Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 9, Problem 4MC
To determine
The difference between a competitive firm and a
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Students have asked these similar questions
What is the best definition of a natural monopoly?
a. Natural monopoly refers to any monopoly that is sanctioned by the
government.
b. Natural monopoly refers to a cost structure that has large fixed costs
and a small constant marginal cost of production.
C. Natural monopoly refers to any monopoly that can sustain its market
power.
d. Natural monopoly refers to a monopoly that drove all of its competitors
out of business.
e. Natural monopoly refers to any monopoly that likely can't sustain its
market power for very long because the source of its power is
susceptible to erosion (e.g., an expiring patent).
What are examples of ways in which a firm can have a monopoly?
A. Patents
B. Natural Monopoly
C. Trademarks
D. A and B
E. A, B, and C
Comparing a perfectly competitive market to a monopoly, which of the following is true?
a.
Price will be higher and quantity will be lower in the perfectly competitive market than in the monopoly.
b.
Price will be equal to marginal revenue in the perfectly competitive market but will be higher than marginal revenue in the monopoly.
c.
at that point on the market demand curve which intersects the marginal cost curve.
d.
Price will be higher than marginal cost in the perfectly competitive market but will be equal to marginal cost in the monopoly.
Chapter 9 Solutions
Managerial Economics: A Problem Solving Approach
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Similar questions
- What is the deadweight loss associated with monopoly? A. The loss in consumer surplus due to high prices and reduced output B. The loss in producer surplus due to low prices and excess supply C. The loss in government revenue due to taxation D. The loss in economic efficiency due to government interventionarrow_forwardWhen will a monopoly set its price equal to marginal cost? A monopoly will set its price equal to marginal cost when A. consumer demand is infinitely elastic. B. new firms cannot threaten to enter. C. consumers are not sensitive to price. D. its marginal revenue curve is downward-sloping. E. it has no fixed costs.arrow_forwardThe accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this figure to answer the questions that follow. a. What price will an unregulated monopoly charge? b. What quantity will an unregulated monopoly produce? c. How many units will a monopoly produce when the regulated price is $10 per unit? d. Determine the quantity demanded and the amount produced at the regulated price of $10 per unit. Is there a shortage or a surplus? e. Determine the deadweight loss to society (if any) when the regulated price is $10 per unit. f. Determine the regulated price that maximizes social welfare. Is there a shortage or a surplus at this price?arrow_forward
- Is a monopoly always bad for society? a. No. For example, patents on medications create monopolies, and increase the price and reduce the quantity sold, but without them, no one would take the high costs of developing new drugs and the quantity will be... zero! b.Monopoly is not bad if its owner gives back to society in charity. c.Yes, Monopoly is always bad d. None of the other answers is correctarrow_forwardA market structure that is “monopoly” is NOT ... Group of answer choices a. production efficient b. allocation efficient c. neither allocation nor production efficientarrow_forwardGaynor is the only manufacturer of gas pumps that automatically refill. Gaynor can earn a profit on the sale of these gas pumps a.in the long run but not the short run because the monopolist will face competition in the short run. b.in the long and short run because entry into the industry by new firms is blocked. c.only in the long run because government regulations prevent monopolists from earning profits in the short run. d.in the short run but not in the long run because new firms will enter the industry in the long run.arrow_forward
- Which of the following is not an artificial barrier to entry into a monopoly market? Answers: A. Patent B. Economies of scale C. Legal harassment D. Bundling productsarrow_forwardA natural monopoly occurs when A. one firm can supply the entire market at a lower price per unit than two or more firms can. B. a few firms collude to act as a single firm. C. one firm owns all the vital resources needed to produce a particular good. D. one firm captures all the consumer surplus.arrow_forwardGaynor is the only manufacturer of gas pumps that automatically refill. Gaynor can earn a profit on the sale of these gas pumps a. in the short run but not in the long run because new firms will enter the industry in the long run. b. in the long run but not the short run because the monopolist will face competition in the short run. c. only in the long run because government regulations prevent monopolists from earning profits in the short run. d. in the long and short run because entry into the industry by new firms is blocked.arrow_forward
- in monopoly, market power permits you to price above MC. What limits how high a price you can set? a. government b. Depends on the demand elasticity for the product c. Depends on the supply elasticity of the product d. no limitarrow_forwardHow does the monopoly quantity (assuming no price discrimination) compare to the competitive quantity? Assume normally shaped demand (decreasing, not completely elastic or inelastic ) a.The monopoly quantity is higher b.The monopoly quantity is lower c.There is not enough information provided to be sure. d.The monopoly quantity is the same. Which one?arrow_forward1. Which of the following is not possible for a monopolist in the short-run? a. An economic profit b. Breaking even c. An above normal rate of return d. An economic loss e. All of the above are possible for a monopolist in the short-run 2. Which of the following is least like monopoly? a. Sony Corporation b. A natural gas utility company c. A cable tv company d. An electric utility company 3. Which of the following is most like a monopoly? a. Parker Brothers (a game company) b. The U.S. Postal Service c. Intel (a chip manufacturer) d. Motorola (an electronics firm) e. Kroger (a grocery store chain) 4. A monopolist can earn above-normal profit in the long-run. a. True b. False 5. If a monopolist cannot make an above-normal profit, entry by other firms will occur. a. True b. Falsearrow_forward
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