Exam 12: Monopoly

Explain the source of monopoly power for DeBeers' Diamond Mine in South Africa, Microsoft (owned by Bill Gates), the American Medical Association (which licenses doctors), Polaroid's Instant Picture Cameras, USAir (which owns virtually all the gates at the airport in Charlotte, North Carolina), and electric utilities.

Only government restrictions serve as entry barriers.

A monopolist is a price maker.

A natural monopoly would benefit by being broken into many smaller firms.

If a firm was able to acquire control over access to bauxite, the ore used in aluminum manufacturing, it would gain monopoly control of the aluminum industry because that firm

Compared to perfect competition, a monopoly in the long run

A monopoly firm

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his or her marginal cost curve upward sloping, the monopolist

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.

Figure 11-6 The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.

Is the monopolist supply decision more complicated than that of competitive supply?

Under what conditions might a monopoly be more efficient than a perfectly competitive firm?

The marginal revenue curve for a monopolist is the same as its demand curve.

A monopolist's cost curves may shift down because

The product supplied by a monopoly firm has

The marginal revenue curve for a monopolist is always below the demand curve.

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

It is possible that if a monopoly is broken up, the cost of production for that product could increase.

Since the Red Cross supplies 95 percent of the blood in the United States, it can be considered a monopolist. Assume that it, in fact, operates like a monopolist. The Red Cross currently charges hospitals and other users $21 for a pint of blood. In order to increase the supply of blood, the government offers the Red Cross a $10 million, lump-sum subsidy. How much more blood supply will the subsidy generate?

Which of the following is not potentially a barrier to entry into the widget market?