Chapter 11 Key Terms

Question 1

pure monopoly

Answer 1

an industry in which there is only one supplier of a product for which there are no close substitutes and in which it is very difficult or impossible for another firm to coexist

Question 2

barriers to entry

Answer 2

attributes of a market that make it more difficult or expensive for a new firm to open for business than it was for the firms already present in that market

Question 3

patents

Answer 3

a privilege granted to an inventor, whether an individual or a firm, that for a specified period of time prohibits anyone else from producing or using that invention without the permission of the holder of the patent

Question 4

natural monopoly

Answer 4

an industry in which advantages of large-scale production make it possible for a single firm to produce the entire output of the market at lower average cost than a number of firms each producing a smaller quantity

Question 5

monopoly profits

Answer 5

any excess of the profits earned persistently by a monopoly firm over and above those that would be earned if the industry were perfectly competitive

Question 6

price discrimination

Answer 6

the sale of a given product at different prices to different customers of the firm when there are no differences in the costs of supplying these customers. Also if it costs more to supply one customer than another but they are charged the same price.