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Economics 1021A/B Chapter Notes - Chapter 13: Economic Rent, Marginal Revenue, Legal Monopoly

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21 Nov 2011

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Western University

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Economics 1021A/B

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ECON 1021A/B Full Course Notes

ECON 1021A/B Full Course Notes

Document Summary

Monopoly sells a good or service that has no good substitute. Barrier to entry: a constraint that protects a firm from potential. Natural barrier to entry creates a natural monopoly. Natural monopoly: an industry in which economies of scale enable one firm to supply the entire market at the lowest possible cost. E. g. firms that deliver gas, water, electricity. Occurs if one firm owns a significant portion of a key resource. Legal monopoly: a market in which competition and entry are restricted by granting of a public franchise, government licence, patent, or copyright. Public franchise: an exclusive right granted to a firm to supply a good or service. Government licence: controls entry into particular occupations, professions, and industries. Patent: exclusive right granted to the inventor of a product or service. Copyright: an exclusive right granted to the author or composer of a literary, musical, dramatic, or artistic work. To sell a larger quantity, the monopoly must set a lower price.

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Related Questions

One major barrier to entry under pure monopoly arises from:

A. The availability of close substitutes for a product

B.Ownership of essential resources

C. The price taking ability of the firm

D. Diseconomies of scale

fuchsiahound634

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.

When is a market classified as monopolistically competitive?

a) A small number of firms compete.
b) There is a barrier that blocks entry by other firms.
c) Many firms produce the same product.
d) Many firms produce a slightly differentiated product.
e) There is one firm that sells a good or service with no close substitutes.

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