Chapter 13 - Monopoly

Question 1

Monopolist

Answer 1

Firm that is the only producer of a good that has no close substitutes

Question 2

Monopolists have

Answer 2

Market power. As a result, they sulk charge higher prices and produce less output than a competitive industry

Question 3

Natural monopoly

Answer 3

Exists when increasing returns to scale provide a large cost advantage to a single firm that produces all of an industry’s output

Question 4

Network externality

Answer 4

The value of a good or service to an individual increases as more individuals use the same good or service

Question 5

Average cost pricing

Answer 5

Forces a monopoly to set its price equal to its average total cost

Question 6

Marginal cost pricing

Answer 6

Forces a monopoly to set its price equal to its average total cost

Question 7

Monopsony

Answer 7

Exists when there is only one buyer of a single good

Question 8

Advance purchased restrictions

Answer 8

Prices are lower for those who purchase well in advance

Question 9

Volume discounts

Answer 9

The price is lower if you buy a large quantity

Question 10

Two-part tariffs

Answer 10

A customer pays a flat fee upfront and then a per-unit fee on each item purchased

Question 11

Digital personalized pricing

Answer 11

Online retailers gather personal information on shoppers and adjust prices accordingly