Chapter 13 - Monopoly And Antitrust Flashcards
A true or pure monopoly exists in cases of only ______ seller of a product for which no close substitute is available
One
Monopolists are ____ rather than price takers
Price makers
A monopolist’s barriers to entry can include ____, _____, and _____.
Legal barriers, economies of scale, control of important imputs
____ include franchising, licensing, and patents
Legal barriers to entry
The situation in which one large firm can provide the output of the market at a lower cost than two or more smaller firms is called a(n) ____
Natural monopoly
A barrier to entry is control over an important _____, such as Alcoa’s control over bauxite in the 1940’s and DeBeers’ control over much of the world’s output of diamonds
Input
In monopoly, the market demand curve may be regarded as the demand curve for the _____ because it is the market for that particular product
Firm
If a monopolist reduces output, the price will _____; if the monopolist expands output, the price will _____.
Rise; fall
In monopoly, if the seller wants to expand output, it will have to lower its price on ____ units
All
The monopolist, like the perfect competitor, will maximize profits at the output where _______ = MC.
MR
The monopolist, unlike the perfect competitor, will not maximize profits at that output where ________ = MC
P
If at a monopolist’s profit-maximizing price and output, the price is less that __________, the monopolist is generating economic losses.
Average total cost
In a monopoly, economic profits are not eliminated by entry, because one of the conditions for monopoly is that _________ exist.
Barriers to entry.
Patents and copyrights are examples of ________ power designed to provide an incentive to develop new products.
Barriers to entry.
The major efficiency objection to monopoly is that a monopolist charges __________ prices and produces _______ output than would exist under perfect competition.
Higher; less
