chapter 15

Question 1

Natural Monopolies

Answer 1

one market supplying a good at a smaller cost. ex.power/gass

Question 2

government created monopolies

Answer 2

The government gives a single firm the
exclusive right to produce some good or service.

Question 3

what does the monoply decide

Answer 3

the decide how much to produce, buyers determine the price

Question 4

what is marginal revenue

Answer 4

the change in total revenue

Question 5

monopoly vs perf comp market

Answer 5

monopoly P>MR, P> MR = MC
perf comp P<MR, MR=MC=P

Question 6

the change of MR

Answer 6

is the revenue that a company can generate for each additional unit sold.
Ex. one apple sells it at 10, but now you have two, so you have to sell it for 9. you keep on losing.

Question 7

MR for monopolies

Answer 7

MR=MC

Question 8

What are perfectly competitive markets

Answer 8

price takers

Question 9

what can never be negative

Answer 9

Price, but MR can be.

Question 10

price on a graph

Answer 10

Price is equal to Average Revenue and MR is below it. (Visualize a graph)

Question 11

what is profit (in monopoly)

Answer 11

difference between p and atc on the graph

Question 12

steps to figuring out profit of monopoly

Answer 12

1. MR=MC to find q
2. q into Qd=P*
3. Q into ATC*
4. profit = (p-atc)Q*

Question 13

inefficiency of monoply

Answer 13

the set MR=MC not the demand curve.
monopolies like to produce less to charge higher prices

Question 14

problems with monopolies

Answer 14

deadweight loss

Question 15

price discrimination

Answer 15

different prices to different people.

Question 16

benefit of price discrimination

Answer 16

no dead weightloss, no consumer suplus.
ex. airlines, discount coupons, financial aid

Question 17

what does government do against monopolies?

Answer 17

encourage competition to break monopoly power.