ECON 1B03 Chapter Notes - Chapter 15: Perfect Competition, Monopoly Price, Marginal Revenue

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ECON 1B03 Full Course Notes

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Econ120 micro, natasha park: a firm that is the sole seller of a product without close substitutes pure monopoly rare. Having a large market share and few significant competitors: key difference between monopoly and perfect competition is that a monopoly firm has market power, the ability to influence the market price of the product it sells. A competitive firm has no market power: main cause of monopolies is barriers to entry, a single firm owns a key resource, government gives a firm exclusive right to produce. Natural monopoly good: natural monopoly: a single firm can produce the entire market q at lower atc than several firms can; economies of scale over the entire range of output . Monopoly vs. competition demand curves demand curve slopes down. D for any individual firm"s product is horizontal at the market price competitive firm sells product with substitutes elastic firm can increase q without lowering p, so mr = p for competitive firm.

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

A natural monopoly is a market where:

A) a single firm has control over a vital natural resource.

B) many smaller firms can produce the entire market output at the same per-unit cost as could one large firm.

C) a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

D) many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.

beigesnail605

74) This market would be considered a “natural monopoly" because over the relevant range of output) A) average cost is declining. B) marginal cost is below average cost. C) the firm is experiencing economies of scale. D) one firm is able to produce any given level of output cheaper than two firms could. E) all of the above are true.

ECON 1B03 Chapter Notes - Chapter 15: Perfect Competition, Monopoly Price, Marginal Revenue

ECON 1B03 Full Course Notes

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