Chapter 13 monopoly Flashcards
What is market power?
This is the power to raise above the marginal cost without fear other firms will enter the market.
What is a monopoly?
A firm with market power.
A firm with market power must blank its price in order to sell and additional unit?
lower.
What does the demand curve or a monopoly look like?
Downward facing.
Where can you find the revenue loss on a graph?
it is the area where the price decreased, and goes out to the demand curve. (slide 11)
Where can you find the revenue gain on a graph?
it is the area where the quantity increased, and goes up to the demand curve. (slide 11)
Do monopoly markets have high or low barriers to enter?
high
The more inelastic a demand curve the more or less the price will rise?
The more in-elastic the more the price will rise.
economies of scale?
the advantages of large-scale production that reduce average costs as quantity increases.
natural monopoly?
when a single firm can supply the entire market at a lower cost than two or more firms.
