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    Economics Chapter 10 Flashcards

    Study Economics Chapter 10 flashcards. Create flashcards for FREE and quiz yourself with an interactive flipper.

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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

    Start studying Chapter 12 Econ. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

    Chapter 12 Econ

    5.0 3 Reviews Pure Monopoly

    Click card to see definition 👆

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

    Click again to see term 👆

    Purely monopolistic

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    Firm that faces a downsloping demand curve?

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    1/30 Created by courtneyg1107

    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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    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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