Ch 10 - Monopoly Flashcards Preview

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Flashcards in Ch 10 - Monopoly Deck (23):
1

A Monopoly is a firm that...

That has no rivals

2

A firm that sets or picks a price based on its output decision is called...

A price setter

3

A firm that acts as a price setter possesses...

Monopoly power

4

Characteristics of a particular market that block new firms from entering it are called

Barriers to entry

5

If long run average cost declines as the level of production increases, a firm is said to experience...

Economies of scale.

6

A firm that confronts economies of scale over the entire range of outputs demanded in its industry is a...

Natural Monopoly

7

Sellers in markets isolated by distance from their nearest rivals have a a degree of...

Monopoly power

8

An expenditure that ha already been made and cannot be recovered is called...

A sunk cost

9

In very few cases the source of monopoly power is he ownership of...

Strategic inputs

10

An important basis for monopoly power consists of special privileges granted by...

Government agencies

11

In situations where products become more useful the larger the number of users of the product arises with...

Network effects

12

When marginal revenue is positive then demand is...

Price elastic

13

When marginal revenue is negative then demand is...

Price inelastic

14

When marginal revenue is zero, then demand is...

Unit price elastic

15

The demand curve for a monopoly is...

The industry demand curve

16

The marginal revenue curve for a price setter will always

Bisect any horizontal line drawn between the vertical axis and the demand curve

17

The monopoly firm can sell additional units only by...

Lowering Price

18

The perfectly competitive firm, by contrast to a Monopoly, can sell ________ at the market price.

any quantity it wants

19

Demand is price elastic at points in the _____ half of the demand curve and price inelastic in the _____ half of the demand curve.

Upper; Lower

20

If demand is price ______, a price reduction reduces total revenue because the percentage increase in the quantity demanded is less than the percentage decrease in the price

Inelastic

21

Marginal revenue is ______ price for the monopoly firm

less than

22

Additional units of a good should be produced as long as...

the marginal revenue of an additional unit exceeds the marginal cost

23

The maximizing solution occurs where...

marginal revenue equals marginal cost