ECON 1000 Chapter Notes - Chapter 12: Marginal Revenue, Natural Monopoly, Price Discrimination

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Monopoly is a market in which one firm sells a good or service that has no close substitutes and a barrier blocks the entry of new firm. In which there is one supplier that is protected from competition by a barrier preventing the entry of new firms. Many firms price discriminate, but not all of them are monopoly firms. Monopoly is a price setter demand for monopoly"s output is market demand; to sell a larger output, monopoly must set lower price. Mr: change in tr that results in one-unit increase of quantity sold. If demand is elastic, a fall in the price brings an increase in total revenue; mr is positive. An increase in revenue from the greater quantity sold outweighs the decrease in revenue from the lower price per unit. If demand is inelastic, a fall in price brings a decrease in total revenue; mr is negative.

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

carminegoldfish488

35. If your competitors will follow your price cuts and ignore price hikes, your firm:
A. faces perfect competition.
B. faces a kinked demand curve.
C. is the marginal price leader of an oligopoly.
D. must be the most efficient firm in the industry.

36. Sticky prices in oligopoly markets are:
A. represented by the kinked demand curve model.
B. typical of cartels.
C. most common for highly differentiated products.
D. a result of price discrimination.

37. Oligopoly is characterized by all of the following except:
A. some industries that produce identical products.
B. frequent price wars.
C. high barriers to entry.
D. prices that are above the minimum of the ATC curve.

38. Which statement is false?
A. A monopoly is both a firm and an industry.
B. A monopoly is an imperfect competitor.
C. There are monopolies in the United States at the regional and local levels.
D. None of these statements is false.

39. Each of the following is a legal barrier to entry into an industry except:
A. government licensing.
B. patents.
C. government franchising.
D. All of these choices are legal barriers.

40. Which one of these is not a natural monopoly?
A. A local electric company
B. A local natural gas company
C. A local cable TV company
D. All of these choices are examples of natural monopolies.

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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.

goldcattle908

ECON 1000 Chapter Notes - Chapter 12: Marginal Revenue, Natural Monopoly, Price Discrimination

ECON 1000 Full Course Notes

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