Monopoly

What are the assumptions of the Pure Monopoly Model?

• Multiple sellers, no close substitutes, significant entry barriers

• A single seller, close substitutes, no entry barriers

• A single seller, no close substitutes, significant entry barriers

• Multiple sellers, close substitutes, no entry barriers

Which of the following is a barrier to entry in a pure monopoly?

• Perfect information

• Free market entry and exit

• Branding

• Price competition

Why will a monopolist not operate in the inelastic portion of its demand curve?

• Because it maximizes revenue

• Because it minimizes costs

• Because it maximizes profits

• Revenue maximization occurs in the elastic portion

What is the profit maximization condition for a monopolist?

• MR=MC to minimize profits

• MR=MC to maximize profits

• MR>MC to maximize profits

• MC>MR to maximize profits

What is a natural monopoly characterized by?

• Diseconomies of scale and government intervention

• Economies of scale and natural monopoly

• Perfect competition and natural monopoly

• Monopolistic competition and economies of scale

What is necessary for price discrimination to occur?

• Perfect competition

• No market power

• Necessary conditions for it to occur

• Government regulation

How many firms are there in a pure monopoly market structure?

• A very large number of firms

• Only one firm

• No firms, as it is a theoretical concept

• A small number of firms with significant market share

In a pure monopoly, what is the nature of the product offered by the firm?

• Firms all produce identical products

• Unique product, no other firm makes anything like it

• The product is made by many firms with slight variations

• The product is a commodity with no differentiation

What kind of price making abilities do individual firms have in a pure monopoly?

• Each firm is so small that changes in its output do not affect market price

• Changes in the firm's output cause changes in the price, i.e., the firm is a price-taker

• Changes in the firm's output cause changes in the price, i.e., the firm is a price-maker

• Firms have no control over the price and must accept the market price

What type of entry barriers exist in a pure monopoly market structure?

• Completely free entry and exit from the industry

• No barriers to entry

• Significant barriers to entry exist

• Entry is limited by government regulation only