# Chapter 9 - Monopoly

## 29 terms · This set of flashcards contains information and terms from Chapter 9 of "Exploring Micro Economics" by Sexton, Fortura and Kovacs

### 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.

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