasticity of demand is inelastic.

True

If a public utility company is considered a monopolist, which of the following is not true?

The company's demand curve and supply curve are upward sloping.

A firm can be the sole supplier of a good and still not be considered a monopoly if

There are very close substitutes for the good.

Why is there a social cost of monopoly?

Too few sources are being used in a monopoly.

A monopoly is socially inefficient because it

charges a price greater than marginal cost.

As opposed to other types of monopoly, a natural monopoly typically owes its monopoly position to

economies of scale.

The marginal revenue curve for a perfectly competitive firm is ___ while the marginal revenue curve of the monopolist is ___.

horizontal, downward sloping

In a monopoly market structure, the firm (the monopolist)

is the whole industry.

If we were to compare the amount produced by firms in a competitive industry to the output produced by a monopoly, the monopolist will produce

on the elastic portion of the demand curve and charge a higher price.

Monopoly producers are faced with

no competitive producers of the same product.

Charging different prices for similar products that have different marginal costs is called

price differentiation.

For a monopoly,

price equals average revenue only.

As compared to a perfectly competitive industry, a monopoly industry with identical cost curves will

produce less and set a higher price.