Chapter 10: Monopoly Flashcards
(7 cards)
1
Q
In order for a monopoly to exist, what conditions must be met?
A
The firm must have something unique to sell, they must prevent competitors from entering the market.
Can also arise if governments regulate the market
2
Q
what are some natural barriers?
A
Controls of resources, Problems in raising capital, & economies of scale
3
Q
what are economies of scale?
A
When long-run average costs fall and as outputs expand?
4
Q
what are economies of scale?
A
When long-run average costs fall and as outputs expand?
5
Q
True or false: Monopolies charge more and have less output?
A
True
6
Q
What is the profit-maximizing rule for Monopolies?
A
P > MR = MC
7
Q
What are some problems with monopolies ?
A
Rent seeking behavior, inefficient price and output, and there is less choices for consumers.
