Week 5- Monopoly textbook

Question 1

Monopoly definition___

Answer 1

1 firm in the market. Can charge whatever place they want.

Question 2

Barriers to entry___

Answer 2

legal, market forces that discourage potential competitors from entering a market.

Question 3

Natural monopoly___

Answer 3

controlling a scarce physical resource.

Question 4

Legal monopoly___

Answer 4

law prohibit competition.

Ex: Only US Postal Service is legally to deliver first class mail.

Question 5

Patent gives___

Answer 5

inventor the exclusive legal right to make, use or sell invention.

Question 6

Trademark is an___

Answer 6

identifying symbol or name for a particular good.

Ex: Chevy cars.

Question 7

Copyright is a___

Answer 7

form of protection by law for original works of authorship.

Question 8

Trade secrets___

Answer 8

• even if the company does not have patent or invention, firms are not allowed to steal their secrets.
  Ex: formula for Cola-Cola.

Question 9

Predatory pricing___

Answer 9

firm uses the threat of sharp price cuts to discourage competition.

Question 10

Monopoly’s profit and output___

Answer 10

Same framework as regular competitive firm.

Profit = TR – TC.

Question 11

Inefficiency of Monopoly-

Answer 11

Monopoly does not supply enough output to be allocative efficient.