ECON 1010 Chapter Notes - Chapter 13: Deadweight Loss, Economic Surplus, Natural Monopoly

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coffeemarten199

19 Mar 2016

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Monopoly (simply deiniion): a market that contains a single irm, basically it is a single company or group that owns all or nearly all of the market for a commodity. A company that produces a good or service for which there is no close subsitute that exists. There is one supplier that is protected from a compeiion. There are two key features of a monopoly no close subsitutes and barrier to enter. The force of compeiion is absent and there is only one supplier with market power. A natural monopoly occurs when, due to economies of scale, one irm can supply the market at lower lrac than muliple irms can. In a monopoly a irm is a price seter, rather then a price tacker like in perfect compeiion. Barriers to entry: constraints protecing the irm from compeiion from potenial new entrants. Ownership of barriers to entry, is when a irm owns the majority of key resources.

Related Questions

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

byzantiumfish483

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

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

crimsonalligator541

ECON 1010 Chapter Notes - Chapter 13: Deadweight Loss, Economic Surplus, Natural Monopoly

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