Aacsb reflective thinking blooms understand

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Financial Markets & Institutions
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AACSB: Reflective ThinkingBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 24-01 How a monopolist sets price and output.Schiller - Chapter 24 #137Topic: A COMPARATIVE PERSPECTIVE OF MARKET POWER
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Financial Markets & Institutions
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Chapter 1 / Exercise 2
Financial Markets & Institutions
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138.Monopolies need some type of barrier to entry to keep potential competitors away. TRUEThe preservation of monopoly power depends on keeping potential competitors out of the market.AACSB: Reflective ThinkingBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 24-01 How a monopolist sets price and output.Schiller - Chapter 24 #138Topic: A COMPARATIVE PERSPECTIVE OF MARKET POWER139.To maintain market power, firms will sometimes purchase their competitors. TRUEWhen all else fails, a monopolist may simply purchase a potential competitor to maintain market power. An example occurred when Live Nation acquired Ticketmaster in 2009 to eliminate competition in the ticket distribution system.AACSB: Reflective ThinkingBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 24-01 How a monopolist sets price and output.Schiller - Chapter 24 #139Topic: A COMPARATIVE PERSPECTIVE OF MARKET POWER140.Monopolists have an advantage over competitive markets in receiving the full benefit of research and development efforts. TRUEIn principle, monopolies are well positioned to undertake valuable research and development because they are sheltered from the constant pressure of competition and they have the resources (monopoly profits) with which to carry out expensive R&D functions.AACSB: Reflective ThinkingBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 24-01 How a monopolist sets price and output.Schiller - Chapter 24 #140Topic: PROS AND CONS OF MARKET POWER141.A monopoly is considered more desirable to society than a perfectly competitive firm because a monopoly has the incentive to pursue research and development. FALSEAlthough monopolists have a clear financial advantage in pursuing research and development activities, they have no clear incentive to do so. Research and development aren't necessarily required for profitable survival. In fact, research and development that make existing plants and equipment technologically obsolete run counter to a monopolist's vested interest and so may actually be suppressed.AACSB: Reflective ThinkingBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 24-01 How a monopolist sets price and output.Schiller - Chapter 24 #141Topic: PROS AND CONS OF MARKET POWER
142.Economies of scale occur when the long-run average cost curve slopes downward. TRUEEconomies of scale are reductions in minimum average costs that come about through increases in the size (scale) of plants and equipment.AACSB: AnalyticBlooms: RememberDifficulty: 1 EasyLearning Objective: 24-01 How a monopolist sets price and output.

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