Exam 13: Monopoly

What is a legal barrier to entry?

Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's long-run average cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is constant at $4. If Gene was regulated using a marginal cost pricing rule, the price he would be allowed to charge to wash 100 cars is

Compared to the profit-maximizing equilibrium of a natural monopoly, a price cap regulation ________ the firm's price and ________ the firm's output.

-The output produced by the single-price, unregulated monopoly in the above figure is

-If a marginal cost pricing rule is imposed on the firm in the figure above, the consumer surplus will be

-In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the consumer surplus?

A monopolist maximizes its profit by producing the amount of output that sets

Methods of rent seeking include which of the following? I. Buying a monopoly II) Creating a monopoly III) Price discrimination

"Price discriminators lose money by being nice to their customers." Is the previous statement correct or incorrect?

With rent seeking by a monopoly

When natural or legal forces work to protect a firm from potential competitors, the market is said to have ________.

When a person lobbies Congress to grant the person the exclusive right to sell a particular good, such lobbying activity is called

Describe the main problem with rate of return regulation and name an alternative regulatory scheme that has been devised to deal with that problem.

A barrier to entry is

Which of the following is a characteristic of a single-price monopoly?

Attempts to create a monopoly by having favorable laws passed are examples of rent seeking.

When a monopoly perfectly price discriminates, there is ________.

-If the firm in the figure above is unregulated, it will make an economic profit of

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America. The deal is tough for many to swallow. "We continue to believe that consumers are best served by competition rather than monopolies," said National Association of Broadcasters Vice President Dennis Wharton. What does Wharton argue?

-If the above figure illustrated a perfectly competitive industry, the equilibrium market price would be equal to