question
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes?
answer
Pure monopoly
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utilities are government owned or regulated.
answer
public
question
The strongest barriers to entry effectively block all ______.
answer
potential competition
question
Economies of scale refer to ______ average total costs with added firm size.
answer
declining
question
______ create(s) legal barriers to entry.
answer
government
question
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___.
answer
substitutes
question
It is difficult to start up a major league sports team because existing professional teams have contracts with the best players and long-term leases on stadiums. Which barrier to entry does this illustrate?
answer
Control of a key resource
question
Which of the following are characteristics of public utilities?
answer
Monopolies or near monopolies
Government owned or regulated
Government owned or regulated
question
What is the term for factors that prohibit firms from entering an industry?
answer
Barriers to entry
question
What term is used to describe declining average total costs with added firm size?
answer
Economies of scale
question
Government creates barriers to entry.
answer
legal
question
Slashing prices is an example of an entry barrier created by a(n)
answer
monopolist
question
Which of the following is considered a barrier to entry into an industry?
answer
Ownership of essential property
question
Patents, economies of scale, and resource ownership are all assumptions of the pure model.
answer
monoploy
question
The strongest barriers to entry effectively block all ______.
answer
potential competition
question
Economies of scale refer to ______ average total costs with added firm size.
answer
declining
question
Which of the following are entry barriers created by monopolists?
answer
Increased advertising
Price reductions
Price reductions
question
______ of essential property is a barrier to entry into an industry.
answer
Control
question
Which of the following are assumptions made in the model of pure monopoly?
answer
The firm is a single-price monopolist and charges the same price for all units of output.
Patents, economies of scale, and resource ownership secure the firm's monopoly.
No unit of government regulates the firm.
Patents, economies of scale, and resource ownership secure the firm's monopoly.
No unit of government regulates the firm.
question
What term is used to describe declining average total costs with added firm size?
answer
Economies of scale
question
Which of the following is considered a barrier to entry into an industry?
answer
Ownership of essential property
question
The change in total revenue associated with a one-unit change in output is called ? revenue.
answer
Marginal
question
Price makers are firms with:
answer
downward sloping demand curves
question
The monopolist wants a price-quantity combination to fall in the _____ section of its demand curve, where a lower price means _____ total revenue.
answer
elastic; greater
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How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
answer
Up to the output at which marginal revenue equals marginal cost
question
Marginal revenue is the change in ______ revenue associated with a single-unit change in output.
answer
total
question
Firms with downward-sloping product demand curves are called price
answer
makers
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A monopolist does not have a supply curve because:
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there is no single, unique price associated with each level of output
it does not equate price with marginal cost
it does not equate price with marginal cost
question
A monopolist will never choose a price-quantity combination where price reductions cause:
answer
a decrease in total revenue
question
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which _______.
answer
MR = MC
question
Why might a monopolist accept a less-than-maximum per-unit profit?
answer
Additional sales more than compensate for the lower profit per unit.
question
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run?
answer
There are no new entrants to increase supply, drive down price, and eliminate profit.
question
Which of the following does the monopolist not have?
answer
A supply curve
question
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.
answer
average;total
question
The monopolist seeks maximum profit, not maximum unit profit.
answer
total
question
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.
answer
monopoly
question
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially ______.
answer
levies a "private tax" on consumers
question
When a firm produces a specific output level at a higher cost than the necessary cost for that level of output, it is called ______.
answer
X-inefficiency
question
The monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient.
answer
average total cost
question
The government broke up Standard Oil in 1911 due to its breach of? laws
answer
anti-trust
question
How does a monopoly generally transfer income?
answer
From consumers to the owners of the monopoly
question
The practice of charging different prices to different buyers for a specific product is known as price
answer
discrimination
question
A firm can be expressly prohibited from engaging in certain business activities or can be broken into two or more competing firms when it
answer
is found guilty of monopoly abuse.
question
Market segregation must exist in order for a monopolist to ______.
answer
price discriminate
question
What is the term used to refer to charging different prices to different buyers of a specific product?
answer
Price discrimination
question
As an example of price discrimination, airlines charge higher fares to business travelers whose demand for travel is and offer lower, more restricted fares to vacationers and others with more demand.
answer
inelastic; elastic
question
If a firm is found guilty of achieving a monopoly through anticompetitive actions, then which of the following may occur?
answer
The firm may be broken into two or more competing firms.
The firm may be expressly prohibited from engaging in certain business activities.
The firm may be expressly prohibited from engaging in certain business activities.
question
Which of the following are conditions necessary for price discrimination?
answer
Monopoly power
Market segregation
No resale
Market segregation
No resale
question
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
answer
price discrimination.
question
With a natural monopoly the demand curve intersects the long-run average total cost curve where the long-run average total cost curve is still
answer
decllining
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If the objective of government is to achieve efficiency, it should establish a legal price for the monopolist that is equal to its marginal cost.
answer
allocative
question
The demand curve intersects the natural monopolist's long-run average total cost curve at a point where long-run average total costs are still falling, due to ______.
answer
economies of scale
question
Price , or charging different prices to different consumers, is widely practiced in the US economy.
answer
discirmination
question
Which of the following are potential solutions to the economic losses incurred by a regulated monopoly caused by socially optimal pricing?
answer
Public subsidies
Price discrimination
Price discrimination
question
A regulated monopoly is likely to suffer losses when ______.
answer
price is set to marginal cost (P = MC)
price is set to achieve the most efficient allocation of resources
price is set to achieve the most efficient allocation of resources
question
If the objective of government is to achieve allocative efficiency, what kind of price should government establish for the monopolist?
answer
One that is equal to its marginal cost.
question
Two solutions to the economic losses caused by socially optimal pricing are providing public and condoning price discrimination
answer
subsidies
question
...
answer
normal profit; economic loss
question
...
answer
...
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