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    Monopoly Concepts and other Competition related concepts

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    A natural monopoly exists whenever a single firm ______.
    is owned and operated by the federal or local government
    is investor owned but has been granted the exclusive right by the government to operate in a market
    confronts economies of scale over the entire range of production that is relevant to its market
    has gained control over a strategic input of an important production process

    Marginal revenue for a monopolist is ______.
    equal to price
    greater than price
    less than price
    equal to average revenue

    In a monopoly in the long run ______.
    economic profits will be eliminated by the entry of rival firms
    economic profits will be reduced, but not eliminated entirely, by the entry of rival firms
    entry will not occur
    none of the above is true

    In monopoly _______.
    because P > MC, a basic condition for efficiency is violated
    consumers are confronted with a price that is lower than marginal cost
    consumers will consume more of the good than is economically efficient
    all of the above are true

    To practice effective price discrimination, a monopolist must be able to ______.
    estimate its own production and cost functions
    avoid detection by government regulatory agencies
    prevent the resale of goods among groups of buyers
    calculate the utility level of each buyer in the market

    A concentration ratio is used to measure ______.
    diseconomies of scale
    marginal cost
    market dominance

    If the only two firms in an industry agree to fix the price at a given level, this is an example of ______.
    price extortion
    price leadership

    When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits, those firms are practicing ______.
    overt collusion
    tacit collusion
    leadership price
    competitive game

    A cartel is an example of ______.
    price extortion
    price leadership
    overt collusion
    tacit collusion

    A dominant strategy equilibrium exists in a game when ______.
    every player has no choice
    every player makes the same choice, regardless of the action of the other players
    each player makes the best choice, given the choice of the other player
    no player is able to dictate the actions of any other player

    When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a ______.
    dormant strategy
    trigger strategy
    conclusive strategy
    tit-for-tat strategy

    An industry characterized by many firms, producing similar but differentiated products, in a market with easy entry and exit is called ______.
    perfect competition
    monopolistic competition

    In large shopping areas, the retail market is most illustrative of ______.
    monopolistic competition
    perfect competition
    perfect oligopoly

    A feature of monopolistic competition that makes it different from monopoly is the ______.
    fact that firms in the model of monopolistic competition follow the marginal decision rule while monopolies do not
    downward-sloping demand curve
    downward-sloping marginal revenue curve
    number of firms in the industry

    Product differentiation under monopolistic competition means that each firm ______.
    charges the same price
    maximizes profit where MC = P
    faces a downward-sloping demand curve
    receives economic profits

    Product differentiation under monopolistic competition means that each firm ______.
    charges slightly different prices
    has a pure monopoly
    maximizes profit where MC = P
    faces a horizontal demand curve

    Monopolistic competition within an industry results in ______.
    overutilization of plants
    chronic excess capacity
    less advertising than in perfect competition
    lower prices than in perfect competition

    Critics of advertising argue that it ______.
    tends to make markets more perfect
    leads to low-cost mass production
    results in higher prices to consumers
    encourages competition through new-product advertising

    If an activity generates external costs, decision makers generating the activity will ______.
    be faced with its full costs
    be faced with no costs
    not be faced with its full costs
    be faced with excessive costs

    A tax system _______ when it minimizes the direct and indirect costs to the economy of tax collection.
    is efficient
    is equitable
    has no deadweight loss
    is both A and B

    Criteria that economists use in selecting a tax system include ______.
    ability to pay and benefits received
    only benefits received
    only ability to pay

    Sales taxes are considered to be ______.

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    Solution Summary

    Solution answers question related to monopoly