MONOPOLY A firm is a pure monopoly when: is the only seller of a unique product

Question

MONOPOLY A firm is a pure monopoly when: is the only seller of a unique product and barriers to from entering the market in the long run. the market in the long run is unrestricted the it is the only seller of a product that has very few close substitutes and entry into entry prevent other sellers re are only a few other very large firms selling similar products. c. d. it can sell all it can produce at any price it chooses. Barriers to entry: b. uarantee that a firm will always earn positive economic profit. cannot be maintained in the long run because other firms will always find a way to enter a profitable industry obstacles that make it impossible or unprofitable for new firms to enter a market in the long run. characterize both perfectly competitive and monopoly markets. Suppose MR = MC = $3 at an output level of 2,000 units. If a monopolist produces and sells 2,000 units, charging a price of $6 per unit and incurring average total cost of $5 per unit, the monopolist will earn profit equal to: a. $6,000 b. $4,000. c. $2,000 d. $1,000. Price discrimination allows a monopolist to: a. charge each customer the same high price, even though some customers are willing to pay more than others. charge those customers with a greater willingness to pay a higher price, resulting in higher profit. charge a price for its product that exceeds the cost of producing it. avohd having to make a pricing decision and leave it to government regulators b. For a firm with monopoly power that cannot engage in price discrimination: 4. the marginal revenue curve lies below the demand curve because any ductio marginal revenue curve lies below the demand curve because the finm marginal revenue curve lies above the demand curve because the monopoly ict enue is a linear function of output because sales are ndependent of n in price applies only to the last unit sold. the the rm can charge any price it wishes. product price. r price on all units in order to sell a higher level of output. d.

Explanation / Answer

1. A firm is a pure monopoly when:

a. It is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long-run.

Explanation: In a pure monopoly, the monopoly company is the only source of a product and there are absolutely no close substitutes for the product. Also, in a pure monopoly, entry barriers prevent other firms to enter the market in the long-run.

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