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  • Chapter 24 Monpoly

    Transféré par

    Kathleen Cornista
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    A monopoly is a market with a single firm. Entry barriers prevent new firms from entering the industry. There are several ways to regulate a monopoly, including average cost pricing, marginal cost pricing, two-part tariffs, rate of return regulation, price caps, and profit sharing. Natural monopolies occur when high fixed costs create entry barriers. A monopoly will continue earning profits as long as entry barriers remain in place.

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    econ

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    A monopoly is a market with a single firm. Entry barriers prevent new firms from entering the industry. There are several ways to regulate a monopoly, including average cost pricing, marginal cost pricing, two-part tariffs, rate of return regulation, price caps, and profit sharing. Natural monopolies occur when high fixed costs create entry barriers. A monopoly will continue earning profits as long as entry barriers remain in place.

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    Attribution Non-Commercial (BY-NC)
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    Signaler comme contenu inapproprié
    52 vues1 page

    Chapter 24 Monpoly

    Transféré par

    Kathleen Cornista
    A monopoly is a market with a single firm. Entry barriers prevent new firms from entering the industry. There are several ways to regulate a monopoly, including average cost pricing, marginal cost pricing, two-part tariffs, rate of return regulation, price caps, and profit sharing. Natural monopolies occur when high fixed costs create entry barriers. A monopoly will continue earning profits as long as entry barriers remain in place.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 1

    ECON 102 Chapter 24- Monopoly

    Study online at quizlet.com/_aja2j


    1. 2. 3. 4.

    Monopoly: a market containing a single firm Monopolist: Firm that is the only seller in the market Entry Barrier: New firms cannot enter the industry Economics of scale occur when: the firm as a decreasing average cost over many outputs Entry barrier

    30. 31.

    Set price equal to average cost: average cost pricing Low constant MC and decreasing AC: how to regulate a natural monopoly Good thing about marginal cost pricing: allocative efficiency P=MC Bad thing about marginal cost pricing: subsizied, no incentive to keep prices low and upgrade Good thing about average cost pricing: firm can cover costs Bad thing about average cost pricing: P>MC (inefficent), no cost lowing intentives Two part tariff (scheme): pay twice for the same good Good thing about two part tariff: firm can cover costs, efficient (P=MC) Bad thing about two part tariff: hard to estimate number of consumers in market and entry fee Rate of return: allows a monopolist to earn a fair return on investment Good thing about rate of return: earn profit, innovate, improve Bad thing about rate of return: what is fair?, legit and not legit costs Price cap: price ceiling Good thing about price caps: has a true incentive to keep costs low Bad thing about price caps: quality may decrease, firm could do too well Profit sharing: firm can make a sertain level of return but the rest must be shared Good thing about profit sharing: keep costs low Bad thing about profit sharing: firm may change behavior when near cut off, firm might gold plate Gold plating: taking profits and turning them into costs so the dont have to share Regulator: needs to remain popular with the consumer

    32.

    33.

    5.

    Natural Monopoloy: high fixed/set up costs entry barrier


    34. 35.

    6. 7. 8.

    Patents are created to (2 things): innovate, reward creativity Tariff: Tax on an imported good Barriers created by the firm (3): Buying all the resources Predatory pricing Threats

    36. 37.

    9.

    A monopoly will keep getting profits if: entry barriers still exsist Demand curve is: downward sloping Linear Demand =: AR curve (average revenue) AR=: a-bQ -b=slope MR=: a-2bQ Total Revenue=: Price x Quantity MR is postive, zero, negative because: TR (U shaped curve) peaks at elastic point (0) and goes back down If ____ is bigger than the _____ we have negative marginal revenue: Loss, gain

    38.

    10. 11. 12.

    39.

    40.

    13. 14. 15.

    41.

    42. 43.

    16.

    44.

    17. 18. 19. 20. 21. 22.

    The marginal revenue curve (MR) is: downward sloping Maximize profit where Q=: MR=MC Maximize profit where Price is: > MR=MC Price is determined by: the shape of the demand curce Monopolies do not have: supply curves Monopoly creates an inefficent market when there is: DWL A single price monopoly is ALWAYS on the ______ part of the demand curve: Elastic Price discrimination: firm sells identical products for different prices senior discount, student discount difficult to resell
    48. 45.

    46. 47.

    23.

    49.

    24.

    25. 26.

    arbitrage: buy low, sell high price discrimination amount output units: sells units at a different price perfect efficient (no DWL)

    27.

    A monopolist using price discrimination will produce ______ than a single price monopolist: more Market segmentation: sells to inelastic (higher price) and elastic(lower price) consumers Set price equal to marginal cost: marginal cost pricing

    28.

    29.

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