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 supply curves facing the Red Cross blood bank. If it were to operate like a profit-maximizing business, how many units of blood would it sell?

A pure monopoly is defined as having only one seller.

A monopoly firm always devotes some of its profits to research.

In perfect competition, one result of the model was that there were no economic profits in the long run. In a monopoly, the firm typically earns a positive economic profit. Why is there this difference?

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

A monopolist faces a horizontal demand schedule.

Pure monopoly is defined as a

In cases of natural monopoly, it is best to have only one firm producing all of the output in a market.

Figure 11-7 The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?

In cases of natural monopolies, society would be better off with many firms competing with each other.

Bargain airline fares in which airlines charge varying rates to passengers for the same flight and service is an example of

Compared to perfect competition, monopoly

If a monopoly firm reduced the price of its product, which of following must have been true?

Figure 11-5 In Figure 11-5, Crown Theater, a monopolist movie theater, has chosen the profit-maximizing output. At this output level, what is total cost for the firm?

A monopolist's cost curves may shift up because of

The key element in preserving a monopoly is keeping rivals out of the market.

Give a complete and concise definition of each of the following terms. a. Deliberately erected entry barriers b. Inefficiency of monopoly c. Price discrimination d. Profit-maximizing equilibrium for a monopolist

A profit-maximizing monopolist will stop production while MR is still greater than MC.

A monopoly may breed inefficiency by reducing competition and restricting production.

The single source of monopolies is economies of scale.