Handout10 - Handout#10 Monopoly Definition Monopoly market...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Handout #10 Monopoly Definition: Monopoly market is a one-firm industry , and there is no close substitute for its output. So, firm demand curve is the same as the downward sloping industry demand curve, which means it has control over market price. 1. A monopolist is a price maker.(T/F) 2. Pure monopoly is able to exist because the firm's product is better than the substitutes that are available in the market.(T/F) Sources for monopoly: a). barriers to entry—legal restrictions, patents, control of natural resources. b). natural monopoly—has advantage of production of scale. 3. Which of the following will occur if a natural monopoly is broken into two smaller firms? a. The price will drop. b. Industry output will increase. c. Production costs will increase. d. Industry output will decrease. 4. The average total cost curve of a natural monopoly a. is always upward sloping. b. is always horizontal. c. is always downward sloping at all points. d. is always downward sloping where it crosses the market demand curve for the good Government’s attitude: advocate is the monopoly is beneficial, and regulate if the monopoly is detrimental to economy. 5. The U.S. government a. intervenes to prevent the monopolization of any market. b. forbids the creation of legal impediments to entry into any market. c. intervenes to prevent the monopolization of some markets and actively encourages the monopolization of others. d. encourages the permanent monopolization of all markets in which the monopolist has technical superiority over potential competitors. 6. Many public utilities are permitted to operate as monopolies because they enjoy economies of large-scale production. (T/F) Profit maximization Same as perfect competitive market, monopoly firm maximizes its profit by producing at
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/18/2011 for the course SOCIAL SEC 200 taught by Professor William during the Winter '05 term at Alvin CC.

Page1 / 4

Handout10 - Handout#10 Monopoly Definition Monopoly market...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online