Chapter 9 - Monopoly
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t_faber4444 on February 24, 2012
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This set of flashcards contains information and terms from Chapter 9 of "Exploring Micro Economics" by Sexton, Fortura and Kovacs
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29 terms
Terms | Definitions |
|---|---|
 Pure Monopoly | Only one seller of a product. Firm and industry are the same. |
| Barriers to Entry in a monopoly | Legal barriers, Economies of scale, Control of important inputs |
| Natural Monopoly | When a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. |
| Natural Monopoly | A ______ arises when there are economies of scale over the relevant range of output. |
| Advantage | Economies of scale provide a cost _________ throughout the relevant output range |
| Monopoly | Faces a downward-sloping demand curve. • Reduces price to increase sales |
| Same | In a monopoly the firm's demand curve is the ______ as market demand curve |
| Fall | If monopolist expands output, price will ______ . |
| Below | The marginal revenue curve for a monopolist lies ______ the demand curve. |
| Less | In a monopoly, marginal revenue is always _____ than price of the goods |
| Revenue | In a monopoly, additional revenue from new unit sold is offset by lower ______ on all previous units |
| Decreases | When a monopoly drops the price to sell one more unit, the revenue received from previously sold units _________ . |
| Inelastic | In a monopoly, below the midpoint, demand is ________ . |
| Elastic | In a monopoly, above the midpoint, demand is ________ . |
| MR = MC | In a monopoly, equilibrium output is at the point where ________. |
| Profit Maximization | For a monopoly firm, price exceeds marginal cost |
| Profits | If TR > TC (the price exceeds average total cost), the monopolist is generating economic _______ . |
| Barriers to Entry | In a monopoly, profits can persist in the long run because of ______ . |
| Losses | If TR < TC (the price is less than average total cost), the monopolist is generating economic _______ . |
| Demand | A monopolist will incur a loss if there is insufficient ______ to cover costs |
| Competition | The fall in price when a patent expires shows the effect of |
| Competition | Lack of ________ hinders technological advances |
| Inefficiency | When a monopolist produces an output where the price is greater than its cost |
| Welfare loss. | When a monopoly is not producing enough from society's perspective |
| Anti-combine Laws | Prevent monopoly. Promote competition. Enhance economic efficiency. |
| Approaches to dealing with monopolies | Anti-combine Laws and government regulation |
| Price discrimination | The business practice of selling the same good at different prices to different customers, even though the costs for producing for the two customers are the same. |
| Perfect price discrimination | Refers to the situation when the monopolist knows exactly the willingness to pay of each customer and can charge each customer a different price |
| Conditions for Price Discrimination | Monopoly power, Market segregation, No resale |
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