# Microeconomics Ch 15

### 52 terms by rayban555

#### Study  only

Flashcards Flashcards

Scatter Scatter

Scatter Scatter

## Create a new folder

Monopoly - Quiz Questions

### Price discrimination

is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices.

### A monopolist produces

less than the socially efficient quantity of output, but at a higher price than in a competitive market.

### Which of the following statements is true?

If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

### If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

marginal revenue is less than the price of the product.

### The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

Marginal cost and marginal revenue

### When a single firm can supply a product to an entire market at a smaller cost than could two or more firms, the industry is called a

natural monopoly.

### When a monopoly increases its output and sales,

the output effect works to increase total revenue and the price effect works to decrease total revenue.

### The marginal revenue of a monopolist falls below price because the firm:

Confronts a downward-sloping demand curve.

### A monopolist will charge a price that:

exceeds the marginal cost.

### Monopoly is a market structure where

there is a single seller producing a unique product.

### Monopoly is the market structure in which

one firm makes up the entire market.

### Average revenue for a monopolist is equal to

the price the monopolist sets.

### The demand curve for a monopolist is

the same as the market demand curve.

### A monopoly firm is different from a competitive firm in that

the monopolist is a price-Maker, whereas the competitive firm is a price-Taker

### The price a monopolist charges for its product is

above marginal revenue

### The monopolist's marginal revenue is less than price because

the monopolist must lower the price of all units in order to sell an additional unit.

### If Marginal Revenue is greater than Marginal Cost, the monopolist should

decrease production.

### The welfare loss triangle shows

the welfare costs of monopoly in terms of consumer and producer surplus.

### Compared to a perfectly competitive firm, a monopolist

charges a higher price.

### The social cost of monopoly refers to the fact that

there is a loss in consumer surplus and producer surplus when a monopolist raises price and restricts output.

### Natural monopoly exists when one firm can supply the output demanded at

lower cost than two or more firms.

### For a natural monopoly

per unit costs are always falling.

### A natural monopoly occurs when a single firm can supply the entire market demand for a product

at a lower average total cost than would be possible if two or more firms supplied the market.

### Price discrimination occurs when

consumers are divided into two groups with one group paying a high price and the other paying a low price.

### A monopolist engages in price discrimination to

earn more profit than would be possible if every buyer paid the same price.

### As compared to a normal monopolist, a price-discriminating monopolist produces a

larger output and charges each consumer a different price.

### A price-discriminating monopolist

is able to capture some of the consumers' surplus.

### Charging different prices to different customers for reasons other than cost

Price discrimination

Market power

Monopoly

Natural Monopoly

Barrier to entry

### Which of the following is true for a monopolist?

It faces a downward-sloping demand curve; It must lower its price on all of its units in order to sell any additional units; Its marginal revenue curve is below its demand curve.

### Market power is

The ability to alter the market price of a product.

### The marginal revenue curve is below the demand curve:

If a firm must lower its price to sell additional output.

### A barrier to entry is

An obstacle that makes it difficult for new firms to enter a market.

### If the firms in a competitive market become plants owned by a monopoly, then the monopoly would

Move upward along the market demand curve as it raises price.

### Both a competitive firm and a monopoly

Face downward-sloping market demand curves.

### Monopolists set prices

At the output where marginal revenue equals marginal cost.

### Compared with a competitive market with the same cost and market-demand circumstances, monopoly results in

Higher prices and lower output.

True.

False.

False.

### After the first unit sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold, because of

a downward sloping demand curve.

### A monopolist's marginal revenue is less than price because

the monopolist must lower the price of all units in order to sell an additional unit.

### Suppose a monopoly is producing at the profit-maximizing level of output. At that level of output

Marginal Revenue = Marginal Cost

### The price a monopolist charges for its product is

above marginal revenue.

### The supply curve of a monopolist is

nonexistent; a monopolist simply chooses the profit-maximizing point on the market demand curve.

False.

### A monopolist should decrease production if

Marginal Revenue < Marginal Cost; MR < MC

False.

Example: