econs 2d

Question 1

Market Power deffinition

Answer 1

the ability of a firm to raise the market price of a g/s above marginal, cost by restricting output to increase the price

Question 2

Monopoly

Answer 2

an industry that consists of a single firm producing a unique product. The strength of its market power will depend on the closeness of substitutes provided by rivals in other industries. Monopolies can exist in a local, national or international level

Question 3

Barriers to entry

Answer 3

These are the obstacles that new firms face that prevent them from easily entering into an industry. They offer monopolies and oligopolies the opportunity to maintain their market power

Question 4

What can barriers to entry be

Answer 4

innocent - natural barrier, owning a location or deliberate

Question 5

EOS

Answer 5

When LRAC falls as output increases

Question 6

Natural Monopoly

Answer 6

This exists when there is only sufficient EOS to support one firm