chapter 12 econ

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Pure Monopoly

Single firm producing a product for which there are no close substitutes?

Purely monopolistic

Firm that faces a downsloping demand curve?

Barriers to entry

Pure monopolists may obtain economic profits in the long run because of ?

Only bank in a small town

Which of the following best approximates a pure monopoly?


Which of the following is not a barrier to entry?

basis for monopoly

Barriers to entering an industry?

natural monopoly

long-run average costs decline continuously through the range of demand

natural monopoly

Large minimum efficient scale of plant combined with limited market demand may lead to?

Barriers to entry

What do economies of scale, the ownership of essential raw materials, and patents have in common?

Industry demand curve

The nondiscriminating pure monopolist’s demand curve?

less elastic than a purely competitive firm’s demand curve

The nondiscriminating monopolist’s demand curve?

Marginal revenue curve lies below the demand curve b/c any reduction in price applies to all units sold

for an imperfectly competitve firm

increase profits by increasing price

when a firm is on the inelastic segment of its demand curve, it can

price exceeds marginal revenue at all outputs greater than 1

With respect to the pure monopolists demand curve it can be said that

less elastic than that faced by a single purely competitive firm

the demand curve faced by a pure monopolist

Becomes negative when output increases beyond some particular level

The marginal revenue curve for a monopolist

it is the same as the market demand curve

Which of the following is characteristic of a pure monopolist’s demand curve

price must be lowered to sell more output

Because the monopolist’s demand curve is downsloping?

in the price range where marginal revenue is positive

The pure monopolist’s demand curve is relatively elastic

ill never produce in the output range where demand is inelastic

A nondiscriminating profit maximizing monopolist

Marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing

For a pure monopolist the relationship between total revenue and marginal revenue is that?

When a monopolist lowers price to sell more output, the lower price applies to all units sold

For a pure monopolist marginal revenue is less than price because?

inelastic segment of its demand curve bc it can increase total revenue and reduce total cost by increasing price

a pure monopolist should never produce in the

charge a higher price

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. if the monopolist is seeking maximum profits, it should

must lower price to increase sales

Assuming no change in product demand, a pure monopolist

the firm would not be maximizing profits

if a monopolist were to produce in the inelastic segment of its demand curve?

Marginal revenue will be positive but declining

If a pure monopolist is operating in a range of output where demand is elastic?

product price and average revenue

The vertical distance between the horizontal axis and any point on a nondiscriminating monopolist’s demand curve measures

total revenue is increasing

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. We thus know that?

price of the 7th unit is $11

A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5, then?

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