Flashcards in Test 4 Agricultural Economics Deck (40)
t/f even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices
t/f the fundamental cause of monopolies is barriers to entry
t/f the amount of power that a monopoly has depends on whether there are close substitutes for its product
t/f deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output
t/f in order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage
t/f a monopolist that can practice perfect price discrimination will not impose a deadweight loss on society
t/f a monopolist maximizes profit by producing an output level where marginal cost equals price
t/f a monopoly creates a deadweight loss to society because it produces less output than the socially efficient level
t/f by selling hardcover books to die-hard fans and paperback books to less enthusiastic readers, the publisher is able to price discriminate and raise its profits
t/f the government may choose to do nothing to reduce monopoly inefficiency because the fix may be worse than the problem
t/f a monopolist produces where P=MC=MR
patent and copyright laws are major sources of what?
government created monopolies
encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for...
government created monopolies
a reduction in a monopolist's fixed costs would....
not effect the profit maximizing price or quantity
what is the formula for calculating profit for monopolists
P= (price- average total cost) times quantity
in reality perfect price discrimination is...
what is an example of public ownership of a monopoly
U.S. Postal Service
what are the characteristics needed for a monopoly
the firm is the sole seller of the product
the firm's product does not have close substitutes
a natural monopoly occurs when...
there are economies of scale over the relevant range of output
what is the shape of the monopolist's marginal revenue curve
a downward sloping line that lies below the demand curve
when a monopolist is able to sell its product at different prices, it is engaging in...
the collection of statutes aimed at curbing monopoly power is called...
t/f if firms in a oligopoly agree to produce according to the monopoly outcome, they will produce the same level of output as they would produce in the Nash equilibrium
false, they need to collude
t/f if all firms in an oligopoly successfully collude and form a cartel, then total profit for the cartel is equal to what it would be if the market were a monopoly
t/f all examples of the prisoner's dilemma game are characterized by one and only one Nash equilibrium
false, can be multiple or none
t/f in the prisoner's dilemma, one prisoner is always better off confessing, no matter what the other prisoner does
t/f in the prisoner's dilemma game, confessing is the dominant strategy for each of the players
t/f the game that oligopolists play in trying to reach the oligopoly outcome is similar to the game that the two prisoners play in the prisoner's dilemma
t/f when prisoners' dilemma games are repeated over and over, sometimes the threat of penalty causes both parties to cooperate