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ECON101 Chapter Notes - Chapter 13: Marginal Revenue, Average Cost, Legal Monopoly

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15 Dec 2017

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University of Waterloo

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ECON101 Full Course Notes

ECON101 Full Course Notes

Document Summary

Monopoly a market with a single firm that produces a good or service with no substitutes o. Protected by a barrier that prevents other firms from entering that market. If a good is produced by only one firm and has a close substitute, the firm faces competition from firms that produce the substitute o. A monopoly sells a good or serve that has no close substitutes. Barriers to entry a constraint that protects a firm from potential competitors o. Natural monopoly a market in which economies of scale enable one firm to supply the entire market at the lowest possible cost o o e. g. gas, water and electricity. Economies of scale exist over the entire lrac curve. One firm can meet the market demand at a lower cost than two or more firms can. Occurs if one firm owns a significant portion of a key resource.

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Related Questions

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, the ____.

A) firm is a single-price monopoly

B) good that the industry produces has close substitutes

C) firm is a natural monopoly

D) firms are protected from competition by a legal barrier

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1. Which characteristic led to Microsoft exercising monopoly power?

A.copyright protection for the Windows operating system

B .no close substitutes

C.economies of scale

D.government franchise

2. The goal of antitrust law is to:

A. prevent monopolies and monopoly power from arising.

B.protect monopolies from the competition.

C. make sure consumers pay high prices.

D. preserve allocative inefficiencies of monopolies.

3. Which of the following is not a characteristic of a monopoly?

A. The market has just one seller.

B.There exist significant barriers to entry.

C. Substitutes for the monopolist's products are available to buyers.

D. No close substitutes exist for the monopolist's products.

4. A constantly declining long-run average cost curve is a characteristic of what type of industrial structure:

A. Monopoly

B. Natural monopoly

C. Oligopoly

D. Perfect competition

5. An industry that has large economies of scale operates most efficiently as a(n):

	A.competitive industry.
	B.monopoly
	C.regulated natural monopoly.
	D.anarchic industry.

When is a market classified as monopolistically competitive?

a) A small number of firms compete.
b) There is a barrier that blocks entry by other firms.
c) Many firms produce the same product.
d) Many firms produce a slightly differentiated product.
e) There is one firm that sells a good or service with no close substitutes.

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