ch 15 terms

Question 1

define monopoly

Answer 1

market sales all from one firm
barrier to entry

Question 2

define barrier to entry

Answer 2

fundamental cause of monopoly
potential competitors can’t compete

Question 3

what are the three barriers to entry

Answer 3

monopoly resources
govt regulation
natural monopoly

Question 4

define monopoly resources

Answer 4

key resource owned by one firm
rarely actually causes monopoly

Question 5

define govt regulation

Answer 5

govt gives one firm exclusive right to produce
ex. bc hydro

Question 6

define natural monopoly

Answer 6

we can produce at an incomparably low cost
economies of scale
often impacted by market size

Question 7

monopoly vs perfect competition demand

Answer 7

competitive —
monopoly aka market \

Question 8

competitive firm MR

Answer 8

p = mr = mc

Question 9

monopoly mr

Answer 9

p> mr = mc

Question 10

how to calculate monopoly profit

Answer 10

(p-atc) x q = profit

Question 11

welfare cost of monopoly

Answer 11

undesirable to consumers
very desirable to producers

Question 12

price discrimination

Answer 12

firms sells same goods for different prices for different people

Question 13

define arbitrage

Answer 13

buy good at lower price and sell at higher price to profit from difference

Question 14

define perfect price discrimination

Answer 14

i know exactly how much everyone is willing to pay and charges them that much

Question 15

imperfect price discrimination

Answer 15

make guess based on demographic what your willingness to pay is

Question 16

2nd degree imperfect price discrimination

Answer 16

charge same people different price based on # on units

Question 17

3rd degree imperfect price discrimination

Answer 17

segments have different elasticities of demand
ex. different age demo at movie theatre

Question 18

what does graph of price discrimination look like

Answer 18

kinked

Question 19

public policy around monopoly

Answer 19

try to make monopoly more competitive
prevent mergers
regulate behaviour
force private monopoly into public enterprise
nothing