Monopoly vs competitive firm

Question 1

In a monopoly, production and suppliers are constrained and prices do not move down the….

Answer 1

Market demand curve

Question 2

True or false

A new equilibrium price is established and average costs are not necessary at or near the minimum in a monopoly

Answer 2

False. No equilibrium in monopoly

Question 3

In a monopoly, economic profits are at maximum and price exceeds ________ at all times.

Answer 3

Marginal costs

Question 4

MONOPOLY OR COMPETITIVE.

No profit squeeze to pressure firms to reduce cost or improve product

Answer 4

Monopoly

Question 5

MONOPOLY OR COMPETITIVE

High prices and profit signal demand for more output

Answer 5

BOTH

Question 6

Barriers to entry are erected to exclude potential competition in

Answer 6

Monopoly

Question 7

MONOPOLY VS COMPETITIVE

High profits attract new suppliers

Answer 7

Competition

Question 8

In competition, products and suppliers ____ and prices slide ______ the market demand curve.

Answer 8

EXPAND productions and supplies

Slide DOWN the market demand curve

Question 9

MONOPOLY VS COMPETITIVE

A NEW EQUILIBRIUM is established and average cost of products approach their minimum

Answer 9

Competition

Question 10

In competition, economic profits approach zero and price equals _____ ______ throughout the process

Answer 10

MARGINAL COST equals price

Question 11

MONOPOLY VS COMPETITIVE

Have profit squeeze to reduce costs or improve product quality

Answer 11

Competition

Question 12

MONOPOLY use the PROFIT MAXIMIZATION RULE to determine ________

Answer 12

Output

MR =MC

Question 13

A MONOPOLIST uses PROFIT MAXIMIZATION at the rate of output where marginal revenue equals?

Answer 13

Marginal cost

Question 14

MONOPOLY

PROFIT MAXIMIZATION EQUATION

Answer 14

Marginal revenue = marginal cost

MC=MR

Question 15

MONOPOLY OR COMPETITIVE

Profit maximization applies to all firms when
MC=MR (=p)

Answer 15

Competitive

Question 16

MONOPOLY OR COMPETITIVE

Profit maximization produce the quantity where
MC =MR (<p></p>

Answer 16

Monopoly

Question 17

Monopoly profits

Total profit =

Answer 17

Total profit= profit per unit x # of Units produced

= (price - ATC) x quantity

OR

total cost - total revenue

Question 18

MONOPOLY OR COMPETITIVE

Produces less and charges a higher price

Answer 18

Monopoly

Question 19

MONOPOLY OR COMPETITIVE

Produce less and charges a lower price

Answer 19

Competitive

Question 20

Marginal cost =

Answer 20

Price

Question 21

MONOPOLY OR COMPETITIVE

Use barriers to entry

Answer 21

Monopoly

Question 22

Barriers to entry

Answer 22

Obstacles that make it difficult or impossible for a producer to enter the market 
Include 
Patents 
Legal harassment 
Exclusive licensing 
Bundling products 
Govt franchises

Question 23

Patent

Answer 23

A gov’t grant of exclusive ownership of an innovation

Question 24

Monopoly granted by a gov’t license include

Answer 24

Local power
Telephone
Cable TV

Question 25

Near monopoly

Answer 25

Two or more firms that may rig the market to replicate monopoly outcome and profits

INCLUDE
duopoly
Oligopoly
Monopolistic competition

Question 26

Duopoly

Answer 26

Two firms together produce the industry output

Question 27

Oligopoly

Answer 27

Several firms that dominate the market

Question 28

Monopolistic competition

Answer 28

Many firms each have a monopoly of their own brand but still contend with competing brands

Question 29

How do monopolies benefit society

Answer 29

Research and development 
Entrepreneurial incentives 
Economies of scale 
Natural monopoly 
Contest able markets 
Structure vs behavior

Question 30

Natural monopoly

Answer 30

An industry in which one firm can achieve economies of scale over the range of the market supply
Ex
Local telephone cable title

Question 31

Economies of scale are present

Answer 31

If average costs fall as the size (scale) of plant and equipment increases
A large firm can produce at lower unit costs than a small firm

Consumers may not benefit from the lower production costs if they don’t lower their prices

Question 32

Contestable market

Answer 32

A IMperfectly competitive industry subject to potential entry if prices or profits increase

Question 33

How contestable a market is depends not so much on its structure as it does on its ______

Answer 33

Barriers to Entry

Question 34

If potential rivals force a monopolist to behave like a competitive firm then a monopolist will impose

Answer 34

No cost on consumers or on society at large

Question 35

The experience with the Model T suggests that potential competition can

Answer 35

Force a monopoly to change its ways

Question 36

Entry effects

Predatory pricing

Answer 36

Temporary price reductions designed to drive out competition