4.1.5.6 Monopoly

Unregulated monopolies

• can influence the market quantity and price.
• cannot change the market quantity
• cannot incorporate.
• take the market price as given.

The following are key features of a monopoly EXCEPT

• diseconomies of scale.
• no close substitutes
• influence over price
• barriers to entry.

Which of the following statements about a monopoly is FALSE?

• Monopolies have no barriers to entry or exit.
• A monopoly is the only supplier of the good.
• The good produced by a monopoly has no close substitutes.
• None of the above answers are true.

A patent grants

• an exclusive right to an inventor of a product
• A patent grants
• the right to practice a profession.
• control over a unique source or supply of raw materials.

Patents create monopolies by restricting

• entry.
• profit
• prices
• Demand

A defining characteristic of a natural monopoly is that

• its AC curve slopes downward as it intersects the AR curve.
• it has no close substitutes.
• it exists because of legal barriers to entry
• its demand curve slopes downward.

All of the following are examples of price discrimination EXCEPT

• "buy now, pay later" payment options.
• buy-one-get-one-free offers.
• "early bird specials" at a restaurant.
• lower ticket prices for matinee performances.

For a monopoly, the industry demand curve is the firm's

• demand curve
• marginal revenue curve
• supply curve
• profit function.

If the price elasticity of demand is greater than 1, a monopoly's

• total revenue increases when the firm lowers its price.
• total revenue decreases when the firm lowers its price
• marginal revenue is negative.
• marginal revenue is zero.

If the demand for its product is inelastic, a monopoly's

• marginal revenue is negative.
• total revenue is unchanged when the firm lowers its price.
• total revenue increases when the firm lowers its price.
• marginal revenue is equal to zero.