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Economics Chapter 10 Flashcards
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Economics Chapter 10
22cards Rebecca F. Economics
Microeconomic Theory
A dilemma of regulation is that:
the regulated price that achieves allocative efficiency is also likely to result in losses.
A pure monopolist should never produce in the:
inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price.
An important economic problem associated with pure monopoly is that, at the profit maximizing outputs, resources are:
underallocated because price exceeds marginal cost.
Confronted with the same unit cost data, a monopolistic producer will charge:
a higher price and produce a smaller output than a competitive firm.
Economic profit in the long run is:
possible for a pure monopoly, but not for a pure competitor.
For a pure monopolist the relationship between total revenue and marginal revenue is such that:
marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing.
Large minimum efficient scale of plant combined with limited market demand may lead to:
natural monopoly.
Pure monopolists may obtain economic profits in the long run because:
of barriers to entry.
The MR = MC rule:
applies both to pure monopoly and pure competition.
The nondiscriminating pure monopolist's demand curve:
is the industry demand curve.
The profit-maximizing output of a pure monopoly is not socially optimal because in equilibrium:
price exceeds marginal cost.
What do economies of scale, the ownership of essential raw materials, and patents have in common?
They are all barriers to entry.
Which of the following conditions is not required for price discrimination?
Buyer with different elasticities must be physically separate from each other.
Refer to the above diagram for a nondiscriminating monopolist. Demand is elastic:
for all levels of output less than q2.
Refer to the above diagram for a nondiscriminating monopolist. Marginal revenue will be zero at output:
q2.
Refer to the above diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to:
subsidize the monopolist or the monopolist will go bankrupt in the long run.
Refer to the above diagram for a pure monopolist. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set price at:
P1.
Refer to the above diagram. Demand is relatively elastic:
in the P2P4 price range.
Refer to the above diagram. To maximize profits or minimize losses this firm should produce:
E units and charge price A.
Refer to the above diagrams. Firm A is a:
pure competitor and Firm B is a pure monopoly.
The demand curve faced by a pure monopolist:
is less elastic than that faced by a single purely competitive firm.
For a pure monopolist marginal revenue is less than price because:
when a monopolist lowers price to sell more output, the lower price applies to all units sold.
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Chapter 12 Econ Flashcards
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Chapter 12 Econ
5.0 3 Reviews Pure Monopoly
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Single firm producing a product for which there are no close substitutes?
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Purely monopolistic
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Firm that faces a downsloping demand curve?
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Terms in this set (30)
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?
X-efficiency
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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Statistics 8 Dec 2019
Large minimum efficient scale of plant combined with limited market demand may lead to:
Natural monopoly Patent monopoly
Government franchise monopoly.
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