Chapter 14 - Monopoly

Question 1

monopolist

Answer 1

A firm that is the only producer of a good that has no close substitutes

Question 2

Monopoly

Answer 2

An industry controlled by a monopolist

Question 3

Two dimensions market structures are based on:

Answer 3

1. The number of producers in the market
2. If the products are differentiated or not

Question 4

Antitrust laws

Answer 4

Laws which prevent monopolies from emerging

Question 5

Market power

Answer 5

The ability of a firm to raise prices

Question 6

Barrier to entry

Answer 6

Something that prevents other firms from entering the industry

Necessary for monopolies to earn economic profits

Question 7

Natural monopoly

Answer 7

Exists when increasing returns to scale provide a large cost advantage to a single firm that produces all of an industry’s output

Question 8

Patent

Answer 8

Gives an inventor a temporary monopoly in the use or sale of an invention

Question 9

Copyright

Answer 9

Gives the creator of a literary or artistic work sole rights to profit from that work

Question 10

Public ownership

Answer 10

The good is supplied by the government or by a firm owned by the government

Question 11

Price regulation

Answer 11

Limits the price that a monopolist is allowed to charge

Question 12

Single-price monopolist

Answer 12

Offers its product to all consumers at the same price

Question 13

Price discrimination

Answer 13

Sellers engage in this when they charge different prices to different consumers for the same good

Question 14

Perfect price discrimination

Answer 14

Takes place when a monopolist charges each consumer his willingness to pay