Monopoly Checkout

Which of the following is not a characteristic of a monopoly market?

• Products are not easily substitutable

• Market supply is dominated by a single firm

• Only weak barriers to entry and exit exist

• Firms are price makers

Which of the following is best considered to be a monopoly in the past?

• Market for computer operating systems

• Restaurant industry

• Market for televisions

• Vegetable market

The degree of market power a firm has is determined by the extent to which they can ________

• Erect barriers to entry and exit

• Set prices

• Drive out other competing firms from the market

• Achieve lower average costs of production

Which of the following are examples of barriers to entry?

i. legal constraints

ii. significant economies of scale

iii. resource rights (ownership)

iv. major start-up costs

• i.

• i + ii

• ii + iii

• all of them

What type of demand curve does the monopolist face?

• Horizontal

• Vertical

• Upward sloping

• Downward sloping

Compared to a perfectly competitive firm, a monopolist will set a _______ price and _______ level of output.

• higher, higher

• higher, lower

• lower, higher

• lower, lower

To maximize revenues, where should a monopolist produce?

• Level of output where MR = MC

• Level of output where MR = 0

• Level of output where MC = min ATC

• As far above the equilibrium level of output as possible

A monopolist that focuses on maximizing profit will charge a ____ market price and supply a ______ level of output than a revenue max firm

• lower, lower

• lower, higher

• higher, lower

• higher, higher

Which of the following is not a characteristic of natural monopolies?

• There are high fixed costs in the industry

• The ATC are lowest when only firm operates in the market

• LRATC decline as output levels rise

• SRATC can be reduced by increased competition

Assume a profit-maximizing monopolists produces 20,000 units of output, that sells this at a price of $55 per unit. Which of the following statements is correct?

• MC = MR at an output level of 20,000 units and corresponding point on AR is $55

• MC = ATC at an output level of 20,000 units and corresponding point on AR is $55

• MR = 0 at an output level of 20,000 units and corresponding point on the demand curve is $55

• MC = AR at an output level of 20,000 units and corresponding point on the demand curve is $55