Competition and 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

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

It is usually very difficult to enter a market that is a monopoly.

• True
• False

A monopoly created by the administration.

• government monopoly

• market power

• monopoly

• natural monopoly

a government license that gives the inventor of a new product the exclusive right to produce and sell it

• patent

• license

• market power

• economies of scale

If there are many firms in an industry producing goods that are similar but slightly different, this is an example of

• Monopoly

• Monopolistic competition.

An oligopoly is a market dominated by just a few firms.

• True
• False