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Marknaden - priser, konsumenter och företag > modul 15 > Flashcards

modul 15 Flashcards

1
Q

What are the characteristics of a monopoly?

A

A monopoly is a market structure characterized by a single seller, no close substitutes for the product, and significant barriers to entry.

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2
Q

What is the relationship between price setting and monopoly power?

A

Monopoly power allows for price setting

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3
Q

What is a monopoly?

A

A market with only one seller

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4
Q

What is a natural monopoly?

A

A monopoly that occurs naturally without any government intervention

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5
Q

What is the difference between a monopoly firm and a perfectly competitive firm in terms of analyzing choices?

A

A monopoly firm has market power and faces a downward-sloping demand curve, while a perfectly competitive firm faces a horizontal demand curve.

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6
Q

How does demand relate to marginal revenue for a monopoly firm?

A

Marginal revenue is less than the price for a monopoly firm due to the downward-sloping demand curve.

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7
Q

What is the relationship between demand and marginal revenue for a monopoly firm?

A

For a monopoly firm, marginal revenue is always less than the price because the firm must lower the price to sell additional units.

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8
Q

How does a monopoly firm maximize profit using the marginal decision rule?

A

A monopoly firm maximizes profit by producing at the quantity where marginal revenue equals marginal cost.

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9
Q

Why does a monopoly firm always select a price in the elastic region of its demand curve?

A

To maximize total revenue

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10
Q

How does a monopoly firm’s output and price differ from a perfectly competitive firm?

A

A monopoly firm sets its output by setting marginal cost equal to marginal revenue and charges a price determined by the demand curve, which exceeds marginal cost. In perfect competition, price and marginal cost are equal.

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11
Q

De Beers acquired rights to nearly all the world’s diamond production, giving it enormous power in the market for diamonds. With new diamond supplies in Canada, Australia, and Russia being developed and sold independently of DeBeers, however, this power has ______.

A

declined

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12
Q

What is the relationship between price setting and monopoly power?

A

Monopoly power allows for price setting

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13
Q

What are some sources of monopoly power?

A

Special advantages of location

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14
Q

What is a source of monopoly power?

A

Exclusive franchise

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15
Q

How does a monopoly firm behave compared to firms in perfect competition?

A

Produces less and charges more

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16
Q

What is meant by a natural monopoly?

A

A natural monopoly is a type of monopoly that arises due to economies of scale, where a single firm can produce at a lower cost than multiple firms in the industry.

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17
Q

Monopoly is at the opposite end of the spectrum of market models from __ competition.

A

perfect

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18
Q

How do firms in a monopoly behave compared to firms in perfect competition?

A

Firms in a monopoly have the ability to restrict output and charge higher prices, unlike firms in perfect competition that are price takers and have no control over the market price.

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19
Q

What is a natural monopoly?

A

A monopoly that occurs naturally without any government intervention

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20
Q

A natural monopoly occurs when a single firm can produce a good or service at a ______ cost than multiple firms.

A

lower

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21
Q

How does price setting relate to monopoly power?

A

In a monopoly, the firm has the power to set the price of its product, as there are no competitors to dictate the market price.

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22
Q

__ are characteristics of a particular market that block new firms from entering it.

A

Barriers to entry

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23
Q

What are the sources of monopoly power?

A

The sources of monopoly power include barriers to entry, economies of scale, control over essential resources, locational advantages, and government restrictions.

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24
Q

A monopoly firm will generally operate where marginal revenue is ______.

A

positive

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25
Q

In a perfectly competitive market, each firm faces a ______ demand curve defined by the market price.

A

horizontal

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26
Q

The additional revenue a monopoly firm gains from selling an additional unit—its marginal revenue—is equal to the ______.

A

marginal price

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27
Q

A monopoly firm faces a ______ market demand curve.

A

downwardsloping

28
Q

How does demand relate to marginal revenue for a monopoly firm?

A

Marginal revenue is less than the price for a monopoly firm due to the downward-sloping demand curve.

29
Q

What is the relationship between marginal revenue and elasticity along a linear demand curve?

A

Marginal revenue is zero at the midpoint of a linear demand curve

30
Q

How does marginal revenue relate to elasticity along a linear demand curve?

A

Marginal revenue is equal to price when demand is unit elastic along a linear demand curve.

31
Q

The relationship between marginal revenue and elasticity along a linear demand curve is ______.

A

negative

32
Q

What is the relationship between demand and marginal revenue for a monopoly firm?

A

For a monopoly firm, marginal revenue is always less than the price because the firm must lower the price to sell additional units.

33
Q

How does a monopoly firm maximize profit using the marginal decision rule?

A

A monopoly firm maximizes profit by producing at the quantity where marginal revenue equals marginal cost.

34
Q

Why does a monopoly firm always select a price in the elastic region of its demand curve?

A

To maximize total revenue

35
Q

What is the relationship between price and marginal revenue for a firm facing a downward-sloping demand curve?

A

Price is less than marginal revenue

36
Q

How does a monopoly firm’s output and price differ from a perfectly competitive firm?

A

A monopoly firm sets its output by setting marginal cost equal to marginal revenue and charges a price determined by the demand curve, which exceeds marginal cost. In perfect competition, price and marginal cost are equal.

37
Q

What is one potential effect of a monopoly on consumer choices?

A

Decreased variety and options for consumers

38
Q

How do monopolies differ from perfect competition in terms of output and price?

A

Monopolies produce less output and charge higher prices compared to perfect competition.

39
Q

What is the difference between a monopoly and a perfectly competitive firm in terms of output and price?

A

Monopoly produces lower output and higher price

40
Q

Why do monopolists have the means and incentive to protect and extend their position?

A

Because they can spend their economic profits to influence political leaders and public authorities

41
Q

What is the term used to describe the output produced by a monopoly firm that is less than the efficient level?

A

Underproduction

42
Q

What is consumer surplus?

A

The difference between what consumers are willing to pay and what they actually pay

43
Q

What is the effect of a monopoly firm charging higher prices compared to a perfectly competitive firm?

A

Decreased consumer surplus

44
Q

What are some public policy responses to monopoly?

A

Public policy responses to monopoly can include regulation, antitrust laws, and promoting competition through market reforms.

45
Q

Compared to a perfectly competitive firm, a monopoly charges:

A

Higher prices

46
Q

A monopoly firm is a ______ setter.

A

price

47
Q

What are some potential effects of a monopoly on consumer choices, price, quality of products, and technological innovations?

A

Decreased consumer choices and higher prices

48
Q

What is the main concern with the transfer of consumer surplus to a monopolist?

A

It reduces efficiency

49
Q

What is the potential gain from moving from a monopoly solution to a competitive solution?

A

The shaded area GRC

50
Q

What is the difference between consumer surplus in a perfectly competitive firm and a monopoly?

A

Consumer surplus is higher in a perfectly competitive firm

51
Q

What are the implications of the higher price charged by a monopoly firm?

A

The higher price charged by a monopoly firm may allow it a profit at the expense of consumers, reducing their options and giving them little say in the matter.

52
Q

What is the result of a monopoly firm producing an output that is less than the efficient level?

A

Decreased deadweight loss

53
Q

What is the potential effect of a monopoly on consumer choices?

A

Limited consumer choices

54
Q

What is the transfer of consumer surplus to a monopolist through higher prices called?

A

Producer surplus

55
Q

The monopolist restricts output to ______ and raises the price to Pm.

A

Qm

56
Q

The monopoly solution raises problems of efficiency, equity, and the concentration of _

A

power

57
Q

What is the impact of a monopoly on consumer choices?

A

Decreased consumer choices

58
Q

What are the problems associated with the monopoly solution?

A

Efficiency, equity, and concentration of power

59
Q

What are potential effects of a monopoly on consumer choices, price, quality of products, and technological innovations?

A

Decreased consumer choices and higher prices

60
Q

What is the main difference between price and marginal cost in a monopoly?

A

Price is greater than marginal cost

61
Q

The total cost of increasing output from Qm to Qc is the area under the ______ cost curve over that range.

A

marginal

62
Q

What is the main difference between a perfectly competitive firm and a monopoly firm?

A

Perfectly competitive firms have a large number of buyers and one seller, while monopoly firms have a large number of sellers and buyers producing a homogeneous good or service

63
Q

A monopoly can result in fewer choices, higher costs, and lower ______.

A

quality

64
Q

What is the public policy response to monopoly?

A

Regulating the production and pricing choices of monopolies

65
Q
A

Marknaden - priser, konsumenter och företag (14 decks)

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