Ch. 22-26 Flashcards
There are no monopolies in the United States. (T/F)
False
The monopolist produces at the minimum point of her ATC curve. (T/F)
False
A monopoly is a firm that produces at the output in an industry. (T/F)
True
The monopolist produces
where MC=MR
The monopolist will not lose money in the long run. (T/F)
True
The most efficient output is found
at the bottom of the ATC curve.
An example of government ownership of a monopoly would be
the Tennessee Valley Authority.
The monopolist charges a higher price than the perfect competitor in the long run. (T/F)
True
A monopolist operates at the minimum point of there ATC curve
in neither the short run not the long run.
If the government attempts to break up a natural monopoly to enforce competition in an industry
the average cost of producing the good will increase.
In the United States, natural monopolies
are commonly regulated by governments.
Patents function to
temporarily protect monopoly power.
Monopoly firms are
sometimes very large.
A public utility would be an example of
a natural monopoly
Monopoly profit
equals (price-ATC) times quantity sold.
When an industry is a natural monopoly
the economies of scale in it arc very great.
The perfect competitor____produces at the output at which MC=MR; the monopolist ____ produces at the output at which MC=MR.
Always;always
All monopolists are imperfect Competitors.(T/F)
true
The International Nickel Company is not a natural monopoly.(T/F)
true
A monopolist make a profit
in both the short and long run.
A monopolist can lose money.(T/F)
true
Each of the following is a legal barrier to entry into an industry except
brand names.
One basis for monopoly is control over an essential resource. (T/F)
true
Monopolies tend to be inefficient. (T/F)
true
The concentration ratio is the percentage of ___ earned by the __ largest firms In the industry.
sales;4
The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over
80
___ is leagal in the U.S.
Cut throat competition
A highly oligopolied industry would have a ___ Herfindahl-Hirschman Index and a ___ concentration ratio.
High;high
Oligopolies are illegal in most states.(T/F)
false
A Herfindahl-Hirschman Index of 10,000 would mean there is how many firms in the industry?
1
The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is
oligopoly
Which one of these firms would be oligopolist?
Proctor & Gamble
Oligopoly is characterized by
high barriers to entry
the closer the industry concentration ratio is to 100, the more likely it is that
there is a small number of firms.
The highest concentration ratio
is in Industry Y.
The Highest Herfindahl-Hirschman Index
is in Industry X
An example of an oligopoly market would be one in which ____ firms sell ___%j of the output.
4;80
Each of the following are oligopoly except
Microsoft
Which of the following represents an illegal control of prices
colluding
A cartel is
a group of firms acting under collusion to control output and maximize group profits
Price leadership is a leagal way to reduce the price problems oligopolies face.(T/F)
true
If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be
5,000
An industry with 4 firms each having 25% market share would have a Herfindahl-Hirschman Index of
2,500
At one end of the competitive spectrum is cutthroat competition. At the other end is
cartel
A concentration ratio of 100 would imply that the industry has ___
no more than four firms
Corporate concentration can be measured by
both the concentration ratio and the Herfindahl-Hirschman Index
As foreign imports become a greater percentage of sales in oligopolized industries.=, the concentration ratio and the Herfindahl-Hirschman Index
become less accurate as a measure of concentration
The higher the concentration ratio, the higher the degree of oligopolization.(T/F)
True
A monopolistic competitive industry has
many firms producing a differentiated product.
Product differentiation takes place in the minds of the buyer. (T/F)
true
Price discrimination
occurs when a seller charges 2 or more prices for the same good or service.
Which statement is true about the monopolistic competitor in the long run?
it will be breaking even.
Price discrimination means
charging different prices for identical goods that have identical production costs.
Through product differentiation, firms attempt to increase the
demands for their products, while making its demand less elastic.
Which of the following would NOT cause the costs in a monopolistically competitive industry to be higher than those in a competitive industry?
A large number of competitors.
An important result in long-run equilibrium in monopolistic competition is that the equilibrium point results in
price=ATC
Which is NOT a characteristic of monopolistic competition?
each firm must take into account the actions of its rivals.
The monopolist competitor has more a elastic demand curve than the monopolist.(T/F)
true
Statement 1. The airlines often engage in price discrimination.
Statement 2. Price discrimination occurs when a seller charges two or more prices for the same good or service.
Both statements are true
______ is the crucial characteristic of monopolistic competition.
product differentiation.
The typical monopolistic competitor
may compete on the basis of convenience, service, and ambience.
Most firms in the US are monopolistic competitors.
most accurate statement
Product differentiation is ____ based on real physical differences among products.
sometimes
Product differentiation
takes place in the minds of the buyers.
The typical monopolistic competior
may be a drugstore, restaurant, gas station, or dry cleaner.
Monopolistic competition is similar to perfect competition for all of the following reasons except
both have identical demand and marginal revenue curves.
Monopolistic competition may lead to each of the following except
peak efficiency
In general, it is fair to say that Americans are provided with
a greater amount of product differentiation than people in most other countries.
Corn from an Iowa cornfield vs. corn from an ILlinois cornfield is not an example of product differentiation.
…
AN industry that has many firms producing a differentiated product would be classified as
monopolistically competitive
Providing better service, ambience, or a convenient location are all forms of
product differentiation.
Expensive blood tests in a medical lab for well-to-do medical patients is not an example of price discrimination.
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