Unit 9 Monopoly

Question 1

Monopoly

Answer 1

A sole producer of a product for which there are no close substitutes

Question 2

Barrier to Entry

Answer 2

Any impediment that prevents new firms from entering an industry and competing on an equal basis with existing firms

Question 3

Patent

Answer 3

A legal barrier to entry that grants its holder the exclusive right to sell a product for 20 years from the date the patent application is filed

Question 4

Innovation

Answer 4

The process turning an invention into a marketable product

Question 5

Price Maker

Answer 5

A firm that must find the profit maximizing price when the demand curve for its output slopes downward

Question 6

Deadweight Loss of Monopoly

Answer 6

Net loss to society when a firm uses its market power to restrict output and increase price

Question 7

Rent Seeking

Answer 7

Activities undertaken by individuals or firms to influence public policy in a way that will increase their incomes

Question 8

Price Discrimination

Answer 8

Increasing profit by charging different groups of consumers’ different prices when the price differences are not justified by differences in costs

Question 9

Perfectly Discriminating Monopolist

Answer 9

A monopolist who charges a different price for each unit sold; also called the monopolist’s dream