ECO/365 Pure Monopoly
All firms maximize ________ by producing the quantity of output at which the marginal revenue is equal to the marginal cost.
profit
___________ equals the total revenue minus the total cost.
profit
Which of the following are characteristics of a contestable firm?
-No real barriers to entry -A single firm
Joe owns the only ice cream shop on a private beach in Florida; people at the beach who want to enjoy an ice cream cone have to buy from him.
$4.00-100-400-4 3.50-200-700-3 3.00-300-900-2 2.50-400-1000-1 2.00-500-1000-0 1.50-600-900- -1 1.00-700-700- -2
An argument can be made that the economic profits generated by pure monoploies have two positive impacts on dynamic growth:
-Potential economic profits give firms and entrepreneurs incentives to develop new production processes and products. -When a monolopy earns an economic profit, it has the financial capital to develop more innovations.
Which of the following are characteristics of a perfectly competitive market?
-large number of sellers -no control over price
Monopoly is a market structure characterized by:
-the firm having significant price control. -a good or service for which there are no close subsitutes -a single seller -a market with barriers to entry
Impediments that prevent firms from entering a market or industry are known as:
barriers to entry
Which of the following is NOT a characteristic of monolopy?
continuous economic profits
The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium is the _________ loss
deadweight
If a monopoly wants to sell more units, it must _________ the price for every unit it sells.
decrease
If the marginal revenue associated with selling one more unit of output is positive, the demand is:
elastic, because this would increase total revenue
For the profit-maximizing level of output, the price charged by a monolopy is not just different but ______________than marginal revenue.
greater
The extra or additional revenue associated with the production of an additional unit of output is the ________ revenue.
marginal
a pure ________is the only seller in a market
monopoly
Due to the market inefficiencies created by__________, one of the roles of government is to limit their market power or even to eliminate them entirely.
monopolies
A ________ produces less output than a competitive firm, and therefore, is liekly to hire less labor.
monopoly
It is unlikely for a pure ______ to be productively efficient.
monopoly
The level of profit that occurs when total revenue is equal to total cost is known as ________ profit.
normal
Total revenue equals
price times quantity
Allocative efficiency is:
producing the goods and services so that their marginal benefit equals their marginal cost.
For a monolopy, 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 fewst resources possible to produce a good or a service.
A company can break even and meet operating costs without a loss when it earns _______ economic profit
zero
