question

Price discrimination

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is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices.

question

A monopolist produces

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less than the socially efficient quantity of output, but at a higher price than in a competitive market.

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Which of the following statements is true?

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If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

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If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

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marginal revenue is less than the price of the product.

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The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

answer

Marginal cost and marginal revenue

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When a single firm can supply a product to an entire market at a smaller cost than could two or more firms, the industry is called a

answer

natural monopoly.

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When a monopoly increases its output and sales,

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the output effect works to increase total revenue and the price effect works to decrease total revenue.

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The economic inefficiency of a monopolist can be measured by the

answer

deadweight loss.

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The marginal revenue of a monopolist falls below price because the firm:

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Confronts a downward-sloping demand curve.

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A monopolist will charge a price that:

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exceeds the marginal cost.

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Monopoly is a market structure where

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there is a single seller producing a unique product.

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Monopoly is the market structure in which

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one firm makes up the entire market.

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Average revenue for a monopolist is equal to

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the price the monopolist sets.

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The demand curve for a monopolist is

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the same as the market demand curve.

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A monopoly firm is different from a competitive firm in that

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the monopolist is a price-Maker, whereas the competitive firm is a price-Taker

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The price a monopolist charges for its product is

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above marginal revenue

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The monopolist's marginal revenue is less than price because

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the monopolist must lower the price of all units in order to sell an additional unit.

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If Marginal Revenue is greater than Marginal Cost, the monopolist should

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decrease production.

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The welfare loss triangle shows

answer

the welfare costs of monopoly in terms of consumer and producer surplus.

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Compared to a perfectly competitive firm, a monopolist

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charges a higher price.

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The social cost of monopoly refers to the fact that

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there is a loss in consumer surplus and producer surplus when a monopolist raises price and restricts output.

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Natural monopoly exists when one firm can supply the output demanded at

answer

lower cost than two or more firms.

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For a natural monopoly

answer

per unit costs are always falling.

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A natural monopoly occurs when a single firm can supply the entire market demand for a product

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at a lower average total cost than would be possible if two or more firms supplied the market.

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Price discrimination occurs when

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consumers are divided into two groups with one group paying a high price and the other paying a low price.

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A monopolist engages in price discrimination to

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earn more profit than would be possible if every buyer paid the same price.

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As compared to a normal monopolist, a price-discriminating monopolist produces a

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larger output and charges each consumer a different price.

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A price-discriminating monopolist

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is able to capture some of the consumers' surplus.

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Charging different prices to different customers for reasons other than cost

answer

Price discrimination

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The ability to alter the market price of a good or service

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Market power

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A market controlled by only one seller

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Monopoly

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A monopoly may persist because of cost advantages over smaller firms if economies of scale exist

answer

Natural Monopoly

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Obstacles that make it difficult or impossible for would-be producers to enter a particular market

answer

Barrier to entry

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Which of the following is true for a monopolist?

answer

It faces a downward-sloping demand curve; It must lower its price on all of its units in order to sell any additional units; Its marginal revenue curve is below its demand curve.

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Market power is

answer

The ability to alter the market price of a product.

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The marginal revenue curve is below the demand curve:

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If a firm must lower its price to sell additional output.

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A barrier to entry is

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An obstacle that makes it difficult for new firms to enter a market.

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If the firms in a competitive market become plants owned by a monopoly, then the monopoly would

answer

Move upward along the market demand curve as it raises price.

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Both a competitive firm and a monopoly

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Face downward-sloping market demand curves.

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Monopolists set prices

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At the output where marginal revenue equals marginal cost.

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Compared with a competitive market with the same cost and market-demand circumstances, monopoly results in

answer

Higher prices and lower output.

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If a firm has market power, the marginal revenue curve always lies below the demand curve.

answer

True.

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Since the monopolist's marginal revenue is below its price, its equilibrium output is the same as a perfectly competitive firm's.

answer

False.

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Since a monopolist is a price taker, it cannot have a supply curve.

answer

False.

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After the first unit sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold, because of

answer

a downward sloping demand curve.

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A monopolist's marginal revenue is less than price because

answer

the monopolist must lower the price of all units in order to sell an additional unit.

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Suppose a monopoly is producing at the profit-maximizing level of output. At that level of output

answer

Marginal Revenue = Marginal Cost

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The price a monopolist charges for its product is

answer

above marginal revenue.

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The supply curve of a monopolist is

answer

nonexistent; a monopolist simply chooses the profit-maximizing point on the market demand curve.

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A monopoly's short-run supply curve is its marginal cost curve above minimum average variable cost.

answer

False.

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A monopolist should decrease production if

answer

Marginal Revenue < Marginal Cost; MR < MC

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Generally speaking, the profit-maximizing output for a monopolist occurs where marginal revenue equals zero.

answer

False.

Microeconomics Ch 15 – Flashcards

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