question
One of the requirements for a monopoly is that:
answer
there is a unique product being produces
question
If a single firm can meet the entire market demand in a particular region at a lower average total cost than a large number of small firms, this single firm is known as:
answer
natural monopoly
question
What is the main difference between the profit maximizing actions a perfect competitor can take versus those actions that a monopoly can take?
answer
a perfectly competitive firm can only change output, whereas a monopolist can change both output and price
question
Suppose a monopoly can sell 10 units of output for $21. In order to sell 11 units of output, the price must fall to $20. What then is the marginal revenue of the 11th unit of output?
answer
$10
question
A profit maximizing output for a single price monopolist is determined by the:
answer
intersection of the marginal revenue and marginal cost, or MR=MC
question
The corresponding price is found on which curve:
answer
demand curve
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Monopolies are inefficient because, at the profit-maximizing level of output:
answer
price does not equal marginal cost
question
A firm is discriminating among groups of buyers when it:
answer
offers different prices to different buyers
question
What is the relationship between the market curve and the monopolists demand curve?
answer
they are the same lol dummy
question
If one firm can satisfy the demand of an entire market at a lower average total cost than two or more firms could, then that firm has a:
answer
natural monopoly
question
What is an example of a natural monopoly?
answer
the electric company in your town
question
What is NOT true about patents?
answer
patents create permanent monopolies (because patents only last about 5 years)
question
If a monopoly wants to sell at a larger quantity, it must:
answer
set a lower price
question
A single price monopolist is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This firm is:
answer
not maximizing profit and should increase profit
question
If a perfectly competitive industry is taken over by monopolists, the price will ___ and the Q produced will ___
answer
rise; fall
question
The deadweight loss under conditions of perfect price discrimination is:
answer
equal to the consumer surplus in the same condition
question
If a monopolist engages in price discrimination, we can expect:
answer
both profits and output to increase
question
When a firm is on the inelastic segment of its demand curve, it can:
answer
increase profits by increasing price
question
mutual interdependence with respect to the price-output policies exists in:
answer
an oligopoly
question
Monopolistically competitive firms:
answer
may realize either profits or losses in the short run, but realize normal profits in the long run
question
If a regulatory commission wants to provide natural monopoly with a "fair return", it should establish that price is equal to:
answer
ATC (average total cost)
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If a pure monopolist is producing at that output where P=ATC, then:
answer
its economic profits will be zero
question
What is NOT a characteristic of monopolistic competition?
answer
production at minimum ATC in the long run
question
In short run equilibrium, a monopolistically competitive firm will set its price at:
answer
below the ATC
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Fair return:
answer
P=ATC
question
Socially optimal:
answer
P=MC
question
What is game theory?
answer
the analysis of how people (or firms) behave in strategic situations
question
Long run equilibrium for a monopolistically competitive firm where economic profits are zero results from:
answer
relatively easy entry
question
What is true about a pure monopolist's demand curve?
answer
it lies above its marginal revenue curve
question
Average fixed cost (AFC) is shown as the distance between:
answer
average variable cost and average total cost
question
Allocative and productive efficiency are possible in which of the unregulated market structures?
answer
ONLY perfectly competitive
question
What is true about monopolists who practice price discrimination?
answer
they charge costumers different prices according to the different elasticities of demand
question
What happens to a monopolist's price, profits and output if its fixed costs decrease?
answer
price: no change
profits: increase
output: no change
profits: increase
output: no change
question
What are the characteristics of an oligopolistic market?
answer
few firms
interdependence among firms
independent price decision making leads to lower returns
collusion can increase oligopolists's profits
interdependence among firms
independent price decision making leads to lower returns
collusion can increase oligopolists's profits
question
In the long run, a monopolistically competitive firm will make:
answer
zero economic profit
question
If all the firms in an oligopoly could, without cost, form an industry wide cartel to jointly maximize profits, the demand curve facing the cartel would be:
answer
the same as the industry demand curve
question
The shapes of the marginal product curve and the total product curve are best explained by the:
answer
law of diminishing returns
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