Five characteristics of a pure monopoly
Price-maker, blocked entry, single-seller, no close substitutes, and non price competition.
Monopolists can create barriers to entry by 3 ways:
decreasing price, increasing advertising, and increasing resource prices.
Regulatory agencies set a ____ ____ price (a term) that a utility company can earn
Fair return price
____ _____ is the apportionment of resources to obtain production of products most wanted by society
Monopolists do not have a supply curve because it does not equate ____ with _____ _____ and there is no single ____ price associated with each level of _____.
price with marginal cost and there is no single unique price associated with each level of output
A monopolist uses the profit maximizing rule of MC = MB to determine ____ and _____.
supply and price
A monopolist can increase profit by charging ___ ____ to ___ ____.
Charging different prices to different buyers.
How is economic profit determined (math)?
per-unit profit multiplied by the profit maximizing output
*If a pure monopolist can price discriminate by separating buyers into two or more groups the firm will face ____ ____ ___ ____. (4 words)
the firm will face multiple marginal revenue curves.
*The non-discriminating monopolist's demand curve is more or less elastic than a purely competitive firms? (more / less)
*To maximize profit a pure monopolist must _____ the difference between ____ _____ and _____ _____.
maximize the difference between total revenue and total cost.
*Confronted with the same unit cost data, a monopolistic producer will charge _____ _____ and produce a ____ ____ than a competitive firm.
a higher price and produce a smaller output than a competitive firm.
*A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price may be ___ or ____ than ATC.
may be greater or less than ATC
**The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium ____ exceeds ____ ____.
price exceeds marginal cost
*With respect to the pure monopolist's demand curve it can be said that ___ ___ marginal revenue at all outputs greater than ____.
price exceeds marginal revenue at all outputs greater than 1.
*The supply curve of a pure monopolist ___ ___ ___ because prices are not ____ to a monopolist.
does not exist because prices are not "given" to a monopolist.
*There is some evidence to suggest that X-inefficiency is:
more likely to occur in monopolistic firms than in competitive firms.
**The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist's demand curve measures ___ ____ and ___ ____.
product price and average revenue
*A nondiscriminating profit-maximizing monopolist will never produce in the output range where demand is _____.
in the output range where demand is inelastic.
*Price discrimination refers to
the selling of a given product at different prices that do not reflect cost differences.
In the short run a pure monopolist will charge the highest price the market will bear for its product (True/False)
*Assuming no change in product demand, a pure monopolist must do what to increase sales
*If profits are maximized (or losses minimized), what is common to both unregulated monopoly and to pure competition?
*Large minimum efficient scale of plant combined with limited market demand may lead to:
*Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC. This means that ____ _____ is being achieved, but not _____ ______.
productive efficiency is being achieved, but not allocative efficiency
*Pure monopoly refers to:
a single firm producing a product for which there are no close substitutes.
*For a pure monopolist marginal revenue is less than price because when a monopolist ___ ____ to sell more output, the ___ ___ applies to all units sold.
when a monopolist lowers price to sell more output, the lower price applies to all units sold.
*The higher prices charged by monopolists are like a ___ ___ that redistributes income from consumers to ____ _____.
are like a private tax that redistributes income from consumers to monopoly sellers.
*If the variable costs of a profit-maximizing pure monopolist decline, the firm should:
produce more output and charge a lower price.