# Microeconomics Chapter 8 – Flashcards

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question
Pure monopolists may obtain economic profits in the long run because
of barriers to entry
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A natural monopoly occurs when
long-run average costs decline continuously through the range of demand.
question
What do economies of scale, the ownership of essential raw materials, and patents have in common?
They are all barriers to entry.
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The nondiscriminating pure monopolist's demand curve:
is the industry demand curve.
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The marginal revenue curve for a monopolist:
becomes negative when output increases beyond some particular level.
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The pure monopolist's demand curve is relatively elastic:
in the price range where marginal revenue is positive.
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A pure monopolist should never produce in the
inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price.
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A pure monopolist is selling six units at a price of \$12. If the marginal revenue of the seventh unit is \$5, then the
price of the seventh unit is \$11.
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The MR = MC rule:
applies both to pure monopoly and pure competition.
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Suppose that a pure monopolist can sell 4 units of output at \$2 per unit and 5 units at \$1.75 per unit. The monopolist will produce and sell the fifth unit if its marginal cost is:
\$.75 or less.
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A pure monopolist is producing an output such that ATC = \$4, P = \$5, MC = \$2, and MR = \$3. This firm is realizing:
an economic profit that could be increased by producing more output
question
If a monopolist's marginal revenue is \$3.00 and its marginal cost is \$4.50, it will increase its profits by:
reducing output and raising price.
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A pure monopolist:
will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
question
If a pure monopolist is producing at that output where P = ATC, then: