Exam 10: Monopoly

The Case in Point on hockey teams suggested that if a sports team had a large enough stadium, it would maximize its profits by selling that quantity of tickets per game where marginal revenue was:

In economic theory, a perfectly competitive firm follows the marginal decision rule, but a monopoly does not.

A perfectly competitive firm is a _______ ; a monopoly is a _______ .

In the _______ range of demand, total revenue _______ with an increase in quantity.

A natural monopoly is most likely to result if a single firm:

A monopoly can be temporary because of:

A horizontal demand curve exists for:

When monopolies exist because economies of scale prevail over the entire range of demand:

Use the following to answer question(s): A Profit-Maximizing Monopoly Firm -(Exhibit: A Profit-Maximizing Monopoly Firm) This profit-maximizing monopoly firm's profit per unit is:

A monopolist is a:

A decrease in the marginal cost of a monopoly firm would _______ quantity and _______ price.

The demand curve facing a monopolist is:

According to theory, to maximize profit, a monopoly firm determines its _______ , _______ , and _______ curves and produces an output where _______ .

If your farm has the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from:

Monopoly firms may have economic profits in the long run.

Suppose that a profit-maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost, the firm changes its price in a profit-maximizing way, then we can predict that its total economic profit will:

Compared to perfect competition:

Use the following to answer question(s): Chip Production Assume that Sandy Chip Products, Inc., is the world's only producer of a special kind of computer chip.Its patents assure that it will continue to be the only producer for at least the next decade.Chip production requires clean water.The firm gets its water from a river, which is being polluted by paper mills located upstream.Sandy Chip therefore has to process the water before using it.A recently enacted pollution-control program, whereby the paper mills will be fined for polluting the river, will result in less pollution and thus lower Sandy Chip's costs.Sandy Chip expects its marginal and average cost to fall by $20 per chip. -(Exhibit: Chip Production) Before the imposition of the pollution fines on the paper mills, the chip firm probably:

Monopolists tend to be price takers because they can take whatever price the market will pay.

Suppose that a profit-maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40.If the firm has been operating for over 10 years, it probably: