.
One of a large number of small firms that produce a homogeneous good
One of a small number of large firms that produce a differentiated good
A single seller of a product with many close substitutes
One of a small number of large firms that produce a homogeneous good
A single seller of a product with no close substitutes
There are no barriers to entry.
The firm is a price taker.
There are no close substitutes for the product being produced.
There are many firms in the industry.
The firm faces a horizontal demand curve.
The government licenses production of the good to a few firms.
The government grants a patent for the good.
A firm can earn economic profit in the long run.
If price falls below average variable cost, it pays to shut down.
There are no barriers to entry.
Legal restrictions
Diseconomies of scale
Product differentiation
Stable market demand
Rising marginal cost
Cannot profitably enter the industry, even in the long run
May freely enter and leave the industry in both the short run and the long run
May freely enter and leave the industry in the long run only
May freely enter and leave the industry in the short run only
Have no incentive to enter the industry, even if economic profits are present
Small firms merge to form larger firms
One firm has control over the entire supply of a basic input required to produce the product
One firm's monopoly position is created and enforced by the government
One firm receives patent protection for certain basic production processes
Long-run average cost declines as a firm expands output
A license
A patent
Official approval to produce a product
Decreasing average costs over the range of market demand
Exclusive use of a natural resource
The same as the demand curve facing a perfectly competitive firm
Vertical because there are no close substitutes for its product
Horizontal because there are no close substitutes for its product
The same as the market demand curve
Perfectly inelastic
P = MR because there are no close substitutes for the monopolist's product.
P > MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
P < MR because the monopolist must decrease price on all units sold in order to sell an additional unit.
AR = MR because there are no close substitutes for the monopolist's product.
P = MR only at the profit-maximizing quantity.
Is the same as its average revenue curve
Is the same as its marginal revenue curve
Is the same as the perfect competitor's demand curve
Lies above its average revenue curve
The monopolist is facing elastic demand.
The monopolist is facing unit elastic demand
The monopolist is facing inelastic demand.
The monopolist is facing perfectly elastic demand
The elasticity of demand cannot be determined with the information given.
Never produces on the inelastic portion of the demand curve because it can increase profit by increasing output
Never produces on the inelastic portion of the demand curve because marginal revenue exceeds marginal cost
Always produces on the inelastic portion of the demand curve
Never produces on the elastic portion of the demand curve because there are no substitutes for the good it produces
Never produces on the inelastic portion of the demand curve because marginal revenue is negative there
Elastic; positive
Elastic; negative
Inelastic; negative
Inelastic; positive
Inelastic; zero
The firm is maximizing its economic profit
The firm is maximizing its total revenue
Total revenue is increasing at an increasing rate as output increases
Total revenue is increasing at a decreasing rate as output increases
Total revenue is decreasing as output increases
Both P and MR remain constant
P is constant, but MR decreases
Both P and MR decrease, but P falls faster than MR
P decreases, but MR is constant
Both P and MR decrease, but MR falls faster than P
P = AR = MR
P > AR = MR
P = AR > MR
P > AR > MR
P = AR < MR
A.The entry of new firms is not a major concern.
B.Monopolists seek to maximize profits.
C.Monopolists can charge any price they want and make a profit.
D.Monopolists can choose any point on the market demand curve.
E.Monopolists can raise price more than 10 percent.
Price equals marginal cost.
Price is greater than marginal cost.
Marginal revenue equals marginal cost
Marginal revenue is less than marginal cost.
Marginal revenue is greater than average revenue.
Can charge whatever price it wants
Charges more than almost any consumer is willing to pay
Is constrained by marginal cost in setting price
Is constrained by demand in setting price
Always earns an economic profit
Raise price and lower output.
Lower price and lower output.
Raise price and raise output.
Lower price and raise output.
Lower output but leave price unchanged.
Price is equal to marginal cost.
Average revenue is equal to marginal cost.
Marginal revenue is positive.
Marginal revenue is less than marginal cost.
Price is greater than average revenue.
A wide variety of substitute products from which consumers can choose
An elimination of barriers to industry entry
A decline in government regulation
A higher price than would exist in a competitive industry
An improvement in allocative efficiency
A monopolist always produces on the inelastic portion of the firm's demand curve.
A monopolist always produces on the inelastic portion of the market demand curve.
A monopolist always produces on the elastic portion of the market demand curve.
A monopolist always produces on the unit elastic portion of the market demand curve.
The presence of a monopolist increases the elasticity of demand.
Always produce in the inelastic range of its demand curve
Never produce in the elastic range of its demand curve
Never produce in the inelastic range of its demand curve
Never produce in the elastic range of its marginal cost curve
Produce in the elastic range of the marginal revenue curve
Lower price to expand revenue possibilities
Restrict output to extract a higher price from customers
Maintain the current price if profit is still positive
Increase plant size to lower marginal cost
Decrease plant size to lower marginal cost
Raise ticket prices
Lower ticket prices to boost sales
Maintain ticket prices and suffer a loss in profits
Expand the number of home hockey games
Reduce the number of home hockey games
Marginal revenue is the greatest distance from marginal cost
Price is less than marginal cost
The value to society of the last unit produced equals marginal cost
Marginal revenue equals marginal cost
Consumers wish to purchase less than what is produced because of high monopoly prices
Total cost is greater than total revenue at all output levels
Total variable cost is greater than fixed cost
Total revenue is greater than total variable cost at all output levels
Fixed cost is greater than total revenue at all output levels
Total variable cost is greater than total revenue at all output levels
As demand changes, each output level can be consistent with more than one profit-maximizing price
Monopolists tend to restrict output
Monopolists have no marginal cost curve
Monopolists can charge any price they want
As demand changes, the firm's profit-maximizing choice of output may change
Prevent monopolies from earning profit in the long run
Prevent monopolies from earning profit in the short run
May allow monopolies to earn profit in the long run
Prevent government from regulating a monopoly
Prevent a natural monopoly from raising its price
They charge the highest price possible
There is a cost-reducing technological change
There are significant barriers to entry
Marginal revenue equals marginal cost
Price is less than average variable cost at all rates of output
The perfectly competitive firm tends to be larger
Only the monopolist attempts to maximize profit
Only the perfectly competitive firm maximizes profit
The perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve
Only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue
They have the same level of barriers to entry
They have a similar number of firms in the industry
The demand curve facing the firm is perfectly elastic for both
Price equals marginal revenue for both
Price equals average revenue for both
Very efficient because it charges a higher price
More efficient because it produces greater output
Inefficient
Equally efficient, as it also produces where MR = MC
Very efficient because it conserves resources by producing less output
Can be expected to decrease
Will usually remain constant
Can be expected to increase
Drops from a high value to zero
Increases from zero to a high value
Converted consumer surplus
Deadweight loss
Economic profit under monopoly
Producer surplus
Contestable profit
Orange juice
Diamonds
Compact disks
Haircuts
Gasoline
A monopolist fails to expand output to the level where the consumers' evaluation of an additional unit is just equal to its opportunity cost
A monopolist has no incentive to produce efficiently, because even if it pays no attention to the costs of production, it will be guaranteed an economic profit
A monopolist will always make profits therefore providing an incentive to keep prices at the level that maximizes consumer surplus
A monopolist has an advantage because it can purchase the resources in a competitive market
Consumer surplus would no longer be equal to producer surplus
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