-Briefly explain why the following statements are TRUE or FALSE:
A) A monopolist produces the quantity at which MC = MR.
B) A monopolist sets a price equal to MR.
C) A monopolist faces a downward sloping MR curve.
D) A monopolist faces a perfectly elastic demand curve.
E) A monopolist must lower price if it produces additional units.
F) A monopolist is always able to price discriminate.
-Why are barriers to entry essential for a monopoly to exist?
a) With no barriers to entry, price setting would be determined by the government
b) If there were no barriers to entry, when the firm earned a profit, new firms would enter the market and compete away its profit. As a result, they would lose their monopoly status.
c) Price fixing is common and is increased with barriers to entry
d) Two of the above
- Which of the following is NOT an example of a barrier to entry for monopolists?
a) Natural ability
b) Economies of scale
c) Government restrictions
d) There is complete information
-To charge different prices to different individuals or groups of individuals is called:
a) unfair
b) price-discrimination
c) price-fixing
d) monopoly
-An industry in which a single firm can produce at a lower cost than can two or more firms is called a(n):
a) natural monopoly
b) fair monopoly
c) strategic monopoly
d) compelling monopoly