EC120 Chapter Notes - Chapter 15: Costco, Old Age, Price Discrimination

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23 Sep 2016

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Monopoly: a firm that is the sole seller of a product without close substitutes: it remains the only seller in its market because other firms cannot enter the market and compete with it. The simplest way for a monopoly to arise is for a single firm to own a key resource. In many cases, monopolies arise because the government has given one person or firm the exclusive right to sell some good or service. Patents and copyright laws are two important examples of creating a monopoly to serve the public interest. A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. Arises when there are economies of scale over the relevant range of output. This is the starting point for evaluating whether monopolies are desirable and what policies the government might pursue in monopoly markets.

Related Questions

A government-created monopoly arises when

a. government spending in a certain industry gives rise to monopoly power.

b. the government exercises its market control by encouraging competition among sellers.

c. the government gives a firm the exclusive right to sell some good or service

d. All of the above could qualify as government-created monopolies

purpleminnow136

What might create a monopoly?

	a.	a key resource is owned by a single firm.
	b.	the government gives a single firm the exclusive right to produce a good or service.
	c.	a single firm can produce output at a lower cost than a larger number of producers.
	d.	all of the above

raspberryrabbit318

If competition decreases in a certain industry

Select one:

a. it would not matter because competition has very little affect in a market economy.

b. A company that is in that industry may have and exert more economic power.

c. Resources will be allocated more efficiently

d. Prices will most likely be lower in that industry

Question 2

Question text

The Sherman Anti-Trust Act

Select one:

a. Gave monopolies a legal right to exist and grow

b. Gave all unions money to pay their members

c. Was a governmental attempt to promote and encourage competition.

d. Created new policies to ensure that workersâ compensation was given to all workers

Question 3

Question text

One reason the government is involved in the U.S. economy is to

Select one:

a. regulate industries in which a monopoly is in the public interest

b. encourage monopolies

c. discourage competition

d. promote the development of negative externalities

Question 4

Question text

Under perfect competition

Select one:

a. The buyers are usually uninformed

b. Market equilibrium sets the price of goods and services

c. The government determines how much of a good to produce.

d. The seller tends to spend much effort in advertising its product because of product differentiation.

Question 5

Question text

The Clayton-Anti Trust Act

Select one:

a. Was never passed

b. Helped monopolists grow wealthier

c. Was passed to lower the taxes on the most wealthy Americans

d. Outlawed price discrimination

EC120 Chapter Notes - Chapter 15: Costco, Old Age, Price Discrimination

EC120 Full Course Notes

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