Micro Chapter 12 Monopolies – Flashcards
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Pure monopoly refers to
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a single firm producing a product for which there are no close substitutes
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Which of the following is correct?
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A purely competitive firm is a "price taker," while a monopolist is a "price maker"
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Which of the following is a characteristic of pure monopoly?
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Barriers to entry
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Which of the following is not a barrier to entry?
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X-inefficiency
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Barriers to entering an industry
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are the basis for monopoly
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A natural monopoly occurs when
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long-run average costs decline continuously through the range of demand
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The nondiscriminating pure monopolist's demand curve
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is the industry demand curve
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The nondiscriminating monopolist's demand curve
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is less elastic than a purely competitive firm's demand curve
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If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue
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will be less than $35
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The demand curve faced by a pure monopolist
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is less elastic than that faced by a single purely competitive firm
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A nondiscriminating profit-maximizing monopolist
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will never produce in the output range where demand is inelastic
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For a pure monopolist the relationship between total revenue and marginal revenue is such that
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marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing
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Pure monopolists may obtain economic profits in the long run because
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of barriers to entry
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What do economies of scale, the ownership of essential raw materials, and patents have in common?
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They are all barriers to entry
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The marginal revenue curve for a monopolist
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becomes negative when output increases beyond some particular level
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Because the monopolist's demand curve is downsloping
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price must be lowered to sell more output
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm will be operating in the
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elastic portion of its demand curve
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing
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4 units
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's price will exceed its marginal cost by ____ and its average total cost by ____
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$30; $20.50
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total costs will be
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$198
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data. At its profit-maximizing output, this firm's total revenue will be
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$280
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1 100 100 100.00 30
2 90 80 63.00 26
3 80 60 52.67 32
......
10 10 -80 67.60 130
Refer to the data for a nondiscriminating monopolist. At its profit-maximizing output, this firm's total profit will be
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$82
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Refer to the diagram for a pure monopolist. Monopoly price will be
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c.
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Refer to the diagram for a pure monopolist. Monopoly output will be
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f.
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Refer to the diagram for a pure monopolist. Monopoly profit
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cannot be determined from the information given
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In the short run, a monopolist's economic profits
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may be positive or negative depending on market demand and cost conditions
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Refer to the diagram. If this industry is purely monopolistic, the profit-maximizing price and quantity will be
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P3 and Q3
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Refer to the diagrams. Firm A is a
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pure competitor and Firm B is a pure monopoly
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At its profit-maximizing output, a pure nondiscriminating monopolist achieves
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neither productive efficiency nor allocative efficiency
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The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium
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price exceeds marginal cost
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A single-price pure monopoly is economically inefficient
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because it produces short of minimum average total cost and price is greater than marginal cost
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Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's
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price and average total cost would be higher, but output would be lower
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Refer to the diagrams. Diagram (A) represents
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equilibrium price and quantity in a purely competitive industry.
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Refer to the diagrams. In diagram (B) the profit-maximizing quantity is
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g and the profit-maximizing price is d
