ECON 213 InQuizitive ch. 10 Liberty University Solution

Order the following businesses from the least to the greatest amount of monopoly power.

Match the appropriate barrier to entry with the correct scenario.

Drag the labels below to the appropriate positions on the monopoly graph to show the firm’s profit-maximizing combination.

Drag the correct words or phrases into the blanks to complete the following paragraph.

A monopolist follows the same – rule as a firm in a competitive market: produce until marginal cost equals marginal revenue. As prices go –, the monopolist gains more customers. At the same time, this – the revenue from each individual customer, including the existing ones. However, up to a certain point the increased sales volume – the revenue loss from the price decrease.

Perfectly competitive firms and monopolies have different price and output structures, but both types of firms operate using the profit-maximizing rule. Drag the following labels to the appropriate places on the graph to show each firm’s profit-maximizing output and price.

What are some problems a monopoly may cause?

Which of the following statements is correct?

Government capping of a monopolist’s prices will lead to a stable market.

Turning a private monopolist into a government-run business ensures that the consumer’s best interests are a priority.

Regulating a monopoly leads to cost inefficiencies.

Breaking up a monopoly will always reduce the amount of inefficiency in the market.

Consider the following graph for a monopoly. Regardless of the firm’s marginal cost of production, it will never increase its production to serve more than 5,000 customers.

Due to the frequent occurrence of illegal file sharing and pirating, copyright holders in the music and movie business always lose more than they gain from the copyright protections.

Place in order the steps we can use to calculate a monopolist’s profit using a graph.

Trace the ideal output level to the demand curve to determine the price.

Calculate the difference between the price and cost, and multiply by the profit-maximizing output.

Model the demand curve and marginal revenue curve.

Find the quantity where the firm maximizes profits by finding where marginal revenue equals marginal cost.

A monopoly has complete control over the market price of a product, and therefore always makes a profit.

Drag the words and/or phrases below into the blanks to complete the following passage about monopolies.

Monopolists want to protect their market position by – potential competitors. A common tactic is to lobby for –, such as –. Such lobbying is a form of –: use of political means to secure a – position.

Is there any way for a monopoly to operate more efficiently than a competitive market? Why or how?

Which of the following traits describe a competitive market, and which describe a monopoly?

Why would it be beneficial for patents to be temporary?

Limited-duration patents are a way to restrict sales of a product until it has proven to be safe.

Having patents expire prevents firms from selling products after they have outlived their usefulness.

Patents give firms the incentive to innovate in the short run, but patents’ expiration encourages more competition in the long run.