Exam 12: Monopoly

Figure 11-1 -The Red Cross is virtually the only operator of blood banks in the United States.In Figure 11-1 are the demand and cost curves facing the Red Cross blood bank.If the Red Cross were to set price and quantity at the level that it would obtain in the long run in a competitive industry, how much blood would it sell?

Table 11-1 -At his profit-maximizing level of output, a monopolist's average total cost curve is tangent to his demand curve.The monopolist

A monopolist maximizes profit by producing the quantity at which MC = MR, just like a perfect competitor.

A market is not a pure monopoly if firms

Unlike a perfectly competitive firm, a monopolist

A monopolist can earn a positive economic profit, even in the long run.

Which of the following will occur if a natural monopoly is broken into two smaller firms?

In the long-run, a monopolist charges the same price as a perfectly competitive firm.

A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms.

Compared to perfect competition, monopoly in the long run

When airlines offer lower fares to passengers who stay over a Saturday night, compared to regular fares, is an example of

Entry barriers are present in monopoly markets but are not in perfectly competitive markets.

Figure 11-5 -In Figure 11-5 are the cost and revenue curves of a monopolist in the theater market, Crown Theater, which is the only movie theater in the city.At its profit-maximizing quantity of tickets sold, movie goers will buy ____ tickets.

Which of the following can be said about a monopoly?

A monopolist can maximize profits by determining the quantity where price is equal to marginal cost.

What is the equilibrium condition for price discriminating monopoly firm? Give some examples for price discrimination.

Too much of society's scarce resources are used to produce goods in monopoly markets.

The average total cost curve of a natural monopoly is always

In the long run under monopoly,

A positive aspect of monopolies is that they may aid innovation in the marketplace.