ECON 1201 Chapter Notes - Chapter 15: Robinson–Patman Act, Sherman Antitrust Act, Joseph Schumpeter

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Monopoly: a firm that is the only seller of a good or service that does not have a close substitute. A firm has a monopoly if it can ignore the actions of all other firms. Monopolies do not face competition= many firms want it. To have a monopoly, barriers to entering the market but be very high-- this is because. Government action blocks the entry of more than one firm into a market. One firm has control of a key resource necessary to produce a good. There are important network externalities in supplying the good or service. Economies of scale are so large that one firm has a natural monopoly. In the us, the government blocks entry in 2 main ways: By granting a patent, copyright, or trademark to an individual or a firm, giving it to the exclusive right to produce a product.

Related Questions

Governments often have the potential to influence whether firms are monopolies. How might the government affect whether a firm is a monopoly?

The government could

Grant a firm a public franchise, making it the exclusive legal provider of a good or service.
grant a patent to a firm, giving it the exclusive right to produce a product.
Grant a copyright to a firm, making it a neutral monopoly
Grant a firm a public enterprise allowing it to benefit from network externalities
Reduce taxes so that a firm benefits from diseconomies of scale

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How might the government affect whether a firm is a monopoly?

The government could

A.grant a firm a public enterprise, allowing it to benefit from network externalities.

B.grant a patent to a firm, giving it the exclusive right to produce a product.

C.grant copyright to a firm, making it a natural monopoly.

D.grant a firm a public franchise, making it a natural monopoly.

E.reduce taxes so that a firm benefits from diseconomies of scale.

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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.

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ECON 1201 Chapter Notes - Chapter 15: Robinson–Patman Act, Sherman Antitrust Act, Joseph Schumpeter

ECON 1201 Full Course Notes

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