ECN 104 Chapter Notes - Chapter 8: Monopoly Price, Natural Monopoly, Marginal Revenue

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salmoncat720

13 Jun 2011

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An industry in which one firm is the sole producer (seller of a product/service for which no close substitutes exist. Single seller: the firm & industry are synonymous: no close substitutes: product is unique. Price-maker: controls total quantity supplied, has considerable control over price; can change price by changing production quantity; can sell a much/little as it wants. Blocked entry: certain barriers keep potential competitors from entering industry: non price competition: product produced may be standardized (natural gas, electricity) engage mainly in public relations advertising or differentiated (windows, frisbees) sometimes advertise products" attributes. Anything that artificially prevents the entry of firms into an industry. Strong barriers effectively block all potential competition; weaker barriers permit oligopoly & entry of competing firms. Single firm can supply good/service to entire market at smaller cost than two+ firms. Aries when there is economies of scale over relevant range of output: when atc declines, least-cost production is realized.

Related Questions

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

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 monopolistically competitive industry is like a purely competitive industry in that:

A. each industry produces a standardized (i.e. homogeneous) product.
B. non-price competition is a feature of both industries.
C. neither industry has significant barriers to entry.
D. firms in both industries face a horizontal demand curve

silverraccoon818

ECN 104 Chapter Notes - Chapter 8: Monopoly Price, Natural Monopoly, Marginal Revenue

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