Monopoly & Oligopoly

What is an economic monopoly?

• A board game in which players engage in simulated property and financial dealings using imitation money. It was invented in the US and the name was coined by Charles Darrow c. 1935

• The exclusive possession or control of the supply of or trade in a commodity or service

• Something legal

• An economic system in which prices are determined by unrestricted competition between privately owned businesses

Monopoly occurs when there is a single _____ in the market of a certain good.

• Household

• Buyer

• Producer

• Consumer

• Industry

The average price of mobile phones suddenly drops by $30. Which of these possibilities would not be true as a result?

• There was a major technological advance

• The supply curve for the mobile phone industry would shift to the right

• Demand for landlines (home phones) would increase

• Demand for mobile phones would increase

Which of the following companies are not monopolies?

• McDonalds

• Simmons Pet Food

• Microsoft

• Google

Which of the following are true in monopoly?

• The monopolist can set price and output

• The demand curve for the firm and the market are the same

• The monopolist protect their position through barriers to entry

Which of the following is not true of monopolists?

• Monopolists seek to maximize profits

• Monopolists can raise price more than 10 percent

• Monopolists can charge any price they want and make a profit

• The entry of new firms is not a major concern

When you go to the movies, the theater is a monopoly vendor of popcorn while you're there (why it costs so much). Suppose that the cost to the theater of fake butter flavoring and yellow food coloring rise significantly, what will happen to the price and quantity of popcorn sold by the theater?

• The price of popcorn will rise and the quantity sold will increase

• The price of popcorn will rise and the quantity sold will fall

• The price of popcorn will remain unchanged and the quantity sold will remain unchanged

• The price of popcorn will fall and the quantity sold will fall

A monopoly requires

• Products that are high priced

• Several close substitutes for the product

• A unique product with no close substitutes

• That the product cannot be produced by small firms

When one firm in an industry can serve the entire market at a lower cost than if there were many firms in the industry, it would be a(n) ...

• Pure monopoly

• Natural monopoly

• Devised monopoly

• Oligopoly

All the following serve as barriers to entry into a market, EXCEPT...

• patents

• technology

• low start up costs

• marketing budgets