microecon ch 12
Which of the following does the monopolist not have?
A supply curve
Which of the following are entry barriers created by monopolists?
Increased advertising Price reductions
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which _______.
MR = MC
Which of the following are characteristics of public utilities?
Monopolies or near monopolies Government owned or regulated
Which of the following are conditions necessary for price discrimination?
No resale Market segregation Monopoly power
Which of the following is considered a barrier to entry into an industry?
Ownership of essential property
What is the term used to refer to charging different prices to different buyers of a specific product?
Price discrimination
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
Pure monopoly
Which of the following are assumptions made in the model of pure monopoly?
The firm is a single-price monopolist and charges the same price for all units of output. No unit of government regulates the firm. Patents, economies of scale, and resource ownership secure the firm's monopoly.
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then which of the following may occur?
The firm may be expressly prohibited from engaging in certain business activities. The firm may be broken into two or more competing firms.
Economies of scale refer to ______ average total costs with added firm size.
declining
Price _________ , or charging different prices to different consumers, is widely practiced in the US economy.
discrimination
The practice of charging different prices to different buyers for a specific product is known as price __________
discrimination
Price makers are firms with:
downward-sloping demand curves
The monopolist wants a price-quantity combination to fall in the _____ section of its demand curve, where a lower price means _____ total revenue.
elastic; greater
________ create(s) legal barriers to entry.
government
X-inefficiency occurs when a firm operates at a cost that is __________ (higher/lower) than the lowest cost for a particular level of output.
higher
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially ______.
levies a "private tax" on consumers
Firms with downward-sloping product demand curves are called price ________
makers
The change in total revenue associated with a one-unit change in output is called ______ revenue.
marginal
The change in total revenue associated with a one-unit change in output is called _________ revenue.
marginal
Slashing prices is an example of an entry barrier created by a(n)
monopolist
A(n) ______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.
monopoly
Patents, economies of scale, and resource ownership are all assumptions of the pure ______ model.
monopoly
The strongest barriers to entry effectively block all ______.
potential competition
Market segregation must exist in order for a monopolist to ______.
price discriminate
Baseball ticket sellers charge a different price for adults and children. Ballpark concession stands charge the same prices for products sold to any customer. The baseball ticket sellers are providing a successful example of
price discrimination.
________ utilities are government owned or regulated.
public
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___.
substitutes
Marginal revenue is the change in ______ revenue associated with a single-unit change in output.
total
The monopolist seeks maximum _________ profit, not maximum unit profit.
total
Why might a monopolist accept a less-than-maximum per-unit profit?
Additional sales more than compensate for the lower profit per unit.
What is the term for factors that prohibit firms from entering an industry?
Barriers to entry
______ of essential property is a barrier to entry into an industry.
Control
What term is used to describe declining average total costs with added firm size?
Economies of scale
How does a monopoly generally transfer income?
From consumers to the owners of the monopoly
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?
There are no new entrants to increase supply, drive down price, and eliminate profit.
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
When a firm produces a specific output level at a higher cost than the necessary cost for that level of output, it is called ______.
X-inefficiency
A monopolist will never choose a price-quantity combination where price reductions cause:
a decrease in total revenue
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the ________ _________ cost curve
average total
The monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient.
average total cost
Government creates ______ barriers to entry.
legal
A firm can be expressly prohibited from engaging in certain business activities or can be broken into two or more competing firms when it
is found guilty of monopoly abuse.
A monopolist does not have a supply curve because:
it does not equate price with marginal cost there is no single, unique price associated with each level of output
