Econ test 3 ch. 8

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Monopoly is at the other end of the spectrum from ____.

perfect competition

A monopolistic firm is a:

price maker that faces the market demand curve.

In a perfectly competitive industry, the industry demand curve is ____, while in a monopolistic industry, the industry demand curve is:

downward sloping; downward sloping.

Barriers that prevent the entry of new firms may arise because:

of both a. and d.

Pure monopoly:

is characterized by all of the above.

Which of the following is a characteristic of a monopoly?

larger barriers to entry

A key element to preserving a monopoly is:

keeping potential rivals out of the market.

Why does the government allow some markets to be monopolized by granting patents?

to promote technological progress

Which of the following would likely be an example of a monopolistic industry?

none of the above

If there are economies of scale throughout the relevant output range of production, which is false?

It would typically result from a firm's possession of an exclusive patent.

Many communities have granted monopoly rights to cable companies. This is an example of a monopoly created through:

government licensing.

When a single firm can produce output over the relevant range of demand more efficiently than two or more firms can, because of the existence of economies of scale, we have:

a natural monopoly.

A natural monopoly is likely to arise when:

economies of scale exist over the relevant range of demand.

Which of the following is false?

A monopoly firm is a price maker, and it will pick a price that is the highest point on its demand curve.

A market structure in which only one firm survives because of economies of scale:

is called a natural monopoly.

A natural monopoly exists if:

average cost of production is lowest when only one firm produces the entire industry output.

Which of the following is not potentially a barrier to entry into a product market?

the absence of economies of scale in the product market

Which of these contributes to the existence of monopoly power?

All of the above contribute to the existence of monopoly power.

Which of the following can serve as a barrier to entry?

all of the above

Which of the following is not a source of monopoly?

technologies that allow each of many small firms to produce at the same per-unit costs as one large firm

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