Perfect Monopoly Flashcards
1
Q
What is a perfect monopoly market or industry?
A
- Single Seller
- Good or service for which there is no close substitutes
- market entry is restricted
Single firm = The firm
2
Q
What are the reasons monopolies exist?
A
Economies of scale: Can produce at a lower cost
*Public utilities
Legal authority or control- Single producer has sole legal authority or sole control of resources
*Patent
3
Q
in a monopoly, the demand curve is?
A
Downward sloping
4
Q
In a monopoly, the marginal revenue curve is?
A
Downward sloping- They are not the same slope. Marginal revenue at a steeper slope than demand.
5
Q
Where will a perfect monopoly produce?
A
When MR = MC: IF they produced at a lower cost
6
Q
How do perfect monopolies determine price?
A
Where Quantity intersects the demand curve based off the same line of MR=MC.
