Podcast
Questions and Answers
Why might a monopoly firm choose to sustain losses for a long period of time through price wars or massive advertisement campaigns?
Why might a monopoly firm choose to sustain losses for a long period of time through price wars or massive advertisement campaigns?
- To lower production costs
- To deter competition (correct)
- To increase market share
- To maximize consumer surplus
In what situation would long-run average costs (LRAC) be lower under a monopoly than if an industry was shared between competitors?
In what situation would long-run average costs (LRAC) be lower under a monopoly than if an industry was shared between competitors?
- Perfect competition
- Oligopoly
- Monopolistic competition
- Natural monopoly (correct)
What term is used to describe the situation where a monopoly produces at a lower quantity and higher price than a competitive market, resulting in societal welfare losses?
What term is used to describe the situation where a monopoly produces at a lower quantity and higher price than a competitive market, resulting in societal welfare losses?
- Total revenue loss
- Consumer surplus
- Deadweight loss (correct)
- Producers' surplus
Why do governments often intervene with legislation to limit the ability of firms to form monopolies?
Why do governments often intervene with legislation to limit the ability of firms to form monopolies?
What is the term that describes the situation where a monopoly could produce at a lower price but does not do so, leading to inefficiency?
What is the term that describes the situation where a monopoly could produce at a lower price but does not do so, leading to inefficiency?
What is a key characteristic of a monopoly market?
What is a key characteristic of a monopoly market?
What type of barrier to entry is described as resulting from the industry being more efficient?
What type of barrier to entry is described as resulting from the industry being more efficient?
Which deliberate action is taken by a monopolist to deter new entrants?
Which deliberate action is taken by a monopolist to deter new entrants?
What do switching costs refer to in terms of barriers to entry?
What do switching costs refer to in terms of barriers to entry?
What advantage could a monopolist have due to control of key inputs or economies of scope?
What advantage could a monopolist have due to control of key inputs or economies of scope?
