Competition and Market Structures: Monopolies

A market in which a single seller dominates

• monopoly

• natural monopoly

• license

• market power

Which of the following is a source of monopoly power?

• Scarcity
• Elasticity of demand
• Barriers to entry
• Low Profits

A barrier to entry is

• A law established by the government to protect new industries.

• A commitment on the part of big business to allow smaller companies to compete.

• An obstacle that prevents additional workers from entering an industry, such as a union.

• An obstacle that makes it difficult for new firms to enter a market.

One of the requirements for a monopoly is that

• products are high priced

• there are several close substitutes for the product

• there is a unique product with no close substitutes

• the product cannot be produced by small firms

A monopolist is

• a price taker

• able to ignore the demand for its product when setting price

• able to set the price for its product

• able to earn only a normal profit in the long run

If a monopolist wants to sell a larger quantity, it must

• set a higher price

• maintain the current price

• set a lower price

• implement new technology

In order for a firm to engage in price discrimination, it must be:

• producing in the inelastic portion of its demand curve to raise its price and increase total revenue

• a price taker

• able to separate consumers into different groups

• experiencing economies of scale in the relevant range of production

Why does no one firm dominate in a perfect competition?

• No firm wants to

• Each firm sells to different people

• Each firm produces exactly the same towards total supply that they cannot influence prices

• One firm will eventually dominate and make it a monopoly

Factors that make it difficult for new firms to enter a market are called

• Barriers to entry
• Factors of production
• Limited supply
• Monopolistic Outlook

Which of the following is an example of a natural monopoly?

• Coca-Cola

• City of McKinney water service

• United Airlines

• Levi Jeans