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A lone seller who produces a unique product without close substitutes is a ____________________.
Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must
have something unique to sell
have a way to prevent competitors from entering the market
be able to segregate its consumers
be able to estimate its demand curve
A city's electric company is able to gain monopoly power in its market due to
control of an essential resource
low barriers to entry
a product with close substitutes
Three natural barriers to entry are
economies of scale
problems in raising capital
control of resources
patents and copyright law
The best way to limit competition is to
lobby for a government-created barrier
control a resource that is essential in the production process
charge a low price
Raising capital to compete against an entrenched monopolist can be done only through private investors.
A natural monopoly exists when
a single seller has lower costs than any competitor
a firm owns a patent or copyright
many sellers sell very similar goods at very similar prices
a single seller has higher costs than any competitor
Which of the following is not an example of a government-created barrier to entry?
patents and copyright law
Patents and copyright law
are natural barriers
assure inventors that no one will sell their ideas
create more competition
mean more varieties of goods and services at different price levels
Both monopolies and competitive firms try to maximize profits.
Shop n' Save is the only grocery store in town. The demand curve for Shop n' Save is
the market demand curve
If a monopolist is producing a quantity where marginal revenue (MR) is equal to $20 and the marginal cost (MC) is equal to $25, the monopolist should produce more to maximize profits.
Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?
A producer can earn long-run economic profits
A producer can earn long-run accounting profits
A producer has no market power
A producer is a price taker
Market failure occurs when resource allocation to firms is inefficient.
When several goods or services are sold together as a single take-it-or-leave-it package, that package is called a cluster.
Which of the following statements about rent seeking are false? (choose 3)
It occurs when resources are used to secure monopoly rights.
It relates only to rent that is payment for the use of property.
It is a form of beneficial competition.
It does not involve the use of lobbying.
We cannot buy a cable subscription for single channels like HGTV or TLC because cable companies act like perfectly competitive firms.
Pottle's Tea House (akin to Starbuck's) has decided that lobbying Congress to pass a tariff on imported teas will cost less than trying to modernize its stores to compete with foreign tea prices. Pottle's Tea House will
decide that lobbying is wrong and modernize its stores
participate in rent seeking and lobby Congress for the tariff
produce more tea to attract more customers
lower its prices to compete with the imported foreign tea
Economists view rent seeking as a beneficial form of competitive behavior.
Brayden just learned that two of the three restaurants in his small town are closing down. Because he has studied economics, he expects the
shuttered restaurants to reopen under new ownership in the near future
remaining restaurant to reduce the number of menu items it offers
remaining restaurant to shut down, as well, in the near future
remaining restaurant to offer early bird specials to attract new customers